A Fundamental Valuation of Höegh LNG Holdings

Frederik Johnsen & Frederik Jørgensen Larsen

Student thesis: Master thesis


Höegh LNG is the largest operator in the FSRU industry with a total fleet of nine FSRU vessels and two LNG carriers. In addition to this, the firm will take delivery of FSRU#10 during Q2 2019. The holding company has been publicly listed at the Oslo Stock Exchange since 2011, while the Master Limited Partnership is publicly listed at the New York Stock Exchange. The purpose of this thesis is to conduct a valuation of Höegh LNG Holdings based on comprehensive strategic and financial analyses. The demand for LNG has increased significantly in recent years. Based on our strategic analysis, we expect the demand to continue increasing. This expectation is mainly related to global economic growth and an increased interest to reduce environmentally hazardous emissions. Major consumers of LNG such as China and South Korea are increasing the share of natural gas in their energy mix at the expense of coal and oil. Further on in the strategic analysis, we identified potential threats against Höegh LNG. The main threats were substitutes such as FSUs, pipelines and alternative energy sources as well as competitors in the industries. The financial analysis consists of profitability- and liquidity risk analyses. We observed a positive trend in the profitability of Höegh LNG, which is above the industry average. The liquidity risk analysis indicates an increased short-term risk, while the long-term risk is considered to be moderate. We calculated the fair value of Höegh LNG Holdings by applying the discounted cash flow model and the sum of the parts approach, using a WACC of 7,28%. By weighting the two models, we computed the fair value of 45,44 NOK per share.

EducationsMSc in Finance and Investments, (Graduate Programme) Final Thesis
Publication date2019
Number of pages117