Cheniere Energy Partners (CQP), the MLP subsidiary of Cheniere Energy (LNG), has experienced a huge earnings growth in recent quarters. The trend is expected to continue in the coming quarters. The partnership is expected to post 108.7% YoY (year-over-year) EBITDA growth in the second quarter of 2018 compared to Q2 2017, driven by the placement of Train 3 and Train 4 at Sabine Pass, strong demand from Asian markets, and higher LNG (liquefied natural gas) prices.
For 2018, Wall Street analysts expect the partnership to see EBITDA growth of 53.4%. Growth is expected to decline to 9.5% next year. CQP expects to bring online Train 5 at Sabine Pass in the second half of 2019. However, the contribution from Train 5 could be minimal in 2019. On the other hand, parent company Cheniere Energy is expected to experience higher earnings growth due to the development of two additional trains at Corpus Christi and Cheniere Marketing.
Cheniere Energy Partners was trading at a forward EV[1. enterprise value]-to-EBITDA multiple of 13.7x as of July 23. That’s below the one-year and three-year averages of 14.0x and 20.1x, respectively. That could indicate a buying opportunity considering the partnership’s stable cash flow from long-term SPAs (sales and purchase agreements) with its customers. About 85%-90% of its total capacity at Sabine Pass is tied to these long-term SPAs. An FID (final investment decision) on Train 6 at Sabine Pass could result in the partnership’s multiple expansion.
As of July 23, 50% of analysts rate CQP a “buy,” and the remaining 50% rate it a “hold.” Bernstein last upgraded it to “outperform,” which is equivalent to a “buy” from “market perform,” which is equivalent to a “hold.” Cheniere Energy Partners is currently trading above its average target price of $36.10.