Hawaiian Electric Industries

Watching the American Savings Bank given challenging macro conditions

Authored By
Analyst Name Julien Dumoulin-Smith
Analyst Email julien.dumoulin-smith@bofa.com
Analyst Designation Research Analyst
Analyst Region BofAS
Analyst Phone +1 646 855 5855
Analyst Name Paul Zimbardo
Analyst Email paul.zimbardo@bofa.com
Analyst Designation Research Analyst
Analyst Region BofAS
Analyst Phone +1 646 855 1470
Report Details
13 March 2023 Equity United States Electric Utilities

Hawaiian Electric Industries

Watching the American Savings Bank given challenging macro conditions

Authored By
Analyst Name Julien Dumoulin-Smith
Analyst Email julien.dumoulin-smith@bofa.com
Analyst Designation Research Analyst
Analyst Region BofAS
Analyst Phone +1 646 855 5855
Analyst Name Paul Zimbardo
Analyst Email paul.zimbardo@bofa.com
Analyst Designation Research Analyst
Analyst Region BofAS
Analyst Phone +1 646 855 1470
Report Details
13 March 2023 Equity United States Electric Utilities
Glossary
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BofA Securities does and seeks to do business with issuers covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

 
Reiterate Rating
UNDERPERFORM
Price
37.33
USD
Price Objective
37.00
USD
Upside
-0.9%
Market Cap
4,087
USD(mn)
Average Daily Value
16.34
USD(mn)
all data as of 13 March 2023
ESGMeterTM
High
ESGMeter is not indicative of a company's future stock price performance and is not an investment recommendation or rating. ESGMeter is independent of BofA Global Research's equity investment rating, volatility risk rating, income rating, and price objective for that company. For full details, refer to "BofA ESGMeter Methodology".
Ticker HE US
Company Financials
Reiterate Rating
UNDERPERFORM
Price
37.33
USD
Price Objective
37.00
USD
Upside
-0.9%
Market Cap
4,087
USD(mn)
Average Daily Value
16.34
USD(mn)
ESGMeterTM
High
all data as of 13 March 2023


What is ESGMeter?
ESGMeter is not indicative of a company's future stock price performance and is not an investment recommendation or rating. ESGMeter is independent of BofA Global Research's equity investment rating, volatility risk rating, income rating, and price objective for that company. For full details, refer to "BofA ESGMeter Methodology".

Key takeaways
  • Examining HE's banking subsidiary in light of the significant volatility and sector's underperformance. HE is expensive.
  • ASB equity decline YoY due to unrealized MtM as interest rates climbed. Portfolio yields 1.74%, well below Treasuries
  • ASB has historically been a source of dividends to the regulated utility. Sufficient liquidity but watching rates even closer

Hawaiian Electric Industries

FDIC: Federal Deposit Insurance Corporation
ASB: American Savings Bank
HTM: Held-to-maturity
AFS: Available-for-sale
FHLB: Federal Home Loan Bank
MtM: Mark to market

 

 

Hawaiian Electric Industries

HE has outperformed local banking peers recently

Reiterate Underperform on shares of Hawaiian Electric (HE) which is expensive relative to our view of the fundamentals and deserves to trade at a discount to utility peers due to its banking exposure. HE owns American Savings Bank (ASB), one of the larger banks in Hawaii. ASB represented ~33% of earnings in 2022, down from 41% in 2021 and we expect this to be 35%+ in future years. Hawaii banking peers Bank of Hawaii (BOH) and First Hawaiian Inc (FHB) have both been under pressure in recent days after the events surrounding Silicon Valley Bank (SIVB - not covered) and other lenders. BOH is -17% the past month and -6% on Friday. FHB was similarly -15% the past month and -3% on Friday. Peers BOH (39%) and FHB (52%) had a higher percentage of deposits below $250,000 than SVB Financial Group (3%) and Signature Bank (SBNY 6%) per S&P Global Market Intelligence. Sunday evenings joint statement by the Department of the US Treasury, Federal Reserve, and FDIC should help ease concerns but the event highlights the risks of higher interest rates for banks equity. Historically ASB has been a funding source for the regulated utility with $42Mn in 2022 and $59Mn in 2023. In 2023 management guides to no external equity and $50Mn dividends from the bank.

