Excelerate Energy - Updated Investment Thesis
The winner in a potential LNG glut
Hi there, we hope you had a fantastic week !
Please find this brief summary of the topics we are covering today
The Week in the Markets
Our weekly summary with the best charts to understand what happened in the markets in 1 minute, along with explanations for those who want to dive deeper.
Equities, Bonds, Currencies, Alternative Assets, Macro Data, company commentaries, Earnings Season, and much more!
Equity Research
Excelerate Energy - LNG infrastructure provider that combines stable revenues from long-term contracts with both organic and inorganic growth opportunities (also secured under long and predictable agreements). After a drop of nearly 30% in just three months, the stock trades at barely 7x EV/EBITDA on a current run-rate basis (vs. ~12x industry average) and is among the best positioned to benefit both from rising demand in emerging markets and from a potential LNG glut driven by the wave of FIDs and liquefaction terminals coming online. Full thesis, assets, contracts, business model, valuation & independent opinion
IDT Corporation - Interview with the CFO of this already $2Bn market cap NYSE company. Full analysis also available (probably the most comprehensive on the internet about this company)
New Fortress Energy - Preview of the debt waterfall analysis we will publish this Wednesday, which includes an assessment of the company’s current situation, a detailed breakdown of each of its debt instruments (maturity, covenants, etc.), a valuation of each of the company’s assets, and a downloadable Excel debt waterfall model to evaluate the bonds under a restructuring scenario, including the impact of potential asset sales.
Portfolio Management
Including updates on our 3-stage monitor, comments on several companies, and our macro views, along with their respective movements in both equities and all asset portfolios.
Investor Resources
Financial models & Data Center Updates:
Nota: Toda esta publicación está disponible en Español en nuestra web
Disclaimer: This publication is for educational purposes only and should not be taken or considered as investment advice under any circumstances. Please consult with your financial advisor before making any investment decisions.
The Week in the Markets
Summary
A week of new highs for the major U.S. indices (finally, even for the Russell 2000, which posted its first record since 2021), this time celebrating the much-anticipated 25 bps Fed cut and expectations of two more cuts later in 2025.
Looking at the broader picture year-to-date, the clear winner so far has been the “debasement trade,” fueled by the irresponsible fiscal policies of the U.S., Europe, China, Japan—and most countries, really—that continue to expand the monetary base. Gold and Bitcoin are near record highs (+40% and +23%, respectively), silver is also approaching new highs (we will soon include it in our table), and the S&P 500 has gained 14% to all-time highs, while the U.S. dollar has fallen 10% year-to-date. Adding to this, with the U.S. administration pressing for another 150 bps in rate cuts over the next 15 months, it seems unlikely the trend will change.
Notably, higher-risk assets have performed strongly this week—such as highly leveraged companies, small caps, and emerging markets—all of which tend to benefit in this environment. And of course, the “Mag7” had yet another spectacular week, now up almost 20% year-to-date. One open question is the potential impact of the new law on foreign work visas passed this week. At first glance, large tech companies appear well positioned to absorb the costs (unlike smaller firms) and could even benefit from the change.
Lastly—and to no one’s surprise—analyst consensus is already leaning toward a bullish fourth quarter, with the dollar expected to remain weak and head toward the 1.22–1.25 € range, while both gold and Bitcoin continue advancing to new record highs. How difficult it was to say this five months ago—and how difficult it is for analysts to argue the opposite now. We’ll see…
Fed Meeting – September 2025
Decision & Projections: The Fed cut rates by 25 bps, in line with expectations, while keeping balance sheet reduction unchanged. Policymakers project two additional cuts in 2025 (bringing rates down to ~3.6%), followed by 3.4% by end-2026 and 3.1% by end-2027.
Rates: The Fed cut rates by 25 bps, as expected, leaving balance sheet reduction unchanged. Projections signal two more cuts this year (to ~3.6% by end-2025), 3.4% in 2026, and 3.1% in 2027. Powell stressed there was no broad support for a 50 bps cut and framed the move as risk management rather than a policy shift, noting Fed rate changes have limited impact on housing but that defaults are rising.
Economy: Powell acknowledged growing risks to employment: unemployment remains low but has begun to rise, while hiring has slowed, partly due to immigration shifts. He admitted the labor market can no longer be called “solid.” GDP moderation reflects weaker consumer spending, and Powell warned that layoffs could quickly drive up unemployment given the low pace of new hiring.
