CQP Ranks 10th in Terms of Total Returns among MLPs



Total returns

Cheniere Energy Partners (CQP), the MLP subsidiary of Cheniere Energy (LNG), is in tenth place among MLPs in terms of three-year total returns. CQP, which is the first company to export LNG (liquefied natural gas) cargo from the Lower 48 states, has returned 11.1% over the past three years. 

CQP’s three-year returns have been driven mostly by its distribution yield, and its shares have lost ~8.0% over the past three years.

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Distribution growth and guidance

Cheniere Energy Partners declared a flat distribution of $0.425 per unit for 2Q17. Based on this distribution, CQP is trading at an attractive distribution yield of 5.9%. 

The partnership could be less likely grow its distribution in the coming quarters considering its high leverage and significant capital spending targets.


Cheniere Energy Partners (CQP) was trading at a forward EV-to-EBITDA[1. enterprise value to earnings before interest, tax, depreciation, and amortization] multiple of 14.7x on October 13, 2017. This multiple is below the historical five-year average of 93.4x. 

CQP’s current distribution yield is slightly lower than the five-year average of 6.0%. CQP’s current valuation could reflect the uncertainty in the global LNG markets and high leverage. 

Cheniere Energy Partners’s current valuation could indicate a buying opportunity. The factors affecting this assessment include its timely completion of LNG trains, as well as the fixed stream of cash flow from long-term take-or-pay contracts amid the challenging energy price environment.

Analysts’ recommendations

Of the analysts surveyed by Reuters, 57.1% rated Cheniere Energy Partners (CQP) as a “hold,” and the remaining 42.9% rated it as a “buy.” BMO Capital last initiated coverage on CQP with an “outperform” rating, which is equivalent to a “buy” rating.

Overall, the partnership has seen five rating updates in 2017—two downgrades and three new coverages. CQP is currently trading below the low range ($31.00) of analysts’ target prices. CQP’s average target price of $33.75 implies an 18% upside potential from the current price levels.

For ongoing coverage on midstream companies, please check out Market Realist’s Master Limited Partnerships page.


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