Examining the bank balance sheet: less equity than before

As of YE22 tangible common equity to assets was 4%, unchanged QoQ but down from 7%. The disclosed Tier 1 leverage was 7.8%, above the 5% "well capitalized" and 4% minimum requirements. ASB had $8,170MMn deposit liabilities as of 12/31/22 (92% of funding sources) versus $153Mn cash, $1,633Mn unused borrowing capacity from FHLB, and $1,640Mn unencumbered securities. The net unrealized losses on securities increased to $329Mn at YE22 up from $32Mn at YE21. This lowered shareholder equity to $469Mn from $728Mn and management described itself as having $194Mn+ of excess equity above the "well capitalized" levels. In October 2022, ASB transferred 66 AFS investments with a $755Mn fair value to HTM with a $206Mn unrealized loss at the time of transfer. The rationale for the change was "to mitigate the potential future impact to capital through accumulated other comprehensive loss and the impact of rising rates on the market value of the investment securities."

 

 

Estimates & Valuation

 

Estimates (Dec) (US$)

2020A

2021A

2022E

2023E

2024E

EPS

1.81

2.25

2.20

2.24

2.41

GAAP EPS

1.81

2.25

2.20

2.24

2.41

EPS Change (YoY)

-9.0%

24.3%

-2.2%

1.8%

7.6%

Consensus EPS (Bloomberg)

 

 

2.18

2.27

2.45

DPS

1.32

1.36

1.37

1.41

1.45

 

Valuation (Dec)

 

 

 

 

 

P/E

20.6x

16.6x

17.0x

16.7x

15.5x

GAAP P/E

20.6x

16.6x

17.0x

16.7x

15.5x

Dividend Yield

3.5%

3.6%

3.7%

3.8%

3.9%

EV / EBITDA*

16.0x

13.9x

14.0x

14.0x

13.3x

Free Cash Flow Yield*

1.1%

1.5%

3.4%

2.4%

3.7%

 

iQmethod SM Measures Definitions

Business Performance

Numerator

Denominator

Return On Capital Employed

NOPAT = (EBIT + Interest Income) × (1 − Tax Rate) + Goodwill Amortization

Total Assets − Current Liabilities + ST Debt + Accumulated Goodwill Amortization

Return On Equity

Net Income

Shareholders' Equity

Operating Margin

Operating Profit

Sales

Earnings Growth

Expected 5 Year CAGR From Latest Actual

N/A

Free Cash Flow

Cash Flow From Operations − Total Capex

N/A

Quality of Earnings

Numerator

Denominator

Cash Realization Ratio

Cash Flow From Operations

Net Income

Asset Replacement Ratio

Capex

Depreciation

Tax Rate

Tax Charge

Pre-Tax Income

Net Debt-To-Equity Ratio

Net Debt = Total Debt − Cash & Equivalents

Total Equity

Interest Cover

EBIT

Interest Expense

Valuation Toolkit

Numerator

Denominator

Price / Earnings Ratio

Current Share Price

Diluted Earnings Per Share (Basis As Specified)

Price / Book Value

Current Share Price

Shareholders' Equity / Current Basic Shares

Dividend Yield

Annualised Declared Cash Dividend

Current Share Price

Free Cash Flow Yield

Cash Flow From Operations − Total Capex

Market Cap = Current Share Price × Current Basic Shares

Enterprise Value / Sales

EV = Current Share Price × Current Shares + Minority Equity + Net Debt + Other LT Liabilities

Sales

EV / EBITDA

Enterprise Value

Basic EBIT + Depreciation + Amortization

iQmethod SMis the set of BofA Global Research standard measures that serve to maintain global consistency under three broad headings: Business Performance, Quality of Earnings, and validations. The key features of iQmethod are: A consistently structured, detailed, and transparent methodology. Guidelines to maximize the effectiveness of the comparative valuation process, and to identify some common pitfalls.

iQdatabase ® is our real-time global research database that is sourced directly from our equity analysts' earnings models and includes forecasted as well as historical data for income statements, balance sheets, and cash flow statements for companies covered by BofA Global Research.

iQprofile SM, iQmethod SM are service marks of Bank of America Corporation. iQdatabase ® is a registered service mark of Bank of America Corporation.

