Performance at month end

RNS Number : 7422O

Impax Environmental Markets PLC

15 October 2012

 



IMPAX ENVIRONMENTAL MARKETS plc

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

DATA AND PERFORMANCE

Pricing
NAV (pence)	119.37
Share price (pence)	99.63
Premium/(discount) (%)	(16.54)
Data
Total fund size (NAV) ( m)		GBP 327.0
Market capitalisation (m)		GBP 273.0
Management fee (%)		1.0
Established		22nd February 2002
Fund structure		Investment Trust
Number of holdings (excluding unlisted)		74
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 %	0.0	+1.8	-0.7
3 months %	+3.1	+3.7	-0.3
YTD %	+3.0	+9.2	-4.1
1 year %	+7.3	+18.5	-0.8
3 year %	-1.7	+32.6	-31.4
5 year %	-3.7	+31.0	-41.5
7 year %	+28.2	+47.8	-1.4
10 year %	+129.0	+190.4	+61.5

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

** Total return

TOP TEN HOLDINGS

Company	Holding %	Description	Country
Nibe	3.2	Ground source heat pumps	Sweden
Kingspan	2.9	Insulation products	Ireland
Watts Water	2.7	Water control products	US
Regal-Beloit	2.6	Electric motors	US
Vacon	2.6	Power electronics	Finland
Pall	2.5	Filtration	US
Spirax-Sarco	2.5	Steam based energy efficiency	UK
Pentair	2.4	Water treatment	US
Clean Harbors	2.4	Hazardous waste treatment	US
RPS Group	2.4	Environmental consulting	UK
TOTAL	26.2

PORTFOLIO ANALYSIS

Geographical US and Canada 41% Europe 40% Japan 5% Asia ex Japan 11% Australia 1% Cash 2%		Company Size >$2bn 36% $500m-2bn 46% <$500m 13% Private 3% Cash 2%
Sectoral Energy efficiency 31% Alternative energy 13% Environmental support services 6% Waste management 22% Pollution control 7% Water infrastructure 19% Cash 2%		PE Ratios* >20x 12% 15-20x 31% <15% 50% Private and other** 5% Cash 2% Average 15.0x

*forward 12 months

*where analyst estimates unavailable or stocks unprofitable

IMPAX ENVIRONMENTAL MARKETS plc

MANAGER'S COMMENTARY (Q3 2012)

Central banks did not disappoint investor expectations in September as details released by the ECB and the Fed resolved the liquidity question, resulting in equity markets rising over the third quarter. Year-to-date global equities have provided positive returns in 7 out of 9 months. As is usually the case in a beta rally, cyclical sectors fared better than defensive sectors on average last month, also helping strong performance of the environmental indices and portfolios. 

Performance & Environmental Markets Update

Outperformance was driven by cyclical companies, which performed well in Q3 following a stabilization of macro headwinds, and companies reporting strong results. Kingspan (insulation products, Ireland) and Nibe (ground source heat pumps, Sweden) benefitted from construction market exposure and reported strong earnings driven by better than expected margins, proving that high quality businesses can continue to thrive in a challenging environment. Emerging clarity on renewables subsidies in Spain drove the performance of Abengoa (bioethanol and recycling, Spain).

Companies reporting disappointing earnings weighed on performance. Clean Harbors (hazardous waste treatment, US) released Q2 results which missed expectations due to weakness in the company's energy business, with concerns that the company will subsequently fail to meet year end numbers. Power Integrations (power conversion electronics, US) fell, reflecting broad weakness in the technology and semiconductor sectors and following the company's mixed guidance for Q3.

Notable policy developments included the unveiling of Japan's Energy Plan to completely phase-out nuclear by the end of the 2030s. It is estimated that they will spend $487 billion on renewable energy over the next two decades, with another $1,077bn investment in energy-efficient technology, and $77bn in co-generation systems. The US EPA released draft guidance on hydraulic fracturing, using diesel fuels as drilling fluids, as part of the Safe Drinking Water Act. The Canadian government finalized       much-anticipated regulations for phasing out old coal-fired plants and introducing performance standards equivalent to              high-efficiency natural gas-fired and renewable generators. The EU opened an anti-dumping probe into Chinese manufacturers of solar panels, covering €21billion of imports, and an inquiry into unfair subsidies is also being considered. The European Parliament approved a shipping sulphur directive to limit fuels in European seas to 0.5% (from 3.5%) by 2020, with control areas including the Baltic Sea and the English Channel by 2015. The Energy Efficiency Directive was also formally approved by the European Parliament.

Positioning and Outlook

The portfolio reflects a focus on high quality businesses with proven business models and strong management teams. Energy efficiency remains a key positive sub-sector bias and we continue to favour hazardous waste and filtration due to their defensive characteristics. We remain cautious on renewables given current uncertainties although we continue to monitor the long-term prospects for this sub-sector. The earnings season was positive overall giving us confidence in the earnings growth expectation for the next twelve months.

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 October 2012

 

END

 

 

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