Intrinsic value of Cheniere Energy Partners - CQP

Previous Close

$28.41

  Intrinsic Value

$12.07

stock screener

  Rating & Target

str. sell

-58%

  Value-price divergence*

+2183%

Previous close

$28.41

 
Intrinsic value

$12.07

 
Up/down potential

-58%

 
Rating

str. sell

 
Value-price divergence*

+2183%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of CQP stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 9.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  307.41
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  1,100
  1,760
  2,719
  4,067
  5,900
  8,325
  11,444
  15,362
  20,171
  25,955
  32,783
  40,709
  49,771
  59,991
  71,377
  83,927
  97,628
  112,459
  128,397
  145,416
  163,491
  182,598
  202,716
  223,832
  245,934
  269,021
  293,094
  318,164
  344,248
  371,369
  399,558
Variable operating expenses, $m
 
  1,186
  1,833
  2,741
  3,977
  5,611
  7,714
  10,354
  13,595
  17,494
  22,096
  27,438
  33,546
  40,434
  48,108
  56,567
  65,801
  75,797
  86,540
  98,010
  110,193
  123,071
  136,631
  150,863
  165,760
  181,320
  197,545
  214,442
  232,023
  250,303
  269,302
Fixed operating expenses, $m
 
  191
  195
  200
  205
  210
  216
  221
  227
  232
  238
  244
  250
  256
  263
  269
  276
  283
  290
  297
  305
  312
  320
  328
  336
  345
  353
  362
  371
  381
  390
Total operating expenses, $m
  922
  1,377
  2,028
  2,941
  4,182
  5,821
  7,930
  10,575
  13,822
  17,726
  22,334
  27,682
  33,796
  40,690
  48,371
  56,836
  66,077
  76,080
  86,830
  98,307
  110,498
  123,383
  136,951
  151,191
  166,096
  181,665
  197,898
  214,804
  232,394
  250,684
  269,692
Operating income, $m
  179
  383
  691
  1,125
  1,718
  2,503
  3,515
  4,787
  6,349
  8,229
  10,449
  13,027
  15,975
  19,301
  23,006
  27,091
  31,550
  36,379
  41,567
  47,108
  52,993
  59,214
  65,765
  72,641
  79,838
  87,356
  95,195
  103,359
  111,853
  120,686
  129,866
EBITDA, $m
  335
  1,079
  1,766
  2,733
  4,051
  5,794
  8,039
  10,859
  14,323
  18,489
  23,409
  29,120
  35,650
  43,015
  51,222
  60,267
  70,143
  80,833
  92,323
  104,591
  117,621
  131,395
  145,899
  161,122
  177,056
  193,700
  211,055
  229,129
  247,934
  267,488
  287,811
Interest expense (income), $m
  242
  505
  758
  1,183
  1,781
  2,594
  3,670
  5,054
  6,792
  8,926
  11,492
  14,521
  18,038
  22,058
  26,592
  31,644
  37,212
  43,290
  49,870
  56,942
  64,492
  72,511
  80,988
  89,914
  99,282
  109,088
  119,331
  130,011
  141,134
  152,706
  164,739
Earnings before tax, $m
  -171
  -122
  -66
  -58
  -63
  -91
  -155
  -267
  -443
  -697
  -1,043
  -1,494
  -2,063
  -2,758
  -3,586
  -4,553
  -5,662
  -6,912
  -8,303
  -9,833
  -11,499
  -13,297
  -15,223
  -17,273
  -19,444
  -21,733
  -24,136
  -26,652
  -29,280
  -32,021
  -34,873
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -171
  -122
  -66
  -58
  -63
  -91
  -155
  -267
  -443
  -697
  -1,043
  -1,494
  -2,063
  -2,758
  -3,586
  -4,553
  -5,662
  -6,912
  -8,303
  -9,833
  -11,499
  -13,297
  -15,223
  -17,273
  -19,444
  -21,733
  -24,136
  -26,652
  -29,280
  -32,021
  -34,873