 
Hawaiian Electric Industries

Banking valuation discount not priced-in

HE currently trades at 14.7x 2025E, a -4% discount versus the electric utility sector at 15.3x. We believe a larger discounted is warranted for (1) the below-average utility EPS growth ~5% with performance incentive mechanisms; and (2) having 30-40% of EPS from the banking subsidiary. Our banking colleague rates both Bank of Hawaii and First Hawaiian Inc. as underperform. The two companies trade at ~13x and ~10x Consensus 2024E; respectively, both steeply discounted versus US utilities at ~16x.

Unrealized losses the investor focus on banks currently

Of the gross unrealized losses, $248.5Mn related to available-for-sale securities and $103Mn for held-to-maturity securities. Within these categories 90%+ were for mortgage-backed securities "issued or guaranteed by U.S. Government agencies or sponsored agencies."

Exhibit 1: American Savings Bank AFS and HTM Unrealized Gain/(Losses)

The unrealized losses have grown significantly YoY

For an accessible version Merrill clients call 800-637-7455; Merrill Edge Self-Directed clients call 877-653-4732

 American Savings Bank

 

2021A

2022A

Available for Sale

 

 

 

Gross Unrealized Gains

 

8

-

Gross Unrealized Losses

 

(52)

(249)

Net

 

(44)

(249)

 

 

 

 

Held to Maturity

 

 

 

Gross Unrealized Gains

 

2

3

Gross Unrealized Losses

 

(13)

(103)

Net

 

(12)

(101)

 

 

 

 

Total

 

(56)

(349)

Source: Company filings

BofA GLOBAL RESEARCH

HE describes limitations on its banking activities if the tangible equity capital ratio declines below 2% with further borrowing limitations if tangible equity becomes negative.

The 30Yr US Treasury was 1.9% on 12/31/21 versus 3.9% on 12/31/22 and is slightly lower at 3.7% currently. The fact that long-term interest rates have declined since 12/31/22 should help to keep the investment portfolio's valuation intact. ASB's disclosed weighted average investment yield was 1.74%.

See our full SOTP in our last note: Hawaiian Electric Industries: Incorporating PIMs in its 5% Utility LT Guide: Implicitly cautious update 15 February 2023.

 

Exhibit 2: Hawaiian Electric (HS US Equity) Equity performance vs XLU US Equity * .75 + (BOH US Equity + FHB US Equity) * .25

HE equity has outperformed a mix of utilities and Hawaiian banking peers to reflect earnings mix of combined entity

Exhibit 2: For an accessible version Merrill clients call 800-637-7455; Merrill Edge Self-Directed clients call 877-653-4732

Source: Bloomberg

BofA GLOBAL RESEARCH

 

 

 

Exhibit 3: American Savings Bank balance sheet and capital ratios

Equity has declined due to the unrealized losses on securities, still comfortably above minimums and capitalization thresholds for well capitalized.

For an accessible version Merrill clients call 800-637-7455; Merrill Edge Self-Directed clients call 877-653-4732

 American Savings Bank Balance Sheet

 

2021A

2022A

 

 

 

ASSETS

 

 

 

 

 

 

Cash and due from banks

 

100

153

 

 

 

Interest-bearing deposits

 

151

3

 

 

 

Restricted cash

 

-

-

 

 

 

Available-for-sale investment securities, at fair value

 

2,575

1,430

 

 

 

Held to maturity at amortized cost

 

522

1,252

 

 

 

Investment Securities

 

3,097

2,681

 

 

 

Stock in Federal Home Loan Bank, at cost

 

10

27

 

 

 

Loans receivable held for investment

 

5,211

5,979

 

 

 

Allowance for loan losses

 

(71)

(72)

 

 

 

Net Loans

 

5,140

5,907

 

 

 

Loans held for sale, at lower of cost or fair value

 

10

1

 

 

 

Other

 

591

692

 

 

 

Goodwill

 

82

82

 

 

 

Total Assets

 

9,182

9,546

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDER'S EQUITY

 

 

 

 

 

 

Deposit liabilities-noninterest-bearing

 

2,977

2,811

 

 

 

Deposit liabilities-interest-bearing

 

5,196

5,359

 

 

 

Other borrowings

 

88

695

 

 

 

Other

 

193

212

 

 

 

Total Liabilities

 

8,454

9,077

 

 

 

 

 

 

 

 

 

 

Common stock

 

-

-

 

 

 

Additional paid in capital

 

354

356

 

 

 

Retained earnings

 

411

450

 

 

 

