Performance at month end

RNS Number : 3233B

Impax Environmental Markets PLC

16 February 2011

 



IMPAX ENVIRONMENTAL MARKETS plc

All information is at 31 January 2011 (unless otherwise stated) and unaudited.

DATA AND PERFORMANCE

Pricing
NAV (pence)	137.47
Share price (pence)	123.85
Premium/(discount) (%)	(9.9)
Data
Total fund size (NAV) ( m)	436.6
Market capitalisation (m)	393.3
Management fee (%)	1.0
Established	22nd February 2002
Fund structure	Investment Trust
Number of holdings (including unlisted)	87
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 %	-3.1	-1.4	-0.9
3 months %	+7.3	+10.7	+6.1
1 year %	+12.0	+30.5	+4.7
3 year %	+22.2	+43.7	-12.4
5 year %	+36.2	+29.9	+23.3

 

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

** Total return

TOP TEN HOLDINGS

Company	Holding %		Description	Country
Clean Harbors	3.0		Hazardous waste management	US
Regal-Beloit	3.0		Industrial energy efficiency	US
LKQ	2.7		Value added waste processing	US
Nibe	2.7		Buildings energy efficiency	Sweden
Pall Corp	2.6		Water treatment equipment	US
Nalco	2.5		Water treatment equipment	US
Telvent	2.5		Industrial energy efficiency	Spain
Horiba	2.1		Environmental testing & gas sensing	Japan
Itron	2.1		Power network efficiency	US
Epistar	2.0		Buildings energy efficiency	Taiwan
TOTAL	25.2

PORTFOLIO ANALYSIS

Geographical US and Canada 37% Europe 38% Japan 5% Asia ex Japan 14% Australia 3% Cash 3%		Company Size >$2bn 38% $200m-2bn 51% <$200m 5% Private 3% Cash 3%
Sectoral Energy efficiency 27% Renewable energy 17% Environmental support services 4% Waste management 25% Pollution control 5% Water infrastructure 19% Cash 3%		PE Ratios >20x 18% 15-20x 36% <15% 37% Unprofitable and private 6% Cash 3% Average 16x

IMPAX ENVIRONMENTAL MARKETS plc

MANAGER'S COMMENTARY (January 2011)

The Company NAV fell 3.1% during the month compared to the MSCI World Small Cap which fell 1.4% and the FTSE ET50 which dropped 0.9%. In Alternative Energy & Energy Efficiency, renewable energy proved the strongest of all the sub-sectors over the month. Biofuels companies, including portfolio holding Abengoa (Spain), were particularly strong, due to the Environmental Protection Agency's (US) approval of gasoline containing up to 15% ethanol (up from 10%) for use in vehicles built from 2001 to 2006. Optimism in the solar sector, particularly in the US, led to positive performance from Sunpower, a stock that both made its full-year results targets and sold a project in Italy during January. Challenges remain in the wind sector. Vestas (Denmark) and Taewoong (Korea) outperformed following increased power market fundamentals (increasing prices and power purchase agreement activity). The energy efficiency sector continued to perform well overall, with strong performance from the transport and power network efficiency sub-sectors offsetting weaker performance from industrial and buildings energy efficiency. Telvent (industrial energy efficiency, US) outperformed due to positive sentiment in grid investment. In Water Treatment & Pollution Control, there was underperformance across all water sub-sectors, concentrated particularly in the water infrastructure sub-sector. Indian stocks (Jain Irrigation and IVRCL Infrastructure) performed poorly due to macro weakness in Asia and regional financing concerns, whilst construction exposed stocks, such as Geberit (Germany) were also weak. Copper price inflation, resulting from strong demand in the Asia-Pacific region, led to weakness in US stock Badger Meter. The pollution control sector slightly outperformed over the month, as M&A speculation drove performance in Pall Corporation (US). In Waste Technologies & Resource Management, stocks underperformed overall in January, as investors took profits in stocks that had outperformed over the past quarter, impacting stocks such as US environmental consultancy TetraTech. Australian recycling and value added waste processing company Sims Metal Management also underperformed on this trend, despite continued strong scrap metal pricing. Another weak environmental consultancy was RPS Group, where the exposure of the company's Australian based activities to the recent Queensland flooding disaster led to a 10% downgrade. M&A activity boosted performance in Clean Harbors (hazardous waste management, US), as the company made a complimentary acquisition in Canada. Clean energy stimulus is expected to reach around $67bn this year compared to $59bn in 2010. In the EU a tax on energy resources is being considered to capture polluters not currently covered by the EU carbon trading scheme. This scheme experienced thefts of carbon credits mid-month which led to suspension of trading for two weeks. In the US, President Obama held his State of the Union Speech and set a target for clean energy in the US to reach 80% by 2035, including nuclear, clean coal and the lowering of fossil fuel subsidies. Australia cut its clean tech funding by AU$500m due the Queensland floods. An additional UN climate summit has been announced for April in Bangkok, to try to progress work on a Kyoto Protocol successor. In renewables, the UK announced that solar PV installations have surged 10-fold to 42MW since the introduction of feed-in-tariffs in April 2010. In Spain, investor groups are to sue the government for the December retroactive solar tariff cuts, whereas Italian data showed a surge in solar installations in 2010, with possible signs of the market overheating. Germany announced it will bring some of its solar tariff cuts forward to July 2011, ranging between 3 and 15%, depending on annualised installations between March and May. China is to tighten rules on renewables with power grid companies buying more electricity from renewable sources, whereas Taiwan is to cut solar tariffs by 30%, as installation equipment costs have fallen. The Philippines is working with the World Bank to design a globally acceptable feed-in-tariff for renewable projects.   In energy efficiency, the EU energy commissioner Oettinger said "far-reaching" energy efficiency methods are to be announced in March, whereas India proposed an energy efficiency program for eight of its industries. China and Germany both announced plans to upgrade and expand their power grids. The US EPA said E15 bioethanol is safe for cars manufactured between 2001 and 2006. In the water sector, China will introduce tougher conservation measures and spend ~$3bn on water conservation between 2011 and 2015. China has also proposed to invest 10% of land transfer fees in rural irrigation reservoir upgrades, or ~$31bn over this period. India will introduce a water policy framework by the end of the year, including guidelines on water allocation and groundwater conservation. It also accepted an $800m loan by the ADB for four hydropower projects, producing up to 856MW of electricity.

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 

16 February 2011

 

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