Flughafen zuerich planning a long-term layover in zurich – flughafen zuerich ag adr (otcmkts flgzy) seeking alpha electricity definition


My wife and I spent part of our honeymoon in Switzerland, and I was immediately fascinated from the moment we arrived at Zurich’s International Airport ( OTC:FLGZY) ( OTC:UZAPF). It was clean, efficient, and provided train rides to the city center every 10 minutes (the city center also only being a little over 10 minutes away by train). I was excited when I discovered that the airport itself was publicly traded, but also a little disappointed after realizing that the ADRs that trade on the US exchanges are largely illiquid.

I decided to purchase shares directly on the Swiss exchange, therefore, through my Fidelity account (which fortunately offers international trading on international exchanges). The symbol for shares on the Swiss exchange is FHZN:CH, and after a recent dip in the share price, I decided to finally pull the trigger on a starter position last Friday morning. The business

The Zurich Airport is situated in a great location, as it’s strategically placed in Switzerland’s largest city. Switzerland maintained a number one position in last year’s Global Talent Competitiveness Index – ahead of Singapore and the U.S., and Zurich itself came in first for all cities. Besides its great reputation for attracting and fostering talent, Zurich also has one of the highest-rated airports.

With an urban atmosphere that is open to all, The Circle represents the logical next step for the airport’s retail centres – over 150,000 passengers, commuters, visitors and employees frequent Zurich Airport every day. Drawing on the airport’s footfall and infrastructure, THE CIRCLE is a uniquely attractive business location.

That’s 150,000 relatively captive consumers that are subject to "impulse purchases" and duty-free goods. Many are likely hungry as well, looking for someplace to either grab a snack, or perhaps even find a nice restaurant. If you’re curious, you can even have a look at "Switzerland’s biggest construction project" on a live webcam available on The Circle’s website.

Not only will Zurich Airport’s headquarters be located in The Circle (expected to open for business in 2020), but the headquarters of Microsoft Switzerland and other IT companies will be as well, according to the company’s chief commercial officer, Stefan Gross (in an interview with CNN Money Switzerland).

The Circle’s current occupancy rate is at roughly 60%, and there are some concerns that office space is already oversupplied in Zurich. But the firm’s CCO is confident that the combination of a large park, proximity to the airport, a new convention center, and overall connectivity to other businesses will give it an edge. It also will boast fine dining, new hotel rooms, and medical facilities. This includes University Hospital of Zurich, a healthcare center for outpatient medical treatment.

Because it’s a "multi-use" complex, Mr. Gross also explained in the interview the occupancy rate might not be the most appropriate metric to use for The Circle, calling it a "little city" – and said that the more pressing concern is making sure that compatible tenants are found for the complex. He even said that the company could even turn away prospective tenants that don’t match its vision, including "traditional retail," as the company doesn’t want "more of the same" – instead opting for more exciting things such as unique retail exhibits that tell unique stories behind the products being sold. Conclusion

The Zurich Airport hasn’t been covered on Seeking Alpha yet (at least that I’m aware of), and likely for a good reason – since there isn’t really a suitable option to invest in the company available to many U.S. investors. For investors with exposure to international exchanges, however, it remains an option if you’re willing to deal with extra risks such as (but not limited to) currency fluctuations, added tax complexities, and holding assets from outside the U.S.

If there’s any truth to this statement, then Zurich Airport’s 51% ownership in the future "little city" that is The Circle (which will be located within walking distance of the airport’s terminals, and only about 12 minutes from the center of the city of Zurich) could be very lucrative going forward, expanding on its attractiveness as a destination overall, as more businesses move there.

This also will add to the already lucrative location that the airport enjoys so close to the center of Zurich itself, as well as its role as an interlinked train, tram, automobile, and aviation hub. The Zurich Airport also is one of the country’s main freight hubs, handling about 400,000 tonnes of air freight and postage every year.

Shares currently trade at around 22.5 times advertised earnings (or roughly 25 times earnings, when excluding "one-off" items). I’m not terribly excited about paying that price, but this also is a very high-quality, growing business that I was willing to pay up for. This also is a discount to the five-year average – but another recession could lead to some intense multiple contraction as well. Shares trade at about 22 times this year’s average expected earnings per share, and I think the longer the time frame, the better my purchase price will look (as earnings and overall business value continue to grow).

I figured I’d buy a half position now and see what happens, but if I get a better opportunity to buy shares going forward, then I’ll likely start layering in again. I plan to hold onto to my shares for a very, very long time, and even think that this could be one of the few truly "buy-and-hold forever" style companies I own, despite the extra risks.

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Additional disclosure: Articles I write for Seeking Alpha represent my own personal opinion and should not be taken as professional investment advice. I am not a registered financial adviser. Due diligence and/or consultation with your investment adviser should be undertaken before making any financial decisions, as these decisions are an individual’s personal responsibility.