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  15,542
  24,789
  38,299
  57,276
  83,104
  117,248
  161,188
  216,362
  284,097
  365,564
  461,737
  573,373
  701,003
  844,944
  1,005,317
  1,182,074
  1,375,036
  1,583,926
  1,808,407
  2,048,115
  2,302,689
  2,571,798
  2,855,160
  3,152,560
  3,463,863
  3,789,022
  4,128,080
  4,481,179
  4,848,557
  5,230,546
  5,627,574
Adjusted assets (=assets-cash), $m
  15,542
  24,789
  38,299
  57,276
  83,104
  117,248
  161,188
  216,362
  284,097
  365,564
  461,737
  573,373
  701,003
  844,944
  1,005,317
  1,182,074
  1,375,036
  1,583,926
  1,808,407
  2,048,115
  2,302,689
  2,571,798
  2,855,160
  3,152,560
  3,463,863
  3,789,022
  4,128,080
  4,481,179
  4,848,557
  5,230,546
  5,627,574
Revenue / Adjusted assets
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
Average production assets, $m
  13,045
  20,872
  32,247
  48,225
  69,973
  98,721
  135,719
  182,174
  239,207
  307,801
  388,777
  482,773
  590,237
  711,434
  846,466
  995,293
  1,157,765
  1,333,648
  1,522,659
  1,724,490
  1,938,839
  2,165,426
  2,404,013
  2,654,421
  2,916,535
  3,190,314
  3,475,798
  3,773,103
  4,082,431
  4,404,062
  4,738,356
Working capital, $m
  102
  521
  805
  1,204
  1,747
  2,464
  3,388
  4,547
  5,971
  7,683
  9,704
  12,050
  14,732
  17,757
  21,128
  24,842
  28,898
  33,288
  38,005
  43,043
  48,393
  54,049
  60,004
  66,254
  72,797
  79,630
  86,756
  94,176
  101,897
  109,925
  118,269
Total debt, $m
  14,433
  21,644
  33,803
  50,882
  74,128
  104,857
  144,404
  194,060
  255,021
  328,342
  414,897
  515,369
  630,237
  759,784
  904,119
  1,063,200
  1,236,866
  1,424,867
  1,626,900
  1,842,638
  2,071,754
  2,313,952
  2,568,978
  2,836,638
  3,116,811
  3,409,453
  3,714,606
  4,032,395
  4,363,035
  4,706,825
  5,064,151
Total liabilities, $m
  15,099
  22,310
  34,469
  51,548
  74,794
  105,523
  145,070
  194,726
  255,687
  329,008
  415,563
  516,035
  630,903
  760,450
  904,785
  1,063,866
  1,237,532
  1,425,533
  1,627,566
  1,843,304
  2,072,420
  2,314,618
  2,569,644
  2,837,304
  3,117,477
  3,410,119
  3,715,272
  4,033,061
  4,363,701
  4,707,491
  5,064,817
Total equity, $m
  443
  2,479
  3,830
  5,728
  8,310
  11,725
  16,119
  21,636
  28,410
  36,556
  46,174
  57,337
  70,100
  84,494
  100,532
  118,207
  137,504
  158,393
  180,841
  204,812
  230,269
  257,180
  285,516
  315,256
  346,386
  378,902
  412,808
  448,118
  484,856
  523,055
  562,757
Total liabilities and equity, $m
  15,542
  24,789
  38,299
  57,276
  83,104
  117,248
  161,189
  216,362
  284,097
  365,564
  461,737
  573,372
  701,003
  844,944
  1,005,317
  1,182,073
  1,375,036
  1,583,926
  1,808,407
  2,048,116
  2,302,689
  2,571,798
  2,855,160
  3,152,560
  3,463,863
  3,789,021
  4,128,080
  4,481,179
  4,848,557
  5,230,546
  5,627,574
Debt-to-equity ratio
  32.580
  8.730
  8.830
  8.880
  8.920
  8.940
  8.960
  8.970
  8.980
  8.980
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
Adjusted equity ratio
  0.029
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -171
  -122
  -66
  -58
  -63
  -91
  -155
  -267
  -443
  -697
  -1,043
  -1,494
  -2,063
  -2,758
  -3,586
  -4,553
  -5,662
  -6,912
  -8,303
  -9,833
  -11,499
  -13,297
  -15,223
  -17,273
  -19,444
  -21,733
  -24,136
  -26,652
  -29,280
  -32,021
  -34,873
Depreciation, amort., depletion, $m
  156
  696
  1,075
  1,608
  2,332
  3,291
  4,524
  6,072
  7,974
  10,260
  12,959
  16,092
  19,675
  23,714
  28,216
  33,176
  38,592
  44,455
  50,755
  57,483
  64,628
  72,181
  80,134
  88,481
  97,218
  106,344
  115,860
  125,770
  136,081
  146,802
  157,945
Funds from operations, $m
  -31
  574
  1,008
  1,550
  2,270
  3,200
  4,369
  5,805
  7,531
  9,563
  11,917
  14,598
  17,612
  20,957
  24,629
  28,623
  32,931
  37,543
  42,452
  47,650
  53,129
  58,884
  64,911
