Performance at month end

RNS Number : 5966F

Impax Environmental Markets PLC

18 June 2012

 



IMPAX ENVIRONMENTAL MARKETS plc

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

DATA AND PERFORMANCE

Pricing
NAV (pence)	117.84
Share price (pence)	96.25
Premium/(discount) (%)	(18.32)
Data
Total fund size (NAV) ( m)		GBP 337.1
Market capitalisation (m)		GBP 275.4
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 %	-4.5	-3.9	-3.2
3 months %	-8.6	-5.3	-9.5
YTD %	+1.7	+3.6	-2.7
1 year %	-13.7	-7.6	-26.9
3 year %	+16.1	+56.8	-24.0
5 year %	-6.6	+14.7	-33.0
7 year %	+56.6	+61.9	+21.5

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

** Total return

TOP TEN HOLDINGS

Company	Holding %	Description	Country
Nibe	3.4	Ground source heat pumps	Sweden
LKQ	3.3	Automotive recycling	US
Regal-Beloit	3.2	Electric motors	US
Clean Harbors	2.9	Hazardous waste treatment	US
Spirax-Sarco	2.5	Steam based energy efficiency	UK
Kingspan	2.5	Insulation products	Ireland
Watts Water	2.4	Water control products	US
Vacon	2.4	Power electronics	Finland
Clarcor	2.4	Air pollution control	US
Stericycle	2.2	Medical waste treatment	US
TOTAL	27.2

PORTFOLIO ANALYSIS

Geographical US and Canada 42% Europe 37% Japan 5% Asia ex Japan 13% Australia 2% Cash 1%		Company Size >$2bn 36% $500m-2bn 45% <$500m 14% 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 15% 15-20x 24% <15% 55% Private and other 5% Cash 1% Average 13.6x

IMPAX ENVIRONMENTAL MARKETS plc

MANAGER'S COMMENTARY (May 2012)

In May, the MSCI AC World Index experienced the 10th worst month on record (since 1988) as investors focused on the impact of Greece possibly leaving the Euro, the approaching "fiscal cliff" in the US, and weaker economic data from China.

Performance Review

Companies with defensive characteristics, such as Clarcor (air pollution control, US) and Stericycle (medical waste treatment, US) held up well in the volatile markets. US stocks proved strong contributors with LKQ (automotive recycling), Power Integrations (power conversion electronics) and Ormat (geothermal) reporting strong Q1 earnings which beat market expectations.

Weakness came from European stocks, particularly those in the south, including Abengoa (bioethanol and recycling, Spain). Kingspan (insulation products, Ireland) fell on fears of another downturn in the construction market, whilst Sims Metal Management (metal recycling, Australia) underperformed following weak upgraded guidance for the full year, and due to its GDP sensitivity.

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 early 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. In Europe, Germany is reconsidering the sharp solar

feed-in tariff cuts that were implemented in early April following harsh criticism by many states. The EU has agreed to stipulate stricter emissions ceilings for four air pollutants, as well as for fine particulates (PM2.5) by 2020. The US surprised the market by announcing higher than expected anti-dumping duties on solar cells made in China and imported to the US, and also announced 26% import duties on Chinese-made wind towers. China announced new subsidies for recycling of e-waste to be implemented on 1 July and the State Council announced new energy efficient appliance subsidies, while the Ministries of Finance and Housing unveiled a target for 30% of all new construction to be energy efficient by 2020. Japan unveiled four scenarios for its future energy mix target, including a scenario of renewables representing up to 35% by 2030. India set a target to double its renewables installation in its next 5 year plan to 2017, taking total renewables installations to 53GW. Numerous environmental legislation developments also occurred in larger emerging markets; South Korea passed a bill to implement a cap and trade carbon scheme by 2015, Russia launched a $17.5bn program to improve water quality and protect resources and Saudi Arabia plans to boost renewable energy by investing $109bn.

With macro uncertainty once again coming to the fore, we continue to maintain a well‐diversified portfolio by sub-sector 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 14x based on NTM with 19% EPS growth.  Q1 earnings are now well advanced and have been broadly in-line with consensus estimates; there have been 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 

18 June 2012

 

END

 

 

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