Hoegh LNG Partners (NYSE: HMLP)

HMLP is a leading owner of Floating Regasification vessels (FSRUs).  Ashland projects high demand for FSRUs due to prolonged growth in LNG supply and the affordability of building new LNG import infrastructure utilizing FSRU as the regas technology.
HMLP shares trade at a substantial discount to our projection of fair market value and pays a consistently attractive distribution which is supported by high quality projects

 

Gaslog Ltd (NYSE: GLOG)

GLOG holds arguably the world’s most modern fleet of LNG ships.  The average build year of GLOG vessels is 2017, substantially under the average industry vessel age of 8 years. Attached to its modern ships are a strong set of counterparty contracts, with more than 75% of the fleet locked into charters of 5 years or longer—underpinning the growth in share price and distribution.
GLOG shares stand to benefit from the additional cashflow arising from new vessels being built and delivered in 2020 and 2021.

 

Teekay LNG Partners (NYSE: TGP)

TGP is a geographical diversification play, targeting the burgeoning LNG trade route from Russia to China.  Undergoing a large buildout program similar to GLOG, TGP has signed charters for a majority of its vessels which last for essentially the entire economic life of the asset, assuring a steady cashflow for years to come.  
The current buildout program will substantially increase cashflow and enable TGP to improve its balance sheet and, in due course, pay attractive distributions to shareholders. 

 

Gaslog Partners, Preferred (NYSE: GLOP-A)

Ashland views the A series Preferred shares of GLOP to be the best risk/reward of the LNG Preferreds.  Yielding near 10% annually, we believe GLOP-A has strong coverage ratios and is sustainable, especially based on the 2020 refinancing which prioritized balance sheet strengthening. 
GLOP-A is a solid anchor position for our portfolio which allows for more opportunistic plays in other areas as stock values fluctuate.




Sources: SEC filings (i.e. Form 20-F) and company presentations of each respective company
 
Disclosure: The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur. Past performance shown is not indicative of future results, which could differ substantially.

The simulated performance shown was created by Ashland, applying historical LNG shipping stock market cycles to present market prices in order to estimate potential future capital gains.  Dividend returns are estimated by applying the current payout level and adjusting for future distributable cashflow as estimated by Ashland's analysis.  The simulated performance shown is not necessarily indicative of future performance, which could differ substantially. The results shown do not represent the results of actual trading using client assets but were achieved by means of the retroactive application of a model that was designed with the benefit of hindsight. The simulated performance was compiled after the end of the period depicted and does not represent the actual investment decisions of Ashland. These results do not reflect the effect of material economic and market factors on decision-making.