Inflation: Goods inflation has picked up due to tariffs, estimated to add 0.3–0.4pp to core PCE, while services disinflation continues. Inflation risks are lower than in April, but Powell highlighted uncertainty as companies plan to pass higher costs to consumers, though this has not yet occurred.
US Retail sales surprised on the upside in August, +0.6% month-on-month, triple what was expected and the third straight monthly gain. On the flip side, housing data was weak: starts fell 8.5%. Still, lower mortgage rates and hopes of more Fed cuts are keeping sales expectations alive.
U.S.–China & TikTok: Trump and Xi spoke on Friday, and afterwards Trump said they’d agreed on U.S. ownership of TikTok and made progress on trade talks. We’ll see if that translates into something real, but the headlines helped put U.S.–China relations back in focus and gave tech another boost.
Bank of England: The BoE left rates at 4% but slowed its bond sales program to £70bn from £100bn, worried about the pressure on gilts. Governor Bailey tried to sound optimistic on inflation moving closer to target, but also made clear that any future cuts will be slow and cautious.
UK inflation & jobs: CPI stayed flat at 3.8% in August, but wage growth is still running hot at 4.7%. Unemployment held at 4.7%, yet payroll data showed the seventh consecutive monthly drop in employees—signs that the labor market is finally starting to cool (
Let’s see how the labour market is affected by the H-1B Visa policy
Updated Investment Thesis: Excelerate Energy
Excelerate Energy is an LNG infrastructure provider focused on the downstream segment of the business, including the regasification of natural gas and natural gas-to-power. The company has positioned itself to benefit from the increasing role of natural gas in power generation during the foreseeable transition from fossil fuels to renewable energy over the next 25 years.
Since its founding in 2003, Excelerate has primarily concentrated on the downstream segment, particularly offshore regasification (owning 20% of the global FSRU fleet and 27% of global capacity). This is complemented by its onshore business, which expanded significantly this year with the well-known $1.05 billion acquisition of New Fortress Energy’s Jamaica operations (onshore LNG import terminals, power plants, and natural gas sales contracts).
Excelerate Energy is distinguished by having its assets secured under long-term contracts (leases and gas sales), with most of its revenues highly predictable (the average duration of FSRU contracts is 7 years—with extensions—while Jamaica contracts average 16 years).
Currently, the company generates nearly $500 million in run-rate EBITDA with several growth opportunities (both organic—such as a new FSRU coming online in 2026 and growth in the Jamaica business—and inorganic through M&A). It also boasts a very healthy balance sheet, a solid management team, and strong fundamental tailwinds. We believe that the tremendous number of FIDs and liquefaction terminals coming online during 2024–2028 will drive significant demand for import terminals (like those provided by Excelerate), alongside low LNG prices that will increase downstream demand.
Despite all this, the company trades at barely 7x EV/EBITDA after falling more than 20% from recent highs over the past four months, and we believe it remains one of the industry’s best-kept secrets (we cover most of the companies in this space, and this is by far one of the least followed).
Today, our goal is to analyze in detail:
Company’s assets (10 FRSU, + new building + conversion, + onshore terminals) and each contracts (including back-to-back sales agreements)
Business model (explaining each part of the LNG supply chain and economics)
Key points of its thesis
Growth opportunities (Jamaica investment plan, FRSUs, other organic opportunities such as Vietnam & potential M&A)
Financials (detail about each type of debt)
Valuation and target price
Independent opinion
Before we begin and to recap on the Natural Gas industry (for which we published a guide explaining it and with an attached Excel detailing all existing assets and publicly traded companies linked to the industry):
FRSU - Floating Regasification Unit. It is used to quickly provide infrastructure to a country that has an energy need for natural gas without having to develop a costly structure. For example, Excelerate signed an FRSU in Finland and another in Germany in 2022 to help alleviate the energy crisis.
Arbitrage - As the natural gas market is made up of "energy islands," it refers to the business of buying in one and selling in another. The common case is buying HH (United States) and selling in Europe (TTF) or Asia (JKM).
Liquefaction contracts - Until 3 years ago, most contracts were $2.5 + 115% Henry Hub, which was implemented by the pioneer Cheniere. Due to the tremendous price differences in recent years, some contracts have started to be made with a sales price where the value of TTF and JKM also comes into play (more beneficial for the exporter)
