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 Year Ended 31 December 2021 – (FY21)

• GAAP Net Investment Income stood at $11 million in FY21 versus $29 million in FY20
• Increased Distributable Net Investment Income in FY21 by 52% YoY to $134 million versus $88 million in FY20
• Closed $1.7 billion of investments in FY21 versus $1.9 billion in FY20, indicating in a five-year average of $1.4 billion
• Pipeline stood over $4 billion as of the end of FY21 versus over $3 billion as of the end of FY20
• Increased dividend to $0.375 per share for Q1FY22, indicating a 7% rise over the dividend declared in Q4YF21.

Source: Company Reports, Analysis by Kalkine Group

Key Update

• On 7 April 2022, the company announced a private offering of $200 million in an initial principal amount of 0.00% green exchangeable senior notes due 2025. The settlement of the Notes is projected to be on 13 April 2022, subject to customary closing conditions.

Outlook

The company projects EPS to increase at a compounded annual rate of 10%- 13% from 2021-2024, relative to the 2020 baseline of $1.55 per share, which is equivalent to a 2024 midpoint of $2.40 per share. Further, the company anticipates dividends per share to grow at a compounded annual rate of 5%-8%. Also, the company believe in its strong financial performance reported in part and continues to innovate on CarbonCount metric for measuring the efficiency of capital to reduce carbon.

Key Risks

The company is exposed to the risk of changes in interest rates that could adversely impact the value of its assets and profitability. It is also prone to the risk of a decline in the level of government support that could harm its business. The decrease in the cost of energy generated by traditional sources of energy or continued low energy prices would result in a decline in the demand for the projects it invests in.

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 and 1-year returns of ~-21.13% and ~-19.82%, respectively. The stock is trading lower than the average of the 52-week high price of $65.55 and the 52-week low price of $34.66.

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 discount has been applied to peer average P/E multiple (NTM) (Peer Average), considering decreased Fee income in FY21 over FY20 and fall in Cash and cash equivalents in FY21 over FY20.

Considering the facts above, we give a “Buy” recommendation on the stock at the current market price of $41.73 per share, as on 10:04 am New York Time, USA (GMT-4) as of 8th April 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.