  71,207
  77,774
  84,611
  91,724
  99,118
  106,801
  114,781
  123,072
Change in working capital, $m
  -31
  195
  284
  399
  543
  718
  923
  1,160
  1,424
  1,712
  2,021
  2,346
  2,682
  3,025
  3,370
  3,715
  4,055
  4,390
  4,718
  5,038
  5,350
  5,656
  5,955
  6,250
  6,542
  6,834
  7,126
  7,421
  7,721
  8,028
  8,344
Cash from operations, $m
  0
  378
  724
  1,151
  1,727
  2,482
  3,446
  4,646
  6,107
  7,851
  9,895
  12,252
  14,930
  17,932
  21,259
  24,908
  28,875
  33,153
  37,735
  42,612
  47,779
  53,228
  58,956
  64,957
  71,231
  77,778
  84,598
  91,697
  99,080
  106,754
  114,728
Maintenance CAPEX, $m
  0
  -435
  -696
  -1,075
  -1,608
  -2,332
  -3,291
  -4,524
  -6,072
  -7,974
  -10,260
  -12,959
  -16,092
  -19,675
  -23,714
  -28,216
  -33,176
  -38,592
  -44,455
  -50,755
  -57,483
  -64,628
  -72,181
  -80,134
  -88,481
  -97,218
  -106,344
  -115,860
  -125,770
  -136,081
  -146,802
New CAPEX, $m
  -2,315
  -7,827
  -11,375
  -15,978
  -21,747
  -28,749
  -36,998
  -46,456
  -57,032
  -68,594
  -80,977
  -93,996
  -107,463
  -121,197
  -135,032
  -148,828
  -162,472
  -175,883
  -189,011
  -201,832
  -214,349
  -226,587
  -238,588
  -250,408
  -262,114
  -273,780
  -285,483
  -297,306
  -309,328
  -321,631
  -334,293
Cash from investing activities, $m
  -2,353
  -8,262
  -12,071
  -17,053
  -23,355
  -31,081
  -40,289
  -50,980
  -63,104
  -76,568
  -91,237
  -106,955
  -123,555
  -140,872
  -158,746
  -177,044
  -195,648
  -214,475
  -233,466
  -252,587
  -271,832
  -291,215
  -310,769
  -330,542
  -350,595
  -370,998
  -391,827
  -413,166
  -435,098
  -457,712
  -481,095
Free cash flow, $m
  -2,353
  -7,883
  -11,346
  -15,902
  -21,628
  -28,599
  -36,843
  -46,334
  -56,998
  -68,716
  -81,341
  -94,703
  -108,626
  -122,940
  -137,487
  -152,135
  -166,773
  -181,322
  -195,731
  -209,975
  -224,053
  -237,986
  -251,813
  -265,584
  -279,363
  -293,220
  -307,229
  -321,468
  -336,018
  -350,958
  -366,367
Issuance/(repayment) of debt, $m
  2,752
  7,211
  12,159
  17,079
  23,246
  30,729
  39,547
  49,656
  60,962
  73,320
  86,556
  100,472
  114,867
  129,547
  144,335
  159,081
  173,666
  188,001
  202,033
  215,737
  229,117
  242,198
  255,026
  267,660
  280,173
  292,642
  305,152
  317,789
  330,640
  343,790
  357,325
Issuance/(repurchase) of shares, $m
  0
  2,158
  1,417
  1,955
  2,645
  3,505
  4,549
  5,785
  7,217
  8,843
  10,660
  12,658
  14,826
  17,152
  19,623
  22,229
  24,958
  27,801
  30,751
  33,804
  36,956
  40,208
  43,559
  47,013
  50,574
  54,248
  58,042
  61,962
  66,018
  70,220
  74,576
Cash from financing (excl. dividends), $m  
  2,623
  9,369
  13,576
  19,034
  25,891
  34,234
  44,096
  55,441
  68,179
  82,163
  97,216
  113,130
  129,693
  146,699
  163,958
  181,310
  198,624
  215,802
  232,784
  249,541
  266,073
  282,406
  298,585
  314,673
  330,747
  346,890
  363,194
  379,751
  396,658
  414,010
  431,901
Total cash flow (excl. dividends), $m
  270
  1,485
  2,230
  3,132
  4,263
  5,636
  7,253
  9,107
  11,180
  13,447
  15,874
  18,427
  21,067
  23,759
  26,471
  29,176
  31,851
  34,480
  37,053
  39,567
  42,020
  44,419
  46,772
  49,089
  51,384
  53,671
  55,965
  58,283
  60,640
  63,052
  65,534
Retained Cash Flow (-), $m
  270
  -2,158
  -1,417
  -1,955
  -2,645
  -3,505
  -4,549
  -5,785
  -7,217
  -8,843
  -10,660
  -12,658
  -14,826
  -17,152
  -19,623
  -22,229
  -24,958
  -27,801
  -30,751
  -33,804
  -36,956
  -40,208
  -43,559
  -47,013
  -50,574
  -54,248
  -58,042
  -61,962
  -66,018
  -70,220
  -74,576
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -672
  812
  1,177
  1,618
  2,130
  2,704
  3,322
  3,964
  4,604
  5,214
  5,769
  6,241
  6,607
  6,848
  6,947
  6,893
  6,679
  6,302
  5,763
  5,064
  4,212
  3,213
  2,076
  810
  -577
  -2,076
  -3,679
  -5,378
  -7,168
  -9,042
Discount rate, %
 