Accumulated other comprehensive loss, net of tax benefits

 

 

 

 

 

 

Net unrealized losses on securities

 

(32)

(329)

 

 

 

Retirement benefit plans

 

(6)

(8)

 

 

 

Total Shareholder's Equity

 

727

469

 

 

 

Total Liabilities and Shareholder's Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

Banking Ratios

 

 

 

Minimum

Well Cap.

vs Min

Tier 1 Leverage

 

7.90%

7.80%

4.0%

5.0%

4.0%

Common Equity Ratio

 

13.30%

12.20%

4.5%

6.5%

4.5%

Tier 1 Capital Ratio

 

13.30%

12.20%

6.0%

8.0%

6.0%

Total Capital Ratio

 

14.30%

13.10%

8.0%

10.0%

8.0%

Tangible Common Equity to Tangible Assets - Actual

 

7.10%

4.10%

 

 

 

Source: Company filings

BofA GLOBAL RESEARCH

Below we highlight sections from HE's 10K

Risk section

Because the earnings of ASB depend primarily on net interest income, interest rate risk is a significant risk of ASB's operations. HEI and the Utilities are also exposed to interest rate risk primarily due to their periodic borrowing requirements, the discount rate used to determine pension funding requirements and the possible effect of interest rates on the electric utilities' rates of return. Interest rates are sensitive to many factors, including general economic conditions and the policies of government and regulatory authorities. HEI cannot predict future changes in interest rates, nor be certain that interest rate risk management strategies it or its subsidiaries have implemented will be successful in managing interest rate risk.

Interest rate risk also represents a market risk factor affecting the fair value of ASB's investment securities. Increases and decreases in prevailing interest rates generally translate into decreases and increases in the fair values of those instruments, respectively. Disruptions in the credit markets, a liquidity crisis in the banking industry or increased levels of residential mortgage delinquencies and defaults may result in decreases in the fair value of ASB's investment securities and an impairment, requiring ASB to write down its investment securities. As of December 31, 2022, ASB's investment in U.S. Treasury and federal agency obligations, and mortgage-backed securities have an implicit guarantee from the U.S. government. Decreases in the fair value of ASB's investment securities may also result in lower equity capital balances as unrealized losses in the available-for-sale investment securities portfolio are recorded as a decrease in equity capital through accumulated other comprehensive losses. The lower equity capital balance could result in a lower tangible equity capital ratio and restrict ASB's permissible activities if the tangible equity capital ratio falls below 2%. A negative tangible equity capital ratio would impact ASB's availability to borrow funds from the FHLB of Des Moines.

Accounting

Investment securities. Investments in debt securities are classified as held-to-maturity (HTM), trading or available-for-sale (AFS). ASB determines the appropriate classification at the time of purchase. Debt securities that ASB intends to and has the ability to hold to maturity are classified as HTM securities and reported at amortized cost. Marketable debt securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and reported at fair value, with unrealized gains and losses included in earnings. Marketable debt securities not classified as either HTM or trading securities are classified as AFS and reported at fair value. Unrealized gains and losses for AFS securities are excluded from earnings and reported on a net basis in accumulated other comprehensive income (AOCI) until realized.

Transfers of debt securities from the available-for-sale classification to the held-to-maturity classification are made at fair value at the date of transfer. The unrealized holding gain or loss at the date of transfer remains in AOCI and in the carrying value of the held-to-maturity investment security. [emphasis added]

Unrealized holding gains or losses that remain in AOCI are amortized or accreted over the expected life of the security as an adjustment of yield, offsetting the related amortization of the premium or accretion of the discount.

 

 

Company Description

Hawaiian Electric Industries (NYSE: HE) is a Hawaii based holding company comprised of an electric utility and a savings bank. The majority of the company is comprised of utilities, about 57% of its earnings at its utility subsidiaries Hawaiian Electric Company (HECO), Hawaii Electric Light (HELCO) and Maui Electric (ME).

 

Investment Rationale

We rate Hawaiian Electric Industries as Underperform with an increasingly cautious setup at the utility outweighing bank tailwinds. Decelerating capex and elevated O&M are likely to limit EPS upside while performance incentive mechanisms are proving punitive thus far. Overall, we see a discount as merited given below average growth, historical execution challenges, and near term risks to the plan.

