Publicly Listed Airport Stocks + Ground Support Equipment Stocks (Mid-2024)
Publicly listed airport stocks are typically not tied to commodity price changes and competition threats + some big airport operators operate multiple airports - including those in emerging markets.
Publicly listed airport stocks (along with ground support equipment stocks) offer investors a unique investment opportunity that are not typically tied to commodity price changes and competition threats. They also offer investors a way to cash in on global travel trends plus many airport operators (including those in Europe) manage other airports in both developed and emerging markets.
For starters, this is how airport stocks typically derive most of their revenues:
Aeronautical Revenues - A per-passenger charge and/or a charge based on the size of the aircraft (subject to government regulations).
Commercial Revenues
Retail space leases - Duty-free shops, restaurants, etc. Airport retail leases are usually structured with minimum guaranteed rents with upside from sales above certain thresholds plus there are inflation linked adjustments in the contracts...
Car parking - Short and long-term parking charges. You might have noticed that airport operators tend to have strong pricing power in this area…
Ground transport - Bus and taxi access charges - especially for airports not connected to public transit like subways…
Property development - Airports often own vast tracts of land that can be used by a range of airport users or industries e.g. car rental agencies, airline offices, hotels, light industry, importers/exporters, and airport service providers like freight, catering, and ground handlers…
Airport stocks typically have the following expenses:
Facilities maintenance & management
Utilities - Obviously, an airport in a cold or hot climate will have higher heating or cooling costs.
Security - These expenses are recovered from airlines through passenger charges plus the government would handle certain aspects of security along with customs.
I need to add that airports are either the subject of strict aeronautical and commercial price controls or just aeronautical price controls. Even if there are no price controls on commercial services, governments and airport operators alike will want to ensure there is no outright price gauging for airport commercial services that angers travellers and airlines alike. After all, there are websites (The Guide To Sleeping in Airports) and plenty of travellers on YouTube, etc. who do airport reviews…
In addition, a poor economy for leisure or business travellers (with corporate expense accounts) along with terrorism or pandemic scares (e.g. SARs, Ebola, Covid, and maybe soon the Bird Flu…) can impact revenues over the short term - meaning you might want to watch your entry point into airport stocks. However, airline travel has continued to grow over the longer term - especially in emerging markets.
As for other risks, perhaps the biggest risk is the lost or bankruptcy of a major airline and this can be particularly devastating to a hub airport rather than an origin or destination airport.
For example: I used to fly TWA (as they had a student value pack of vouchers for a set price with a set number of trips anywhere within the continental USA for students) from San Francisco to Washington DC via their hub in St. Louis - which was a massive Y shaped airport terminal:
By September 1999, Lambert was TWA's main hub, with 103 destinations served by 515 daily flights: 352 on TWA mainline aircraft and 163 on Trans World Express flights operated by its commuter airline partners. Lambert became the eighth-busiest U.S. airport by flights. Congestion caused delays during peak hours and was exacerbated when bad weather reduced the number of usable runways from three to one, and traffic projections made in the 1980s and 1990s predicted enough growth to strain the airport and the national air traffic system.[45] As a result, city leaders decided to build a 9,000-foot (2,700 m) runway, dubbed Runway 11/29, parallel to the two larger existing runways. At $1.1 billion, it was the costliest public works program in St. Louis history.[46] It required moving seven major roads and destroying about 2,000 homes, six churches, and four schools in Bridgeton.[46][47][48] Work began in 1998 and continued even as traffic at the airport declined after the 9/11 attacks, the collapse of TWA and its subsequent purchase by American, and American's flight reductions several years later.
The last time I was in that airport, it was mostly dead and it now sounds like large portions of the terminal complex will be knocked down:
In early 2022, airport officials released a plan that would consolidate both existing terminals into one, at the existing Terminal 1 site.[92] The proposal would gradually demolish Concourses A, B, C and build a single new concourse with 62 gates in its place, while retaining the iconic domed terminal building.[93] Following the completion, Terminal 2 would be demolished or repurposed.[92]
Another risk would be a black swan event e.g. a large plane crashing into the airport terminal itself. Although there have been many crashes and runway mishaps during take-offs and landings (I believe the worst plane crash in history is still the collision of two jumbo jets on a fog shrouded Canary Islands airport runway back in the 1970s), I am not aware of any incident involving an aircraft actually crashing into and destroying an airport terminal.
However, I would be concerned about EU and local government climate change restrictions impacting European airport stocks. But while governments can force people to stay home or to take trains for shorter distance trips (e.g London to Paris), they cannot force people to take a train from New York to Paris where no such train exists...
Finally, there is always the risk of other regulatory and political changes e.g. something the Mexican airport stocks are now grappling with after the government announced late last year that the new tariff rate would be 9% of gross revenue compared to the previous 5%.
Likewise, there are risks when it comes to building and operating airports in emerging markets as Fraport AG (ETR: FRA / FRA: FRA / OTCMKTS: FPRUY / FPRUF) found out the hard way (somewhat reflected in their long term trading chart) when they ventured into the Philippines some years ago:
What I was told around the time the Terminal 3 saga was happening was that certain Filipino families or individuals involved in the project had excessively sticky fingers even by the standards of the Philippines (no doubt why the project kept dragging on and on…) to the point where even their own reputations were sullied locally (after all, Manila badly needed a new airport terminal)…
Also, the Germans behaved very badly when they figured out what was going on and when things got contentious e.g. Germany is a minor trading partner with and investor in the Philippines compared to the USA and certain Asian countries. The Filipinos could care less about what the Germans thought, they did not like or appreciate the “German attitude,” and they responded accordingly (and while the whole incident did get the Philippines plenty of bad press in Germany at the time; again, German-Filipino relations/trade/investment is not particularly significant and there are not many Filipinos or Germans living in each other’s countries…).
