Uncertainty over distribution growth at Hoegh LNG Partners has seen the New York-listed MLP downgraded by analysts at DNB Markets.
Its team, led by Nicolay Dyvik, dropped the company from buy to hold, suggesting an ATM programme and rising interest rates would limit upside.
Dyvik and colleagues Mats Bye and Jorgen Lian say the company presently has stable cash flow from five FSRUs, but future expansion is uncertain.
This stems from parent Hoegh LNG’s three-year contracts on FSRU 7 and FSRU 8, which make them unsuitable for dropdown - and the next two units remaining charter free right now.
“We believe it will take time for Hoegh LNG Partners to achieve any clarity on future growth potential as it also takes time from contract announcement to start-up of cash flow,” the analysts wrote.
DNB expects Hoegh LNG Partners to distribute $1.76 per unit to investors in 2018. This is projected to remain stable in 2019 and 2020.
The analysts are forecasting a profit of $14.6m for Hoegh LNG Partners in the second quarter of 2018, below the $15.6m Bloomberg consensus.
