Performance at month end

RNS Number : 5797U

Impax Environmental Markets PLC

18 October 2010

 



IMPAX ENVIRONMENTAL MARKETS plc

All information is at 30 September 2010 (unless otherwise stated) and unaudited.

DATA AND PERFORMANCE

Pricing
NAV (pence)	126.88
Share price (pence)	116.70
Premium/(discount) (%)	(8.0)
Data
Total fund size (NAV) ( m)		409.4
Market capitalisation (m)		376.2
Management fee (%)		1.0
Established		22nd February 2002
Fund structure		Investment Trust
Number of holdings (including unlisted)		90
Exchange		London
Currency		GBP
ISIN Number		GB0031232498
Sedol		3123249
Reuters RIC code		IMPX.L
Bloomberg code		IEM LN

Performance	IEM Net Asset Value*	MSCI World Global Small Cap**
1 month %	+7.8	+8.8
3 months %	+5.0	+8.8
1 year %	+4.5	+15.2
3 year %	+2.4	+13.8
5 year %	+36.2	+28.4

* Performance data is for undiluted NAV ex income

** Total return

TOP TEN HOLDINGS

Company	Holding %		Description	Country
LKQ	2.5		Value added waste processing	US
Nibe	2.3		Buildings energy efficiency	Sweden
Clean Harbors	2.3		Hazardous waste	US
Telvent	2.3		Industrial energy efficiency	Spain
Pall Corp	2.2		Water treatment equipment	US
Regal-Beloit	2.0		Industrial energy efficiency	US
Nalco	2.0		Water treatment equipment	US
Horiba	1.9		Environmental testing and gas sensing	Japan
China Longyuan	1.9		Renewable energy developer	China
Itron	1.9		Value added waste processing	China
TOTAL	21.3

PORTFOLIO ANALYSIS*

Geographical		Company Size
US and Canada	35%	>$2bn	33%
EU and EFTA	37%	$200-2bn	52%
Rest of the World	22%	<$200m	5%
Cash	6%	Unprofitable & private	4%
		Cash	6%
Sectoral		PE ratios
Energy efficiency	22%	PER >20x	25%
Renewable energy	20%	PER  15-20x	36%
Services	5%	PER <15x	27%
Waste management	24%	Unprofitable	6%
Pollution Control	5%	Cash	6%
Water Infrastructure	18%
Cash	6%

IMPAX ENVIRONMENTAL MARKETS plc

MANAGER'S COMMENTARY (Q3 2010 - 30 September)

During the quarter the Company NAV rose 5.0% compared to the MSCI World Small Cap which rose 8.8%. In Alternative Energy & Energy Efficiency, energy efficiency continued to outperform.  Nibe (buildings energy efficiency, Sweden) rose on the back of strong Q2 results and evidence of strong markets in crucial Q3, while Telvent (industrial Energy Efficiency, Spain) benefited from cheap valuation and increasing confidence on reaching revised guidance, particularly on cash flow.  Abengoa (biofuels, Spain) rose on the back of a strong Q2 and an increased appetite for Spanish equities. The Wind sector was weak, driven by profit warnings by wind turbine manufacturers and IPPs lowering installation targets. Vestas (wind power generation equipment, Denmark) issued a Q2 profit warning while EDP Renovaveis (renewable energy developers & IPPs, Spain) suffered continued weakness due to weak power prices, power demand and regulatory uncertainty in the US, leading to reduced MW installations and consequent downgrades. In Water Treatment and Pollution Control, positive highlights were increased M&A activity, with Cinven (utility services, UK) coming forward with a higher offer to buy Spice Holdings (water infrastructure, UK) and strong Q2 results for both Pall Corp (water treatment equipment, US) and Nalco (water treatment equipment, US).  Overall the sector underperformed in Q3, with cooling construction datapoints creating headwinds for Mueller Water (water infrastructure, US). Horiba (environmental testing & gas sensing, Japan) and Kurita (water treatment equipment, Japan) suffered from the strength of the yen and exposure to the peaking semiconductor capex.  In Waste Technologies and Resource Management, general waste management outperformed due to cheap valuation and trough earnings while hazardous waste was weak as investors took profits following strong prior performance. Transpacific (diversified waste management, Australia) rose on the back of solid FY results (FFYE June 2010) and increased confidence in the strength of Australia/New Zealand economic growth in 2011. Shanks (diversified waste management, UK) rose following the successful sale of PFI projects and renewed M&A speculation.  Stericycle (hazardous waste management, US) and Clean Harbors (hazardous waste management, US) fell due to profit taking following a strong Q2, where pricing was driven up the Deepwater Horizon oil spill. Rhetoric was raised by leaders in Europe, US and China on the role of cleantech as a driver for job creation, although recent climate meetings in Bonn and Tianjin have not brought the international community closer to a binding climate treaty ahead of the Cancun meeting in December. The US political deadlock has prevented any federal climate or energy legislation. The latest attempt is Senator Bingeman's stand-alone RES-bill which is expected to come to vote after the November mid-term elections. It has a slim chance of passing. The EPA is stepping up its role in the absence of federal legislation and will introduce a contested regulation, limiting GHG emissions based on the Clean Air Act, in January. At state level California has a crucial RES-bill coming for vote in November, which would require utilities to generate 33% of renewable energy power by 2020. California is the leader in US state environmental legislation and this vote is therefore seen as crucial. European news flow has been mixed. France and the Czech Republic cut solar feed-in tariffs with talk of possible volume caps. Germany announced 12-year extensions to existing nuclear plants and cuts in feed-in-tariffs in the over-heated solar sector but remains committed to renewables long-term. The target is 80% of energy from renewables by 2050, with focus on wind, bioenergy and grid expansion. Asian environmental policy has been positive with more colour on the 12th 5-year plan in China. Government procurement alone should see a fleet of ½ million electric vehicles by 2012, a domestic national emissions trading scheme, the announcement of carbon and resource taxes, and grid investment as well as RMB5 trillion budget for non-fossil fuels development to 2020, with focus on wind, natural gas and nuclear. Taiwan and Malaysia announced ambitious new renewables targets and India is to start a renewables trading programme in October. Korea aims to build 1 million electric vehicles by 2020. In the water sector Abu Dhabi plans to stockpile vital supplies of water underground, an investment of Dh1.6 billion. Abu Dhabi currently depends on desalination to supply 98% of its potable water and the reservoir could supply country's water needs for three months if desalination plants failed. China plans to focus on establishing load-control objectives for phosphorous/nitrogen in key river basins in its next 5 year plan, developing TMDL-based water discharge limits and research on drinking water source protection, water pollution prevention and treatment for offshore areas.

Latest information available at: http://www.impax.co.uk/funds/listed-equity-funds/impax-environmental-markets-plc

Impax Asset Management Limited

18 October 2010

 

END

 

 

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