Performance at month end

RNS Number : 1126Y

Impax Environmental Markets PLC

16 December 2010

 



IMPAX ENVIRONMENTAL MARKETS plc

All information is at 30 November 2010 (unless otherwise stated) and unaudited.

DATA AND PERFORMANCE

Pricing
NAV (pence)	129.07
Share price (pence)	114.65
Premium/(discount) (%)	(11.17)

 

 

Data
Total fund size (NAV) ( m)		412.2
Market capitalisation (m)		366.2
Management fee (%)		1.0
Established		22nd February 2002
Fund structure		Investment Trust
Number of holdings (including unlisted)		88
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 %	+0.7	+3.2	-0.4
3 months %	+9.7	+15.0	+6.2
1 year %	+8.6	+27.1	-4.4
3 year %	+5.6	+25.2	-28.3
5 year %	+44.2	+32.0	+39.2

* 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	2.6		Hazardous waste	US
LKQ	2.6		Value added waste processing	US
Nibe	2.5		Buildings energy efficiency	Sweden
Pall Corp	2.4		Water treatment equipment	US
Telvent	2.4		Industrial energy efficiency	Spain
Nalco	2.3		Water treatment equipment	US
Horiba	2.1		Environmental testing & gas sensing	Japan
China Everbright	2.0		Water utilities	Hong Kong
Vacon	1.9		Industrial energy efficiency	Finland
TOTAL	23.6

PORTFOLIO ANALYSIS

Geographical US and Canada 37% Japan 5% Europe 37% Australia 3% Asia Ex Japan 14% Cash 4%		Company Size >$2bn 34% $200m-2bn 54% <$200m 4% Private 4% Cash 4%
Sectoral Energy efficiency 24% Renewable energy 17% Environmental support services 5% Waste management 24% Pollution control 6% Water infrastructure 20% Cash 4%		PE Ratios >20x 20% 15-20x 24% <15% 46% Unprofitable and private 6% Cash 4%

IMPAX ENVIRONMENTAL MARKETS plc

MANAGER'S COMMENTARY (30 November 2010)

During the month the Company NAV rose 0.7% compared to the MSCI World Small Cap which rose 3.2%. In Alternative Energy & Energy Efficiency, continued weakness in the renewables sector again impacted performance whilst stocks in the energy efficiency sector continued to produce strong returns. An anticipated recovery of LED markets saw positive performance from Epistar (Taiwan) whilst positive Q3 results accompanied by strong sales and margins drove the performance of Nibe (buildings energy efficiency, Sweden) and LEM (industrial energy efficiency, Switzerland). Regal Beloit (US) posted strong gains as it became subject to M&A speculation following the takeover by ABB of fellow electric motor company Baldor. Negative  performers included Taewoong (wind power generation equipment, Korea) as declining volumes produced weak Q3 results. Sunpower (solar energy generation equipment, US) suffered as France intervened to restrict growth in the solar sector and concerns were raised over further feed in tariff reductions, or a hard cap, in Germany. Italy's decision to remove the subsidies introduced last year to drive demand for natural gas vehicles impacted Landi Renzo (transport energy efficiency, Italy). In Water Treatment & Pollution Control, positive gains came from the water infrastructure, water technologies and pollution control sub sectors. Government support for new water and waste infrastructure was announced in China's 12th Five Year Plan, assisting performance of China Everbright (water utilities). Strong Q3 results drove the performance of Nalco (water treatment equipment, US) and Horiba (environmental testing and gas sensing, Japan), the latter of which also benefitted from anticipation of recovery in its automotive emissions testing business. In Waste Technologies & Resource Management, hazardous waste company Clean Harbors (US) rose on strong Q3 numbers and a positive outlook on volume and prices. Other notable strong performers included environmental consultancies RPS (UK) and Tetra Tech (US) which rose on signs of earnings recovery. Positive gains were offset by negative contributions from diversified waste management holdings as expectations of slow GDP recovery had the knock on effect of slow recovery in waste volumes. Portfolio holdings impacted included Lassila & Tikanoja (Finland), Transpacific Industries (Australia) and Seche Environnement (France). The UNFCCC climate summit in Cancun started with relatively low expectations of progress towards reaching a binding global treaty. Possible areas of progress are forestry, the REDD project and funding for climate adaptation in developing countries. Prominent developing country polluters have announced plans of ambitious future environmental policies, with China and South Korea planning domestic carbon trading schemes and resource and carbon taxes, whilst Brazil is to ban the build-out of new fossil fuel plants after 2014. As expected, the US mid-term elections saw the Republicans win a large majority in the House of Representatives and win seats in the Senate, although they failed to win a majority. This is likely to hamper large, federal-level environmental legislation such as cap & trade over the next two years. However, areas of political common-ground are energy efficiency and renewable electric standard (RES), possibly combined with nuclear and natural gas legislation. In California, a proposition to suspend a landmark climate change law was defeated by a sizable margin, taking the proportion of renewables-sourced electricity that utilities need to generate in 2020 from 20% to 33%. In renewables, Spain withdrew from planned retro-active solar FiT cuts after threats of lawsuits but shortened the FiT period from 40 to 25 years and cut tariffs for new projects. Italy is looking to reform its renewables subsidies, introducing a broader FiT, which would give the market more visibility. India launched its REC trading program, with generators receiving one RE certificate for each 1MWh of renewable power injected to the grid. Taiwan will announce FiTs for renewables for 2011, whereas South Korea plans to invest $8.2bn in offshore wind by 2019. In energy efficiency, the EU has announced plans of a €1trn energy network and a German study shows the need of sizable investments in the grid-network to enable renewables growth. New German and EU-level grid legislation is expected over the         winter-spring 2011. The UK government is focused on drastically improving energy efficiency in housing through legislation and funding such as the Renewable Heat Incentive and the Green Deal legislation, with more detail expected in December 2010 and March 2011. Both India and China have announced further incentives to encourage the use of, and investment in, electric vehicles. In water technologies, the US EPA has issued rules to protect drinking water supplies from future efforts to bury pollution from coal-fired plants and carbon capture and storage (CCS), as well as tightening water pollution controls in areas dependant on tourism, focusing on cutting levels of phosphorus and nitrogen. Mexican utilities were granted a loan of $100m by the World Bank to improve water treatment efficiency in urban areas.

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

Impax Asset Management Limited

16 December 2010

 

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