Höegh LNG Holdings (Buy, TP: NOK90.00) - Dividend decision in H2 2018
Höegh LNG announced today the termination of the Pakistan FSRU contract. We argue a scenario-based valuation is the only way forward until we get more clarity. We calculate a SOTP of NOK71/share based on four FSRUs valued at a newbuild cost and a SOTP of NOK46/share if valued as LNGCs. If future FSRUs end up trading in the market at USD45k/day, we calculate that the equity ratio would decline below 27.5% by Q2 2019, which means that a decision on potential dividend suspension would likely first be taken by mid-2018 or H2 2018, once it has more visibility on its backlog.Leif Hoegh & Co. is engaged as an international shipping company that offers transportation and logistics solutions for customers worldwide within selected industrial shipping segments. Co. is involved in the following segments: Ro/Ro, Liquified Natural Gas (LNG), Dry Bulk, Reefer Vessels, Open Hatch, and Hoegh Fleet Services (HFS). Co. operates a fleet of vessels within the deep sea and short sea segments, operating in the transportation of cars and high/heavy rolling stock. Co. operates LNG carriers employed on long-term contracts for the transportation of liquefied natural gas.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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