UPDATE: Morgan Stanley Initiates Coverage On Hoegh LNG Partners LP On Floating Regasification Play With Extensive Cover

In a report published Tuesday, Morgan Stanley analyst Fotis Giannakoulis initiated coverage on

with an Equal-Weight rating and $24.00 price target. In the report, Morgan Stanley noted, “HMLP is focused exclusively on the floating regasification segment of the LNG market, with a fleet of 3 modern purpose-built FSRU (1 fully owned, 2 in a 50/50 JV). It distributes an annual $1.35/unit that is well protected at 1.1x total unit coverage and by the 17 year average contract coverage for its initial fleet. HMLP's distribution is guided to rise by 25%+ with the drop down of one already contracted FSRU, bringing it to ~$1.70 per unit by end-2015. We apply a 7% forward yield, equal to its peers' target yield on their distribution after contracted dropdowns, resulting in our $24 PT. Our $32 bull case values the stock at a 6% yield and ~$1.90 distribution, assuming chartering and dropdowns of two uncontracted new builds and further growth of the drop down pipeline. Our $16 bear case values the stock at NAV.” Hoegh LNG Partners LP closed on Friday at $25.89.