 

 

iQmethod SM - Bus Performance*

 

 

 

 

 

(US$ Millions)

2020A

2021A

2022E

2023E

2024E

Return on Capital Employed

3.5%

4.2%

4.1%

4.1%

4.2%

Return on Equity

8.6%

10.4%

9.9%

9.7%

10.0%

Operating Margin

12.1%

13.5%

10.2%

12.4%

12.9%

Free Cash Flow

46

61

138

96

150

 

 

 

 

 

 

iQmethod SM - Quality of Earnings*

 

 

 

 

 

(US$ Millions)

2020A

2021A

2022E

2023E

2024E

Cash Realization Ratio

2.2x

1.5x

2.0x

2.0x

2.0x

Asset Replacement Ratio

1.6x

1.3x

1.4x

1.6x

1.4x

Tax Rate

17.0%

20.2%

20.1%

18.5%

18.6%

Net Debt-to-Equity Ratio

83.4%

88.8%

86.0%

85.2%

82.2%

Interest Cover

3.5x

4.1x

3.7x

4.2x

4.4x

 

 

 

 

 

 

Income Statement Data (Dec)

 

 

 

 

 

(US$ Millions)

2020A

2021A

2022E

2023E

2024E

Sales

2,580

2,850

3,742

3,029

3,091

% Change

-10.3%

10.5%

31.3%

-19.1%

2.0%

Gross Profit

NA

NA

NA

NA

NA

% Change

NA

NA

NA

NA

NA

EBITDA

550

632

632

630

664

% Change

-5.0%

15.0%

-0.1%

-0.3%

5.4%

Net Interest & Other Income

(68)

(81)

(81)

(77)

(78)

Net Income (Adjusted)

198

246

241

246

264

% Change

-9.2%

24.4%

-2.0%

2.0%

7.4%

 

 

 

 

 

 

Free Cash Flow Data (Dec)

 

 

 

 

 

(US$ Millions)

2020A

2021A

2022E

2023E

2024E

Net Income from Cont Operations (GAAP)

200

248

243

248

266

Depreciation & Amortization

238

246

251

254

264

Change in Working Capital

(79)

(126)

0

0

0

Deferred Taxation Charge

(2)

(5)

(5)

(5)

(5)

Other Adjustments, Net

72

13

0

0

0

Capital Expenditure

(384)

(315)

(350)

(400)

(375)

Free Cash Flow

46

61

138

96

150

% Change

-17.2%

34.4%

126.4%

-30.6%

55.7%

 

 

 

 

 

 

Balance Sheet Data (Dec)

 

 

 

 

 

(US$ Millions)

2020A

2021A

2022E

2023E

2024E

Cash & Equivalents

359

311

311

311

311

Trade Receivables

281

344

344

344

344

Other Current Assets

7,439

8,247

8,247

8,247

8,247

Property, Plant & Equipment

5,266

5,392

5,435

5,581

5,692

Other Non-Current Assets

1,659

1,528

1,528

1,528

1,528

Total Assets

15,004

15,823

15,865

16,012

16,123

Short-Term Debt

219

142

232

237

238

Other Current Liabilities

7,593

8,398

8,398

8,398

8,398

Long-Term Debt

2,119

2,322

2,244

2,297

2,306

Other Non-Current Liabilities

2,701

2,536

2,530

2,525

2,519

Total Liabilities

12,632

13,397

13,404

13,457

13,462

Total Equity

2,372

2,425

2,518

2,611

2,717

Total Equity & Liabilities

15,004

15,823

15,922

16,068

16,179

* Click for full definitions of iQmethodâ„  measures.

 

 

Hawaiian Electric Industries (HE)

Our PO of $37 for Hawaiian Electric Industries is based on a sum of the parts approach. We apply:

1) a 15.9x base 2025E sector peer forward P/E multiple is grossed up +5% to reflect capital appreciation across the sector. We apply a -1.0x discount to incorporate below-average growth profile and volatile historical performance.

2) a 2023E forward price to book value of 1.6x in-line with small-cap banking peers.

3) Apply an average P/E multiple to reflect parent expense.

Upside and downside risks are: 1) political, regulatory, and legislative changes, 2) capital expenditures, 3) inflation and operating costs, 4) bank loss reserves and margins, and 5) pandemics and natural disasters.

 

 

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Julien Dumoulin-Smith

 

First Solar, Inc.