  15.60
  16.38
  17.20
  18.06
  18.96
  19.91
  20.91
  21.95
  23.05
  24.20
  25.41
  26.68
  28.02
  29.42
  30.89
  32.43
  34.05
  35.76
  37.54
  39.42
  41.39
  43.46
  45.63
  47.92
  50.31
  52.83
  55.47
  58.24
  61.15
  64.21
PV of cash for distribution, $m
 
  -582
  600
  731
  833
  894
  910
  880
  810
  712
  597
  478
  365
  266
  185
  123
  77
  46
  26
  13
  7
  3
  1
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  67.2
  63.6
  60.5
  57.8
  55.5
  53.4
  51.6
  49.9
  48.4
  47.0
  45.8
  44.6
  43.6
  42.6
  41.7
  40.8
  40.0
  39.2
  38.5
  37.8
  37.2
  36.6
  36.0
  35.4
  34.8
  34.3
  33.8
  33.3
  32.8
  32.4

Cheniere Energy Partners, L.P. (Cheniere Partners) is a limited partnership formed by Cheniere Energy, Inc (Cheniere). The Company operates through liquefaction and regasification operations at the Sabine Pass LNG terminal segment. Through its subsidiary, Sabine Pass Liquefaction, LLC (SPL), it is developing, constructing and operating natural gas liquefaction facilities (the Liquefaction Project) at the Sabine Pass LNG terminal located in Cameron Parish, Louisiana, on the Sabine-Neches Waterway less than four miles from the Gulf Coast. Through its subsidiary, Sabine Pass LNG, L.P., it owns and operates regasification facilities at the Sabine Pass LNG terminal, which includes existing infrastructure of five LNG storage tanks with capacity of approximately 16.9 billion cubic feet equivalent, two marine berths that can accommodate vessels with nominal capacity of up to 266,000 cubic meters and vaporizers with regasification capacity of approximately four billion cubic feet per day.

FINANCIAL RATIOS  of  Cheniere Energy Partners (CQP)

Valuation Ratios
P/E Ratio -56.1
Price to Sales 8.7
Price to Book 21.7
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow -4.1
Growth Rates
Sales Growth Rate 307.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -20.5%
Cap. Spend. - 3 Yr. Gr. Rate -5.8%
Financial Strength
Quick Ratio 0
Current Ratio 0.7
LT Debt to Equity 3207.4%
Total Debt to Equity 3258%
Interest Coverage 0
Management Effectiveness
Return On Assets 0.5%
Ret/ On Assets - 3 Yr. Avg. -1.3%
Return On Total Capital -1.3%
Ret/ On T. Cap. - 3 Yr. Avg. -2.9%
Return On Equity -29.6%
Return On Equity - 3 Yr. Avg. -31.3%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 46.3%
Gross Margin - 3 Yr. Avg. 64.3%
EBITDA Margin 20.6%
EBITDA Margin - 3 Yr. Avg. -34.8%
Operating Margin 16.2%
Oper. Margin - 3 Yr. Avg. -20.2%
Pre-Tax Margin -15.5%
Pre-Tax Margin - 3 Yr. Avg. -95.4%
Net Profit Margin -15.5%
Net Profit Margin - 3 Yr. Avg. -95.4%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio -57.9%

CQP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CQP stock intrinsic value calculation we used $1100 million for the last fiscal year's total revenue generated by Cheniere Energy Partners. The default revenue input number comes from 2016 income statement of Cheniere Energy Partners. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CQP stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 15.6%, whose default value for CQP is calculated based on our internal credit rating of Cheniere Energy Partners, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Cheniere Energy Partners.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CQP stock the variable cost ratio is equal to 67.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $186 million in the base year in the intrinsic value calculation for CQP stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Cheniere Energy Partners.

