Cheniere Energy’s EV-to-sales
In this article, we’ll analyze Cheniere Energy’s valuation based on its historical and forward multiples. Cheniere Energy currently trades at an enterprise-value-to-sales (or EV-to-sales) multiple of 15.4x. The company’s forward EV-to-sales multiple, which is based on next-12-month sales estimates, is 8.9x. This figure reflects higher revenue in the coming quarters driven by LNG (liquefied natural gas) exports from Trains 3 and 4 of the Sabine Pass Liquefaction project.
Cheniere Energy’s EV-to-EBITDA
Cheniere’s forward EV-to-EBITDA multiple of 20.5x is higher than the peer median of 13.6x. The company’s high valuation might not be justified because of its negative operating cash flows, high leverage, and uncertainty in global LNG demand. However, its high valuation might reflect the first mover advantage, foreseeable future cash flows tied to long-term contracts, and the rising LNG demand from Asian markets including China. Moreover, the company is exploring other expansion opportunities like mid-scale LNG projects, pipeline projects, and various downstream opportunities including power generation and FSRUs (floating storage regasification units).
The company recently announced the open season for the Midship Pipeline project. This project is a 200-mile, 36-inch diameter pipeline with a natural gas transportation capacity of 1,400,000 dekatherms per day.
The proposed midscale LNG projects near the existing sites “would provide 1.4 mtpa of expected LNG production capacity per train, for a total potential expected capacity of 9.8 mtpa if all 7 trains were built,” according to a press release.