FSLR

FSLR US

Julien Dumoulin-Smith

 

Generac Holdings Inc.

GNRC

GNRC US

Julien Dumoulin-Smith

 

Hannon Armstrong

HASI

HASI US

Julien Dumoulin-Smith

 

Idacorp

IDA

IDA US

Paul Zimbardo

 

NextEra Energy

NEE

NEE US

Julien Dumoulin-Smith

 

Nextracker Inc

NXT

NXT US

Julien Dumoulin-Smith

 

Northwest Natural Holdings

NWN

NWN US

Julien Dumoulin-Smith

 

NRG Energy

NRG

NRG US

Julien Dumoulin-Smith

 

OGE Energy Corp

OGE

OGE US

Julien Dumoulin-Smith

 

Ormat Technologies

ORA

ORA US

Julien Dumoulin-Smith

 

Portland General Electric Company

POR

POR US

Julien Dumoulin-Smith

 

Stem, Inc.

STEM

STEM US

Julien Dumoulin-Smith

 

TransAlta Corp

TAC

TAC US

Dariusz Lozny, CFA

 

TransAlta Corporation

YTA

TA CN

Dariusz Lozny, CFA

 

TransAlta Renewables Inc.

YRNW

RNW CN

Dariusz Lozny, CFA

UNDERPERFORM

 

American Water Works

AWK

AWK US

Julien Dumoulin-Smith

 

Avangrid

AGR

AGR US

Paul Zimbardo

 

Avista

AVA

AVA US

Julien Dumoulin-Smith

 

Black Hills Corporation

BKH

BKH US

Julien Dumoulin-Smith

 

Dominion Energy

D

D US

Paul Zimbardo

 

Edison International

EIX

EIX US

Paul Zimbardo

 

Evergy, Inc

EVRG

EVRG US

Julien Dumoulin-Smith

 

Eversource Energy

ES

ES US

Paul Zimbardo

 

EVgo Inc.

EVGO

EVGO US

Alex Vrabel

 

FirstEnergy

FE

FE US

Julien Dumoulin-Smith

 

Fluence Energy

FLNC

FLNC US

Julien Dumoulin-Smith

 

Fortis

YFTS

FTS CN

Dariusz Lozny, CFA

 

Fortis Inc

FTS

FTS US

Dariusz Lozny, CFA

 

FTC Solar

FTCI

FTCI US

Julien Dumoulin-Smith

 

Hawaiian Electric Industries

HE

HE US

Julien Dumoulin-Smith

 

MDU Resources Group, Inc.

MDU

MDU US

Dariusz Lozny, CFA

 

MGE Energy

MGEE

MGEE US

Julien Dumoulin-Smith

 

New Jersey Resources Corp

NJR

NJR US

Julien Dumoulin-Smith

 

NextEra Energy Partners

NEP

NEP US

Julien Dumoulin-Smith

 

Pinnacle West

PNW

PNW US

Julien Dumoulin-Smith

 

Southern Company

SO

SO US

Julien Dumoulin-Smith

 

Spire

SR

SR US

Julien Dumoulin-Smith

 

SunPower Corp.

SPWR

SPWR US

Julien Dumoulin-Smith

 

Tellurian Inc

TELL

TELL US

Julien Dumoulin-Smith

 

UGI Corp.

UGI

UGI US

Julien Dumoulin-Smith

 

Unitil Corporation

UTL

UTL US

Julien Dumoulin-Smith

RSTR

 

ONE Gas, Inc.

OGS

OGS US

Julien Dumoulin-Smith

 

Southwest Gas Holdings

SWX

SWX US

Julien Dumoulin-Smith

 

 

I, Julien Dumoulin-Smith, hereby certify that the views expressed in this research report accurately reflect my personal views about the subject securities and issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or view expressed in this research report.

 

 

 Important Disclosures

 

 

Hawaiian Electric (HE) Price Chart

Hawaiian Electric (HE) Price Chart: Shows up to three years of stock price history, and any changes to BofA Global Research’s opinion, price objective, analyst, and/or coverage status. For an accessible version Merrill clients call 800-637-7455; Merrill Edge Self-Directed clients call 877-653-4732.

The Investment Opinion System is contained at the end of the report under the heading "Fundamental Equity Opinion Key". Dark grey shading indicates the security is restricted with the opinion suspended. Medium grey shading indicates the security is under review with the opinion withdrawn. Light grey shading indicates the security is not covered. Chart is current as of a date no more than one trading day prior to the date of the report.

