Value Investor's Edge Live #43: Flex LNG: Surging Cash Flows And Dividends

Marketplace Roundtable

Oeystein Kalleklev, CEO of Flex LNG (FLNG), a leading ultramodern LNG shipping company, joined J Mintzmyer's Value Investor's Edge Live on June 10, 2021, to discuss the LNG shipping markets and capital allocation priorities for Flex LNG. Flex has set an upsized dividend level of $0.40/qtr and appears set to support this payout, and potentially even higher payouts, due to excellent time charter fixtures. Despite this progress, FLNG still trades at a significant discount to NAV if we utilize newbuild asset parity, which I estimate at nearly $20/sh. This implies over 45% of equity upside in addition to a nearly 12% income yield. FLNG is likely to raise the dividend even further by late 2021!
This interview and discussion of the underlying LNG global markets is relevant for anyone with LNG shipping or LNG export infrastructure investments, including Cheniere (LNG), Cheniere Partners (CQP), GasLog Partners (GLOP), Golar LNG (GLNG), Hoegh LNG Partners (HMLP), Teekay LNG Partners (TGP), and Tellurian (TELL).
Topics Covered
(3:00) What is driving the strength in LNG markets?
(9:00) What is the spread between MEGI/XDF and TFDE rates?
(12:00) Any additional charter coverage planned?
(14:00) Any appetite or opportunity for fleet growth?
(17:30) Potential to increase share purchase authorization levels?
(21:00) Commentary on dividend program and sustainability.
(23:45) What are the primary risks in this market?
(28:00) Any impacts/risk to upcoming regulations? Any benefits?
(33:00) Technical difference between ME-GI, ME-GA, and X-DF designs?
(38:30) Any concern about the LNG orderbook? Qatar orders?
(47:15) Commentary on recent interest rate swap transactions?
(52:30) What differentiates FLNG from peers and other shipping firms?
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