Hannon Armstrong Sustainable Infrastructure Capital, Inc.

HASI Details

Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE: HASI) is engaged in climate solution investments, including energy efficiency, renewable energy, as well as other sustainable infrastructure markets.

Results For the First Quarter of 2022

• HASI has delivered GAAP EPS of $0.51 on the fully diluted basis for the first quarter of 2022 as compared to $0.61 for the same period in FY 2021
• The company has reported GAAP-based net investment income of $10.1 Mn for Q1 FY 2022 as compared to $4.0 Mn for the same period in 2021
• HASI was able to close $331 Mn of investments in Q1 FY 2022 as compared to $188 Mn in pcp. The portfolio grew by 28% YoY to $3.7 Bn.
• HASI has lowered the cost of funds as it has issued $200 Mn CarbonCount-based exchangeable notes in the month of April 2022. These would be maturing in 2025.
• The company has declared dividend of $0.375 per share.

Source: Analysis by Kalkine Group

Recent Update

HASI has recently announced 3 new multi-year partnerships. These partnerships are with leading non-profit organizations focused towards community resilience, careers in sustainability as well as energy efficiency building upgrades.

Outlook

Recently, HASI has affirmed its guidance that distributable EPS is anticipated to grow at the compound annual rate of 10%-13% from 2021 to 2024, relative to 2020 baseline of $1.55 per share. This is equivalent to 2024 midpoint of $2.40 per share. The company has mentioned that estimated more than 63,000 metric tons of carbon emissions would be avoided annually due to the transactions which HASI has closed in Q1 FY 2022.

The company is having more than $930 Mn of potential liquidity available in order to finance scheduled as well as anticipated investments.

Key Risks

The company’s business depends in part on the U.S. federal, state as well as local government policies. Therefore, a decline in the level of support from the government could impact its broader business. The company has been operating in the competitive market and future competition could impact the terms of its investments.

Valuation Methodology: Price/EPS Based Relative Valuation (Illustrative)

Technical Overview:

Chart:

Source: REFINITIV

Note: Purple Color Line Reflects RSI (14-Period)

Stock Recommendation

Notably, growth in NII led to robust performance in Q1 FY 2022 and places HASI well for the year. Considering its gain on the sale revenue, in addition to NII, HASI has demonstrated that its dual-revenue business model has been working well despite challenges.

The stock has been valued using Price/EPS multiple based relative valuation (on an illustrative basis) and the target price so arrived reflects a potential rise of low double-digit (in % terms). A slight premium has been applied to Price/EPS Multiple (NTM) (Peer Average) (approx) considering decent outlook as well as affirmation of its guidance.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Considering the aforementioned factors and the decent outlook, we give a “Buy” rating on the stock at the current market price of US$39.27, as on 10.26 am New York Time, USA (GMT-4) as of 07 June 2022.

Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI) is a part of Kalkine’s Global Green Energy Product

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined:-

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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