Hawaiian Electric Industries Inc.
) or HEI announced that it plans to commence a registered
underwritten public offering of up to 6,100,000 shares of its
common stock. J.P. Morgan Securities LLC, a unit of
J.P. Morgan Chase & Co.
) and Morgan Stanley & Co. LLC, a unit of
) are acting as joint book-running managers for the offering. In
conjunction with this offering, the underwriters will be granted
an option to purchase up to an additional 900,000 shares of HEI's
common stock solely to cover over-allotments, if any.
HAWAIIAN ELEC (HE): Free Stock Analysis
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HEI intends to use the net proceeds for investment in its utility
subsidiaries' capital expenditures, to repay borrowings incurred
to finance capital expenditures and for working capital purposes.
The offering will be made under HEI's existing shelf registration
statement filed with the Securities and Exchange Commission,
which became automatically effective on Nov 4, 2011.
Honolulu, Hawaii-based Hawaiian Electric Industries was founded
in 1891. The company along with its subsidiaries provides
electricity and banking services in Hawaii. The company mainly
utilizes renewable energy sources to produce electricity. The
company's market capitalization is $2.7 billion.
HEI supplies power to approximately 450,000 customers or 95% of
Hawaii's population through its electric utilities, HECO, Hawaii
Electric Light Company, Inc. and Maui Electric Company, Limited
and provides a wide array of banking and other financial services
to consumers and businesses through American Savings Bank,
F.S.B., one of Hawaii's largest financial institutions.
The tourism industry in Hawaii is recovering on the back of an
economic recovery in the U.S. and Japan. These two countries
generate the largest number of tourists to Hawaii. This is also
reflected in Hawaii's state visitor arrival. State visitor
expenditures also continued to grow. Hotel occupancies and room
rates remain higher year over year. Finally, Hawaii's
construction industry is also showing signs of recovery with a
rising trend of public contracts for new commercial and
industrial building permits.
Hawaiian Electric is progressing smoothly to comply with the
Hawaii Clean Energy Initiative (HCEI), which calls for generating
70% of its energy needs from renewable sources by 2030. The
Hawaii Public Utilities Commission (PUC) is also supportive of
the company's focus to reduce its dependence on imported fossil
fuels by substantially increasing the use of renewable energy.
The company plans to spend approximately $3 billion over the
five-year period ending in 2016 for capital expansion programs
with a distinct focus on renewable energy projects. Of the
projected $3 billion of capital expenditures, approximately 39%
are targeted for environmental compliance, infrastructure
investments for fuel and to integrate renewable sources into the
system; 38% are earmarked for transmission and distribution
projects; 13% for generation projects; and 10% for maintenance.
Along with long-term expected earnings growth of 6.4%, this Zacks
Rank #3 (Hold) stock also offers a solid dividend yield of 4.6%.
The company has been paying stable and consistent dividends since
1901, which adds to the attractiveness of its shares. Going
forward, we believe the company is well positioned to continue to
deliver attractive earnings growth with reduced risk and
volatility cumulating in an above-average dividend yield.
In the near term, we are more positive about
Pike Electric Corporation
) which carries a Zacks Rank #1 (Strong Buy).