Hoegh LNG Partners: Loading Up For Acquisitions Amid Gas Surge

Ashland Heights Investments |

Eric was recently interviewed by online investment research platform SeekingAlpha to discuss Ashland's central investment theme in Hoegh LNG Partners (ticker: HMLP).  Ashland's article is the most comprehensive and widely followed research covering HMLP on the SA platform.

Published: October 30th, 2019

Here's a brief summary of the thesis, which outlines why it is a core holding in the LNG Strategy Fund:

  • Despite recent weak stock price action, HMLP has seen stable distributable cash flow (DCF) generation from its high margin, long-term project assets.
  • A proactive position on maturing debt and ample balance sheet capacity has positioned the company to fund another FSRU dropdown.
  • Multiple valuation methods point to a $25/share price target, implying a potential upside of more than 50% from present share price in addition to quarterly dividends currently yielding 11%.
  • Leading analysts share positive views of HMLP; however, with a lower PT of $19/shr. We believe analysts are not accounting for the favorable macro picture of global LNG, particularly on the downstream side where HMLP holds significant influence and pricing power.

We are bullish HMLP and have set a price target of $25/share (from current $16). We see distributions per share continuing an upward trend until reaching an annual yield of 13% at the current share price.
Look for an FSRU dropdown in 2020 which contributes to further EBITDA growth and underpins further increase in the common distribution.

Links:
Interview with SeekingAlpha
Ashland's Thesis on HMLP