 

 

Equity Investment Rating Distribution: Utilities Group (as of 31 Dec 2022)

Coverage Universe

Count

Percent

Inv. Banking Relationships R1

Count

Percent

Buy

72

48.98%

Buy

51

70.83%

Hold

38

25.85%

Hold

29

76.32%

Sell

37

25.17%

Sell

25

67.57%

 

Equity Investment Rating Distribution: Global Group (as of 31 Dec 2022)

Coverage Universe

Count

Percent

Inv. Banking Relationships R1

Count

Percent

Buy

1853

52.58%

Buy

1040

56.13%

Hold

840

23.84%

Hold

493

58.69%

Sell

831

23.58%

Sell

404

48.62%

 R1 Issuers that were investment banking clients of BofA Securities or one of its affiliates within the past 12 months. For purposes of this Investment Rating Distribution, the coverage universe includes only stocks. A stock rated Neutral is included as a Hold, and a stock rated Underperform is included as a Sell.

 

 

FUNDAMENTAL EQUITY OPINION KEY: Opinions include a Volatility Risk Rating, an Investment Rating and an Income Rating. VOLATILITY RISK RATINGS, indicators of potential price fluctuation, are: A - Low, B - Medium and C - High. INVESTMENT RATINGS reflect the analyst's assessment of both a stock's: absolute total return potential as well as its attractiveness for investment relative to other stocks within its Coverage Cluster (defined below). There are three investment ratings: 1 - Buy stocks are expected to have a total return of at least 10% and are the most attractive stocks in the coverage cluster; 2 - Neutral stocks are expected to remain flat or increase in value and are less attractive than Buy rated stocks and 3 - Underperform stocks are the least attractive stocks in a coverage cluster. Analysts assign investment ratings considering, among other things, the 0-12 month total return expectation for a stock and the firm's guidelines for ratings dispersions (shown in the table below). The current price objective for a stock should be referenced to better understand the total return expectation at any given time. The price objective reflects the analyst's view of the potential price appreciation (depreciation).

Investment rating

Total return expectation (within 12-month period of date of initial rating)

Ratings dispersion guidelines for coverage clusterR2

Buy

≥ 10%

≤ 70%

Neutral

≥ 0%

≤ 30%

Underperform

N/A

≥ 20%

 R2Ratings dispersions may vary from time to time where BofA Global Research believes it better reflects the investment prospects of stocks in a Coverage Cluster.

INCOME RATINGS, indicators of potential cash dividends, are: 7 - same/higher (dividend considered to be secure), 8 - same/lower (dividend not considered to be secure) and 9 - pays no cash dividend. Coverage Cluster is comprised of stocks covered by a single analyst or two or more analysts sharing a common industry, sector, region or other classification(s). A stock's coverage cluster is included in the most recent BofA Global Research report referencing the stock. 

 

Price Charts for the securities referenced in this research report are available on the Price Charts website, or call 1-800-MERRILL to have them mailed.

BofAS or one of its affiliates acts as a market maker for the equity securities recommended in the report: Hawaiian Electric.

The issuer is or was, within the last 12 months, an investment banking client of BofAS and/or one or more of its affiliates: Hawaiian Electric.

BofAS or an affiliate has received compensation from the issuer for non-investment banking services or products within the past 12 months: Hawaiian Electric.

The issuer is or was, within the last 12 months, a non-securities business client of BofAS and/or one or more of its affiliates: Hawaiian Electric.

BofAS or an affiliate expects to receive or intends to seek compensation for investment banking services from this issuer or an affiliate of the issuer within the next three months: Hawaiian Electric.

BofAS or one of its affiliates is willing to sell to, or buy from, clients the common equity of the issuer on a principal basis: Hawaiian Electric.

The issuer is or was, within the last 12 months, a securities business client (non-investment banking) of BofAS and/or one or more of its affiliates: Hawaiian Electric.

BofA Global Research personnel (including the analyst(s) responsible for this report) receive compensation based upon, among other factors, the overall profitability of Bank of America Corporation, including profits derived from investment banking. The analyst(s) responsible for this report may also receive compensation based upon, among other factors, the overall profitability of the Bank's sales and trading businesses relating to the class of securities or financial instruments for which such analyst is responsible.

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