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, and other sustainable infrastructure markets.

Result Performance for the first quarter of FY22 -

• The company reported an increase in total revenue by $7 million, compared to Q1FY21 driven by higher interest income and coupled with higher fee income.
• The portfolio grew by 28% y-o-y to $3.7 billion during the quarter.
• GAAP EPS on a fully diluted basis in Q1FY22 stood at $0.51, compared to $0.61 reported in Q1FY21.
• The Group reported an increase in reported GAAP-based Net Investment Income to $10.1 million in Q1FY22, compared to $4.0 million reported in the prior corresponding period.
• The company closed $331 million of investments in Q1FY22, compared to $188 million in Q1FY21.

Source: Company Reports, Analysis by Kalkine Group

Key Update

• Recently the company has announced three new multi-year partnerships with non-profit organizations - Groundswell, SEI, and Southface Institute, focused on community resilience, careers in sustainability, and energy efficiency building upgrades. The partnership is expected to provide funding for access to affordable clean energy and health-improving products.

Outlook

Based on the improving fundamentals the Group expects that annual distributable earnings per share will grow at a compounded annual rate of 10% to 13% from 2021 to 2024, with respect to 2020 baseline of $1.55 per share. This translates to a 2024 midpoint of $2.40 per share. It also anticipates growth of annual dividends per share to be at a compounded annual rate of 5% to 8%.

Key Risks

The Group is responsible for generating desired returns to its investors and any challenges towards achieving it might put a risk to the future capital needs. The hike in interest rates also might push the interest expenses in the near term.

Valuation Methodology: Price/Earnings Per Share Based Relative Valuation (Illustrative)

Technical Overview:

Daily Price Chart

Source: REFINITIV, Note: Purple color line reflects Relative Strength Index (14-Period)

Stock Recommendation

The company has delivered 6-month returns of ~-37.23%. The stock is trading lower than the average of the 52-week high price of $65.74 and the 52-week low price of $33.61.

The stock has been valued using a P/E multiple based relative valuation (on an illustrative basis), and the target price so arrived reflects a rise of low double-digit (in % terms). A slight premium has been applied to peer average P/E multiple (NTM) (Peer Average), considering the growth in the portfolio, and expected growth in earnings per share.

Considering the facts above, we give a “Buy” recommendation on the stock at the current market price of $38.58 per share, as on 10.10 am New York Time, USA (GMT-4) as of 20 May 2022.

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.

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.

Disclaimer

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