Performance at month end

RNS Number : 0899K

Impax Environmental Markets PLC

15 August 2012

 



IMPAX ENVIRONMENTAL MARKETS plc

All information is at 31 July 2012 (unless otherwise stated) and unaudited.

DATA AND PERFORMANCE

Pricing
NAV (pence)	115.75
Share price (pence)	94.25
Premium/(discount) (%)	(18.57)
Data
Total fund size (NAV) ( m)		GBP 322.6
Market capitalisation (m)		GBP 262.7
Management fee (%)		1.0
Established		22nd February 2002
Fund structure		Investment Trust
Number of holdings (excluding unlisted)		76
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**	FTSE ET50**
1 month %	0.0	0.0	-2.0
3 months %	-6.2	-2.3	-6.2
YTD %	-0.1	+5.3	-5.7
1 year %	-11.1	-1.9	-22.1
3 year %	+7.8	+48.9	-26.3
5 year %	-7.7	+24.9	-37.8
7 year %	+33.1	+46.8	+2.5

* Performance data incorporates undiluted NAV until exercise of warrants on 25 June 2010

** Total return

TOP TEN HOLDINGS

Company	Holding %	Description	Country
Regal-Beloit	3.5	Electric motors	US
Nibe	3.4	Ground source heat pumps	Sweden
Clean Harbors	3.1	Hazardous waste treatment	US
LKQ	2.6	Automotive recycling	US
Watts Water	2.6	Water control products	US
Pall	2.5	Filtration	US
Pentair	2.5	Water treatment	US
Clarcor	2.5	Air pollution control	US
RPS Group	2.5	Environmental consulting	UK
Spirax-Sarco	2.4	Steam based energy efficiency	UK
TOTAL	27.6

PORTFOLIO ANALYSIS

Geographical US and Canada 42% Europe 39% Japan 5% Asia ex Japan 12% Australia 1% Cash 1%		Company Size >$2bn 34% $500m-2bn 44% <$500m 17% Private 4% Cash 1%
Sectoral Energy efficiency 31% Alternative energy 13% Environmental support services 5% Waste management 23% Pollution control 7% Water infrastructure 20% Cash 1%		PE Ratios >20x 14% 15-20x 24% <15% 55% Private and other* 6% Cash 1% Average 13.7x

*Where analyst estimates unavailable or stocks unprofitable

IMPAX ENVIRONMENTAL MARKETS plc

MANAGER'S COMMENTARY (July 2012)

During July, markets remained highly volatile due to the Spanish banking system bailout worries, which drove up sovereign bond yields. The major central banks' monetary policies will remain accommodating in this context and additional easing measures remain possible. However, some progress appears to have been made in European sovereign-debt crisis.

Performance & Environmental Markets Update

Positive macro news led to stronger performance from European stocks and general/hazardous waste companies, which also rose on early signs of good results. US water infrastructure companies, such as Pentair, benefitted from the drought and exposure to recovery in US construction markets. M&A activity drove performance with RPS Group (environmental consulting, UK) making an acquisition to complement their Australian business.

July proved a challenging month for the LED sector, with renewed concerns on overcapacity impacting Epistar (LED manufacturer, Taiwan). Trina Solar (solar wafers, cells and modules, China) underperformed due to solar overcapacity and following a disappointing pre-release of Q2 results with downgraded earnings expectations. Ormat (geothermal, US) and Tomra (reverse vending machines, Norway) both fell on profit taking following a strong Q2.

In July, the European Commission announced plans to tighten rules for CO₂ emissions for both cars and vans. Cyprus took over the EU rotating presidency from Denmark and during its 6 month tenure will be focusing on the Global UN Climate talks as well as water issues. In the UK, a draft Water Bill was sent to Parliament with the main focus on: enabling non-household customers to switch suppliers, relaxing the current mergers and acquisitions regime, and enabling bulk water trading within the industry. The new Renewable Obligation Certificate (ROC) banding was also confirmed with a 10% cut to onshore wind, unchanged off-shore wind support and larger than expected cuts to biomass/co-firing, but increased support for marine and tidal energy and

energy-from-waste. The US Department of Commerce announced preliminary import tariffs of up to 73% on Chinese and Vietnamese wind towers, due to alleged "dumping". In Asia, Japan launched its new generous renewable energy Feed-in-Tariff and aims to create a $628bn green market through deregulation and subsidies to promote renewable energy and low emission cars. China continues to focus on water investments and is proposing to allocate 20% of government land transfer fees to local water investment needs. China also increased its solar energy target from 15GW to 21GW by 2015.

Positioning and Outlook

Our quarterly environmental subsector thematic filter is unchanged from Q2, with more challenging fundamentals offset by attractive valuations. Energy efficiency remains a key positive subsector thematic and we remain cautious on renewables until current regulatory and overcapacity issues resolve.  Regionally, we remain supportive of the Asian growth story, we are more cautious on the US and approach Europe on a stock by stock basis.  The portfolio is focussed on high quality companies reflecting a balance of defensive holdings with visibility of earnings and cyclical holdings with commodity and construction exposure.

In the near term, we expect that markets will remain volatile and will be driven by macroeconomic and political factors as investors attempt to price in sovereign debt risks and lower forecasts for global growth. Despite the current high levels of uncertainty, valuation remains below the historical range and is based on growth expectations that have moderated in the last month. We remain convinced that environmental markets remain well positioned to deliver superior long term growth and returns to investors.

Impax Asset Management is supportive of the UK Stewardship Code. Our full Stewardship Code statement, ESG and Proxy Voting policies and the quarterly summaries of our proxy voting activities can be viewed on:

http://www.impax.co.uk/en/investor-relations/governance-csr 

15 August 2012

 

END

 

 

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