Introduction
The small and largely unknown ethanol-focused Green Plains Partners (GPP) as a Master Limited Partnership would appeal to income investors, if not for their currently low distribution yield of slightly under 4.00%. Whilst
Green Plains Partners: Still Choked In 2021, But 2022 Could See A 10%+ Yield
Summary
- Green Plains Partners has seen a solid start to 2021 but they are still choked by their credit facility repayment terms for the remainder of the year.
- Both their net income and their underlying operating cash flow increased modestly during the first quarter of 2021, thereby supporting finances.
- They are producing ample free cash flow that in theory could easily send their current low distribution yield to a very high-double-digit level of 10% on current cost.
- The only issue prohibiting this is making their choking credit facility repayment installments and even after these, it will still require refinancing or further asset divestitures before year-end.
- Given this mixed situation, I believe that maintaining my neutral rating is appropriate for the time being but it could be upgraded in the future once liquidity risks ease.
I primarily focus on income investments, as well as deep value and contrarian opportunities.
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