DINO - Holly Energy Partners: Higher Yield Coming After Sinclair Acquisition 10%+ Possible

• Holly Energy Partners recently completed their acquisition of new assets from Sinclair as their parent company merged with the latter.
• Whilst this pushed their outstanding unit count higher, it should also boost their free cash flow and thus see their strong distribution coverage remain.
• It also saw their net debt increase slightly over 20%, but given the circa 20% forecast earnings increase, this should cancel out.
• When these two variables are combined, it sees scope for distribution growth in the coming years once they finish integrating their new assets.
• Since their high 8%+ distribution yield stands to potentially grow into a very high 10%+ yield on current cost, I believe that maintaining my buy rating is appropriate.

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