Key insights
- The analysis suggests Cheniere ($LNG) is undervalued due to overlooked factors in consensus EBITDA estimates, including a tax credit, CMI upside, and the impact of a Qatar supply disruption. With 90% of production under long-term fixed-fee contracts, a $6.6B revenue floor provides downside protection. A potential catalyst is the Q1 earnings call on May 7, where management commentary on the Qatar situation could force model revisions and an EBITDA beat.
Short version:
Cheniere is mispriced because consensus EBITDA excludes a one-time $370M alt-fuel tax credit, structurally underestimates CMI upside from wide JKM/Henry Hub spreads, and treats the 12.8 MTPA Qatar Ras Laffan force majeure (3–5 year repair timeline) as temporary — while $6.6B of next-12-months fixed-fee revenue caps downside in every scenario.
Key points:
- Street at 11.24× NTM EV/EBITDA on $7,568M 2026 EBITDA with three items ($370–626M) completely absent * 90% of production under long-term fixed-fee SPAs → $235/share equity value on just the contracted floor at 11× * Current price $260 → structural mispricing, not a commodity call * Catalyst: Q1 earnings, May 7 (Fusco framing of Qatar as “structural” would force model rebuilds, EDBITA beat)
This is not a commodity bet — it’s a modeling arbitrage on a best-in-class contracted franchise with asymmetric upside from the supply shock.
Full primary-source write-up (10-K page 47, earnings transcripts, Al-Kaabi quotes, spot data, etc.) here: https://darrenleung1.substack.com/p/cheniere-has-a-66b-floor-and-a-255
Happy to get pushback on the Qatar repair timeline, CMI guidance floor, or the durability of the fixed-fee contracts.