For good reason as long as if you don’t include the I in interest, as a rule of a thumb, at least include the full value of the company’s balance sheet, not merely the equity, except people don’t look at EBITDA and market cap. Cheniere expects about EBITDA $ 2 billion in 2021, and the current enterprise value, thanks to Oh My God Much Debt, is all about $ 28 billion… that’s a EV/2021 about EBITDA 9, I’d say in case you look at enterprise value/BITDA it’s a lot less flattering. While assuming that European and Asian import costs are similar to current levels, as indicated by Cheniere’s projections, their EBITDA per share should be about $ 11 when they have nine trains running in 2021.
Which, certainly, they aren’t yet we’re looking at massive, incredibly expensive capital projects, and they take a long time to build.
You’d say you’re paying 4X EBITDA, the stock is now at $ 46.
Basically start researching their projects, you’ll end up looking at plenty of their 2021 projections, being that’s what they use as their run rate once everything is built and operating at capacity, when you think about investing in Cheniere. Actually the first train could be up in the next few months, after that, the second a few months after that, and later they’ll add a train or two each year or two, essentially, until they’re all built out in about six years. Refiners don’t Valero, for sake of example, and oil refiner, trades at a current EV/EBITDA of about Not 2021 numbers, but 2015 numbers, mLPs often trade at huge EV/EBITDA numbers.
What follows first appeared as part of the Friday File late last year. That’s when this one stock I would buy to turn $ 100000 into $ 1 million stock was first teased by the Oxford Club folks, though they’ve been pretty consistently ‘re running’ this ad for lots of the past six months. It’s not will be magic and it’s not should be fast. You might consider looking at Cheniere Partners, the MLP that Cheniere set up to be part of their financing for Sabine Pass, that does at least generate some cash flow by way of MLP distributions, though it also sacrifices some upside by not being involved in all of Cheniere’s other development projects, Therefore in case you’re feeling a bit more risk averse but like the idea of this. Therefore, since there’s an almost irresistible catalyst in the startup at Sabine Pass, so it is probably will be a story we see from plenty of the newsletter jockeys, and the ‘topline’ numbers look fantastic if you project a few years out and assume that global LNG arbitrage is still a viable business at that time, particularly if you assume that LNG costs return to their historical highs in Japan, Korea and Europe. Essentially, on the other side, Jim Chanos took a very public short position in Cheniere just a few weeks ago because of his argument, fairly compelling, that the world is will be awash in LNG and the gains will not be nearly what Cheniere is projecting… particularly because of the massive, massive debt burden they’ve taken on to build these plants.
Seth Klarman’s Baupost is likely the other billionaire owner of Cheniere that Fessler hints at, but other high profile folks are involved as well, there’re some big billionaires involved in Cheniere the biggest name is Carl Icahn, who got a seat on the board and bought a big chunk just a couple months ago. There is some rebuttal from Cheniere bulls, largely as long as they see some reason for optimism about the new management team and the likelihood that we’ll have more visibility about cash flow soon…, chanos is still shorting LNG, and called Cheniere financial engineering gone crazy at the SALT conference last month. Did you know that the first LNG train at Sabine Pass did indeed start producing on time and they report that it was completed within the budget, and they’ve shipped out at least seven LNG tankers as of a month ago and have now declared that Train 1 is substantially complete, Cheniere. You can figure your math but they figure that their margins may be substantial as long as the Henry Hub price for natural gas in the US is at least a couple dollars cheaper than the LNG delivered price in Europe or Asia, the examples Cheniere gives in some recent investor presentations imply that the cost is common gas plus about 15percent, plus $ 1 per mcf for shipping to Europe.
It’s indeed a huge arbitrage business, their benefits will depend on the difference between the price they can get for the natural gas in the end market, and the price they have to pay to buy the gas in the US, pipe it into their LNG train, liquefy and ship it.
For the first a few trains, much of the capacity of Sabine Pass is indeed already under contract buyers will pay index rates for whatever country they’re importing to, mostly Japan, India and Europe so far, and Cheniere will buy the natural gas in the US, send it through the liquefaction process to be loaded on refrigerated LNG tankers, and deliver it to gasification terminals for their customers.