Performance at month end

RNS Number : 3831D

Impax Environmental Markets PLC

15 May 2012

 



IMPAX ENVIRONMENTAL MARKETS plc

All information is at 30 April 2012 (unless otherwise stated) and unaudited.

DATA AND PERFORMANCE

Pricing
NAV (pence)	123.39
Share price (pence)	99.00
Premium/(discount) (%)	(19.77)
Data
Total fund size (NAV) ( m)		GBP 357.9
Market capitalisation (m)		GBP 287.2
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 %	-2.9	-2.3	-4.0
3 months %	+0.1	+1.8	-4.1
YTD %	+6.5	+7.9	+0.5
1 year %	-11.8	-4.5	-27.7
3 year %	+25.0	+63.0	-20.2
5 year %	+2.2	+23.8	-26.2
7 year %	+76.7	+82.0	+37.9

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

** Total return

TOP TEN HOLDINGS

Company	Holding %	Description	Country
Nibe	3.5	Ground source heat pumps	Sweden
Regal-Beloit	3.2	Electric motors	US
LKQ	3.0	Automotive recycling	US
Kingspan	2.7	Insulation products	Ireland
Clean Harbors	2.6	Hazardous waste treatment	US
Vacon	2.5	Power electronics	Finland
Spirax-Sarco	2.4	Steam based energy efficiency	UK
Watts Water	2.2	Water control products	US
RPS Group	2.2	Environmental consulting	UK
Itron	2.2	Meters and utility data	US
TOTAL	26.5

PORTFOLIO ANALYSIS

Geographical US and Canada 39% Europe 39% Japan 5% Asia ex Japan 13% Australia 3% Cash 1%		Company Size >$2bn 38% $500m-2bn 47% <$500m 10% Private 4% Cash 1%
Sectoral Energy efficiency 32% Alternative energy 14% Environmental support services 5% Waste management 24% Pollution control 6% Water infrastructure 18% Cash 1%		PE Ratios >20x 19% 15-20x 29% <15% 46% Private and other 5% Cash 1% Average 14.7x

IMPAX ENVIRONMENTAL MARKETS plc

MANAGER'S COMMENTARY (April 2012)

Markets were volatile in April as investors grappled with broadly positive economic data coming out of Asia and the US on the one hand, and renewed negative concerns about European sovereign debt risks (especially in Spain) and concerns about the implications of the impending French election for resolution of these issues.

Performance Review

Companies announcing strong Q1 earnings drove performance, such as Spirax-Sarco (steam based energy efficiency, UK), which also benefited from a strong market preference for quality and defensive companies. LKQ (automotive recycling, US) performed well having beaten Q1 earnings expectations, with strong organic growth in its core US business coupled with strong contribution from its recent European acquisition. Dialight (LED lighting, UK) performed well following a strong Interim Management Statement and a wealth of positive newsflow on growth in the LED lighting sector.

Weakness came from renewables, in particular from southern European stocks which were impacted due to concerns of sovereign risk in Spain, such as EDP Renovaveis (renewable IPP, Spain) and Abengoa (bioethanol and recycling, Spain). Companies missing Q1 earnings expectations detracted from performance, such as Itron (meters and utility data, US) which missed expectations due to overrunning overhead costs despite good revenue growth.

Positioning and Outlook

Our quarterly environmental subsector outlook shows fundamentals improving across several subsectors and valuations remaining attractive.  Energy efficiency remains a key positive thematic for the portfolio, with signs of recovery in construction markets and improving outlook for LED markets particular highlights.  Although valuations are attractive, we remain cautious on renewables as on-going overcapacity in wind and solar OEM's, together with on-going regulatory uncertainty, continues to weigh on share prices.

Government policies continue to be supportive for environmental sectors particularly for energy efficiency and within Asia, counterbalancing weakness from on-going renewable subsidy cuts. In the US, the Department of Defence announced a target deployment of 3GW of renewable energy to meet 25% of energy needs by 2025, while the US EPA finalised long-anticipated new source performance standards (NSPS) for hydraulically fractured natural gas wells. New York State Governor Andrew Cuomo announced investments of $800 million to enhance the energy efficiency of state and local government buildings, with a goal of reducing energy consumption by 20% over the next four years. Canada unveiled regulations aiming to make large trucks and buses up to 23% less polluting by 2018. In Asia, Japan released a draft for a new Feed-in-Tariff (FIT) program to be launched in July. China surprised by announcing it will aim to reduce its carbon intensity by 40% by 2025, 5 years later than the initial plan of 2020. China also introduced a national waste to energy price, double that of coal-fired plants. Taiwan introduced a street light program, where 362,000 street lights will be replaced with LED luminaries over the next three years, with a total investment of $84m.

With macro uncertainty once again coming to the fore, we continue to maintain a well‐diversified portfolio by subsector and geography, reflecting a balance of defensive companies with visibility on earnings and high quality cyclical holdings.  Portfolio valuation remains compelling with portfolio PE of 15x based on NTM with 18% EPS growth.  Q1 earnings are now well advanced and have been broadly in-line with markets with no major misses to expectations.  The fund is positioned to perform well as the global economy continues to recover and longer term environmental themes play out.

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 May 2012

 

END

 

 

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