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 Q3FY21 (For the Quarter Ended 30 September 2021)

• Total revenue stood at $48.88 million in Q3FY21, largely unchanged from Q3FY30, as higher interest income due to a larger portfolio and higher average rate, was offset by lower gain on sale and fee income.
• GAAP EPS stood at $(0.04) on a fully diluted basis for Q3FY21 versus $0.28 in Q3FY20. Further, the reported $0.41 distributable EPS on a fully diluted basis for Q3FY21 up 14% YoY.
• The portfolio increased 45% YoY to $3.2 billion and Managed Assets up by 28% YoY to $8.2 billion.
• Declared dividend of $0.35 per share.

Source: Company Reports, Analysis by Kalkine Group

Recent Update

• On 25 January 2022, the company advised that it would release its Q4FY21 and FY21 results after market close on 17 February 2022, to be followed by a conference call at 5:00 PM (Eastern Time).

Outlook

The company anticipates annual distributable EPS to grow at a CAGR 7-10% from 2021 to 2023, relative to the 2020 baseline of $1.55 per share, which is equivalent to a 2023 midpoint of $1.98 per share. The company also anticipates that annual dividends per share will increase by 3-5% CAGR from 2021 to 2023.

Besides, with the launching of a $100 million CarbonCount-based Commercial Paper Note Program in Q3FY21, the first such program in the United States along with the other pillars of its funding platform in place, the company holds more than $960 million of potential liquidity obtainable to finance scheduled and anticipated investments.

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 stock is trading lower than the average price of the 52-week low-high range for the stock at $34.66–$65.90, respectively.

The stock has been valued using a Price/EPS 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 Price/EPS multiple (NTM) (Peer Average), considering the net loss posted by the company in Q3FY21, along with the longer cash conversion cycle of 248 days in Q3FY21 versus industry median of 12.5 days.

Considering the factors above, we give a “Buy” recommendation on the stock at the current market price of $40.42 per share as of 16^th February 2022 (Time: 10:00 AM, NY, USA).

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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