Performance at month end

RNS Number : 6959Z

Impax Environmental Markets PLC

18 January 2011

 



IMPAX ENVIRONMENTAL MARKETS plc

All information is at 31 December 2010 - Q4 2010 (unless otherwise stated) and unaudited.

DATA AND PERFORMANCE

Pricing
NAV (pence)	141.80
Share price (pence)	129.75
Premium/(discount) (%)	(8.5)
Data
Total fund size (NAV) ( m)		450.6
Market capitalisation (m)		412.3
Management fee (%)		1.0
Established		22nd February 2002
Fund structure		Investment Trust
Number of holdings (including unlisted)		86
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 %	+9.9	+8.8	+7.5
3 months %	+11.8	+15.0	+4.5
1 year %	+12.0	+30.1	-2.4
3 year %	+10.7	+34.3	-29.2
5 year %	+55.4	+36.9	+43.5

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

** Total return

TOP TEN HOLDINGS

Company	Holding %		Description	Country
Regal-Beloit	2.8		Industrial energy efficiency	US
Clean Harbors	2.8		Hazardous waste	US
Nibe	2.7		Buildings energy efficiency	Sweden
LKQ	2.6		Value added waste processing	US
Telvent	2.4		Industrial energy efficiency	Spain
Pall Corp	2.3		Water treatment equipment	US
Nalco	2.3		Water treatment equipment	US
Horiba	2.1		Environmental testing & gas sensing	Japan
Lee & Man	2.0		Recycling & value added waste processing	Hong Kong
Epistar	1.9		Buildings energy efficiency	Taiwan
TOTAL	23.9

PORTFOLIO ANALYSIS

Geographical US and Canada 37% Japan 5% Europe 37% Australia 4% Asia ex Japan 14% Cash 3%		Company Size >$2bn 37% $200m-2bn 52% <$200m 4% Private 4% Cash 3%
Sectoral Energy efficiency 24% Renewable energy 17% Environmental support services 5% Waste management 26% Pollution control 6% Water infrastructure 19% Cash 3%		PE Ratios >20x 21% 15-20x 37% <15% 33% Unprofitable and private 6% Cash 3%

IMPAX ENVIRONMENTAL MARKETS plc

MANAGER'S COMMENTARY (Q4 2010)

The Company NAV rose 11.8% during the quarter compared to the MSCI World Small Cap which rose 15.0% and the FTSE ET50 which rose 4.5%. In Alternative Energy & Energy Efficiency, energy efficiency stocks remained strong, driven by strong Q3 results and impending new legislation. The buildings energy efficiency sector also rose in advance of an anticipated recovery in 2012, effecting Nibe (Sweden), which also benefitted from the cold winter driving increased demand for heating products, Zumtobel (Austria), which also benefitted from strong secular growth prospects for LED lighting and Kingspan (UK), which is set to benefit from new EU energy efficiency legislation in 2011. Weakness persisted across the renewables sector with wind stocks continuing their run of particularly poor performance. China High Speed Transmissions (wind power generation equipment, Hong Kong) was weak on concerns of the effect of reduced Chinese wind sector growth on gearbox demand, and Taewoong (wind power generation equipment, Korea) on ongoing overcapacity and margin pressure. Solar stocks were weak including Sunpower (solar energy generation equipment, US) as European governments took steps moderate demand and on overcapacity concerns. In Water Treatment & Pollution Control, water stocks were driven by strong Q3 results and investor appetite for stocks with construction exposure. M&A activity in the pollution control sector led to a rise in the share price of Dionex (environmental testing, US), as the company is to be acquired by Thermo Fisher at a rich valuation (17xEV/EBITDA). Particularly strong performing water stocks were Nalco (water treatment equipment, US), which was additionally boosted by a successful debt refinancing, and Geberit (water infrastructure, Switzerland). Regional economic concerns weighed on Indian companies IVRCL Infrastructure and Jain Irrigation (both water infrastructure) as an unrelated fraud case in the banking sector drove concerns about finance availability for Indian infrastructure. In Waste Technologies & Resource Management, strength was generated by increasing commodity prices, growing comfort on economic growth prospects, and relatively cheap valuations. Value added waste processors Newalta and Sims Metal Management (Canada and Australia respectively) benefitted from exposure to rising commodity prices - the former particularly from an increase in the price of oil. Commodity price increases, combined with strong Q3 results and 2011 guidance resulted in positive performance from Clean Harbors (hazardous waste management, US). An exception to the general trend of strong waste sector performance was Lee & Man (value added waste processing, Hong Kong) where disappointing Q3 earnings resulted in downgrades. The Cancun climate summit managed to rebuild trust and cooperation among delegates, but brought limited progress of relevance for investors. Agreement was achieved regarding a monitoring/verification framework and a Green Climate Fund managed by the World Bank to allocate up to $100bn in climate aid to the poorest countries by 2020. Uncertainty regarding the REDD-forestry mechanism, CDM and Kyoto Protocol frameworks remains. The UK announced an Electricity Market Reform to incentivise the development of low carbon electricity through a carbon floor price, a feed-in-tariff with contract for difference and an Emissions Performance Standard, implying that no new coal plants can be built without CCS. The US approved extensions of Bush-era tax cuts, including sizable direct environmental funding through cash grants and tax credits of $11bn for renewable energy, ethanol and energy efficiency. California approved cap & trade legislation to cap pollution from plants, cars and trucks by roughly 15% by 2020, taking effect from 2012. In renewables, Italy is reforming and clarifying its incentives, by moving from green certificates to a feed-in-tariff, whereas France has a freeze in its solar PV development until March, when it is expected to introduce a new policy framework. Sweden and Norway agreed to establish a common green certificate market in 2012. Spain reduced tariffs for thermal solar and wind, and stunned investors with a retroactive cut in feed-in-tariffs and hourly caps for premium tariffs for solar PV. Turkey, on the other hand, ratified a new law guaranteeing prices paid for renewables, with wind in particular set to benefit strongly as investments of up to $30bn or ~19GW of new wind capacity might be developed within the next 4-5 years. In energy efficiency, Ireland introduced new residential energy efficiency incentives, including tax reliefs. The EU will introduce new fuel efficiency targets on vans and may move to tighten biofuel legislation by July 2011. The US DoE will provide $148m to accelerate the development of efficient vehicle technologies.  In the water sector, India supported a regional protocol for water management in the Himalayan River Basin, as well as utilising a $1bn World Bank loan to start round-the-clock water supply facilities in 12 major cities. The Indonesian government has granted $6.3bn in funding for water resource developments in 2011. In the waste sector, the UK launched a consultation regarding Anaerobic Digestion, aiming to improve the planning and approval process for new installations, with results expected in April 2011.

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

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 January 2011

 

END

 

 

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