Corporate tax rate of 27% is the nominal tax rate for Cheniere Energy Partners. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CQP stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CQP are equal to 1185.9%.

Life of production assets of 83.6 years is the average useful life of capital assets used in Cheniere Energy Partners operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CQP is equal to 29.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $443 million for Cheniere Energy Partners - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 337.896 million for Cheniere Energy Partners is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Cheniere Energy Partners at the current share price and the inputted number of shares is $9.6 billion.

RELATED COMPANIES Price Int.Val. Rating
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BWP Boardwalk Pipe 14.62 6.17  str.sell
ETP Energy Transfe 17.83 12.38  sell
CQH Cheniere Energ 25.33 0.81  str.sell
ENLK EnLink Midstre 16.08 2.71  str.sell
TEP Tallgrass Ener 46.25 18.00  str.sell

COMPANY NEWS

▶ CQP Ranks 10th in Terms of Total Returns among MLPs   [Oct-18-17 09:14AM  Market Realist]
▶ Can Cheniere Energy Partners Gain Upward Momentum from Here?   [Oct-04-17 07:44AM  Market Realist]
▶ MLP Rating Updates during the Week Ended September 29   [Oct-03-17 05:06PM  Market Realist]
▶ Cheniere Energy Has Risen 1.6% in September: Whats Next?   [Sep-25-17 04:13PM  Market Realist]
▶ Oil CEOs on Harvey's Impact in 90 Seconds   [Sep-08-17 09:07AM  Bloomberg Video]
▶ Cheniere CEO on Hurricane Harvey. LNG Supplies   [Sep-07-17 12:46PM  Bloomberg Video]
▶ Are Wall Street Analysts Still Bullish on Cheniere Energy?   [Aug-30-17 02:05PM  Market Realist]
▶ 3 Stocks to Buy With Dividends Yielding More Than 6%   [Aug-17-17 10:37AM  Motley Fool]
▶ How Cheniere Energy, Inc. Makes Most of Its Money   [Aug-16-17 09:50AM  Motley Fool]
▶ Cheniere Energy Partners posts 2Q profit   [Aug-08-17 11:36PM  Associated Press]
▶ Why Cheniere Energy Is Weak ahead of 2Q17 Earnings   [Aug-04-17 05:35PM  Market Realist]
▶ PAA, WPZ, MMP, and CQP: Last Weeks Key MLP Rating Changes   [Jul-25-17 07:41AM  Market Realist]
▶ 79% of Analysts Call Cheniere Energy a Buy   [Jul-20-17 10:35AM  Market Realist]
▶ Whats Driving Cheniere Energys Natural Gas Supply?   [Jul-18-17 10:39AM  Market Realist]
▶ 3 Stocks at All-Time Highs Still Worth Buying   [Jul-08-17 07:28AM  Motley Fool]
▶ Whats Driving Cheniere Energys Recent Market Performance?   [Jun-23-17 05:19PM  Market Realist]
▶ Are Wall Street Analysts Bullish on Cheniere Energy?   [Jun-08-17 10:36AM  Market Realist]
▶ Could Cheniere Energy Gain from the Current Gulf Rift?   [Jun-07-17 03:23PM  Market Realist]
▶ Are Wall Street Analysts Bullish on Cheniere Energy?   [May-25-17 09:07AM  Market Realist]
▶ Cheniere Energy Continues to Rally after US-China Trade Deal   [May-24-17 08:07AM  Market Realist]
▶ Cheniere Energy, Inc.: Buy at the High?   [May-23-17 01:03PM  Motley Fool]
▶ Cheniere Energy Partners posts 1Q profit   [09:02AM  Associated Press]
▶ Analysts Recommendations for Cheniere Energy   [Apr-11-17 02:35PM  Market Realist]
▶ What Wall Street Analysts Recommend for Cheniere Energy   [Apr-06-17 07:35AM  Market Realist]
Financial statements of CQP
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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