2023-06-01 15:56:14 ET
Cheniere Energy Partners ( NYSE: CQP ) +1% in Thursday's trading even after Wolfe Research downgraded the stock to Underperform from Peer Perform with a $43 price target, preferring parent Cheniere Energy ( NYSE: LNG ) because of its cash flows, growth potential and capital return plan.
While Cheniere Partners ( CQP ) represents steady cash flow and potential for growth at the end of the decade, Wolfe said Cheniere Energy ( LNG ) continues to have a better capital return profile and contracted cash flow growth in the nearer term.
At current levels, Wolfe sees LNG's 2025 distributable cash flow yield of 15% as much more attractive than CQP's ~9% yield.
Cheniere Partners' ( CQP ) cash flows are fairly stable given its ownership of the 30M metric tons/year Sabine Pass LNG export facility and its long-dated take or pay contracts, with an eventual growth opportunity in the proposed 20M tons/year expansion.
But Wolfe noted it is early, with a long permitting and commercialization process required, and cash flows likely would not start until late in the decade.
More on Cheniere Energy Partners:
- Financial and valuation comparison to sector peers
- Analysis: Cheniere Energy Partners: Growing Distributions And Unique Global Exposure
- Stock price return: Down 16.5% YTD, down 14.5% in the past 12 months
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Cheniere Energy Partners cut at Wolfe Research, seeing more value in parent