To make your life easier, the rest of this post is organized by country covering ALL airport stocks and some related airport service providers (e.g. the makers of airport terminal or security equipment, etc.) who’s airport related equipment divisions would account for a significant portion of their overall business (as obviously some very large manufacturers have airports as customers, but they may not be that relevant for the overall business e.g. MAN Truck & Bus SE, which is a subsidiary of Traton SE, which in turn is a subsidiary of Volkswagen Group, makes specialized Neoplan Airport buses).
The post includes:
A quick description of the stock with links to the IR page and stock quote(s) on Yahoo! Finance.
A link to any Wikipedia page (for what it might be worth…)
A price/book (most recent quarter) ratio plus forward or trailing P/E and dividend yields linked back to the Yahoo! Finance statistics page.
The latest long term technical chart linked back to Yahoo! Finance.
And as always, this post is provided for informational purposes only (and to make your life easier by providing you with relevant information, links, and charts). It does not constitute investment advice and/or a recommendation…
Asia
East Asia
🇨🇳 China
Beijing Capital International Airport Company Limited
Beijing Capital International Airport Company Limited (HKG: 0694 / FRA: BJ1 / OTCMKTS: BJCHY / BJCHF) is involved in in the aeronautical and non-aeronautical businesses at the Beijing Capital Airport.
The company's aeronautical business is involved in the provision of aircraft landings and take-offs; passenger service facilities; ground support services; and firefighting services for domestic and foreign air transportation enterprises. Its non-aeronautical business includes the franchise-based operation of ground handling agent services for domestic and foreign airliners; in-flight catering services; duty free and other retail shops in the terminals, as well as restaurants and other catering businesses in terminals; leasing advertising spaces inside and outside the terminals; and other businesses. The company's non-aeronautical business also comprises the leasing of properties in the terminals; provision of car parking services; and provision of ground handling facilities for ground handling agent companies.
Price/Book (Most Recent Quarter): 0.77
Forward P/E: 32.89 / Forward Annual Dividend Yield: N/A (Yahoo! Finance)
Comba Telecom Systems Holdings Ltd
Added August 12, 2024
Comba Telecom Systems Holdings Ltd (HKG: 2342 / FRA: COA1 / OTCMKTS: COBJF) is a global leading solution and service provider of wireless and information communications systems with its R&D facilities, manufacturing base, and sales and service teams. Leading through innovative technology, the Company offers a comprehensive suite of products and services, including Antenna and subsystems, Network systems (Wireless access & Wireless enhancement), Services, Enterprise networks, etc., to its global customers.
Comba’s wireless solutions are designed to handle such high traffic volumes with multi-operators and multi-systems (2G/3G/4G) conditions. Since many sectors are required to address the high volume, high capacity requirements, it is essential that a solid design and sectorization planning is used to prevent interference between sectors and hence provide quality of service and experience for the passengers.
Deployed in airports around the world including Beijing (China), Domodedovo (Russia), Mexico City (Mexico), Brasilia (Brazil), the Comflex-series of active DAS solutions enables wireless coverage and capacity enhancement for such venues and integrates seamlessly with our Wi-Fi solutions to offload traffic at hotspot areas.
The Company has established its R&D headquarters based in Guangzhou Science City and has applied for over 5,600 Chinese and international patents. Their global manufacturing base, located in Guangzhou Economic and Technological Development District, covers an area of approximately 80,000 square meters. Their 5G antenna and filter manufacturing base, located in Guangzhou Zhongxin Knowledge City, covers an area of roughly 20,000 square meters.
Price/Book (Most Recent Quarter): 0.66
Trailing P/E: 358.33 (no forward P/E) / Forward Annual Dividend Yield: 2.79% (Yahoo! Finance)
Guangzhou Baiyun International Airport
Built in the 1930s, Guangzhou Baiyun International Airport (SHA: 600004) is one of the important international hubs of the Belt and Road Initiative, the Air Silk Road, and occupies a core position in the aviation hubs of the Guangdong-Hong Kong-Macao Greater Bay Area. Since its relocation to the current site in 2004, Baiyun Airport has been in the process of rapid development of various businesses, continuous improvement of hardware facilities and steady progress in the construction of international aviation hub.
In 2019, the annual passenger throughput of Baiyun Airport exceeded 73 million person-times. Nearly 500,000 flights took off and landed. From Baiyun Airport, the air route network covers more than 230 destinations all over the world, with nearly 80 airlines in operation. Guangzhou forms a "4-hour air circle" with major cities in China and Southeast Asia, and a "12-hour air circle" with major international destinations.
Under the special circumstances of COVID-19 epidemic, Baiyun Airport transported a total of 43,768,000 passengers in 2020. It became the fastest recovering and largest passenger traffic airport in the world. In Airports Council International (ACI) World's 2020 Global Airport Passenger Satisfaction Assessment, Baiyun Airport ranked first among the participating airports in the world, and achieved an extraordinary performance in "quality" and "quantity" worldwide.
In 2021, Baiyun Airport completed 362,000 takeoffs and landings, transported 40.257 million passengers, and ranked first in passenger throughput among domestic airports; the annual cargo throughput reached 2.045 million tons, a record high, and the annual cargo throughput of international and regional airports increased by more than 20% year-on-year.
Price/Book (Most Recent Quarter): 1.29
Forward P/E: 42.02 / Forward Annual Dividend Yield: N/A (Yahoo! Finance)
