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Impax Asian Env Mkt (IAEM)

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Tuesday 03 May, 2011

Impax Asian Env Mkt

Interim Management Statement

RNS Number : 8347F
Impax Asian Environmental Mkts Plc
03 May 2011
 



Impax Asian Environmental Markets Plc ('IAEM' or the 'Company')

Interim Management Statement

For the three months ended 31 March 2011

 

This interim management statement covers the period from the 1 January 2011 to 31 March 2011 (the "Period"), and is prepared in accordance with the UK Listing Authority's Disclosure and Transparency Rule 4.3.

 

Investment objective

 

The Company's investment objective is to generate long-term capital growth through investment in a diverse portfolio of companies in the markets for cleaner or more efficient delivery of basic services of energy, water and waste in the Asia-Pacific Region. To be eligible for investment, such companies must have at least 20% of their turnover, profits or invested capital in these markets.

 

Performance

 

During the Period, the Company's diluted Net Asset Value ("NAV") per Ordinary Share (excluding current year net revenue) declined by 5.0% from 128.9p to 122.4p. The Company's undiluted NAV per Ordinary Share (excluding current year net revenue) declined by 5.7% from 134.2p to 126.5p compared with the MSCI AC Asia Pacific ex Japan Index which declined 0.9% (capital return priced in pounds sterling).

 

Over the first quarter of 2011 performance of Emerging Markets equities was behind global equities due to concerns about inflation and rising interest rates. While many of the Company's largest holdings performed strongly and fundamental drivers for the environmental sector in Asia remained favourable, the Company's exposure to India and certain weaker sub-sectors, such as water infrastructure, value added waste processing and Chinese rail, held back overall performance. The renewable energy sector and the Korean market performed strongly, but IAEM's relatively small exposure to these areas was not sufficient to compensate for under performance in other areas.

 

The Company was affected by exposure to Japanese equities that fell following the earthquake, tsunami and nuclear accident at Fukushima.  However, the strong performance of Japanese stocks earlier in the quarter and potential new opportunities for Japanese holdings in the energy supply and reconstruction sectors meant that overall Japan was not a drag on performance during the quarter.

 

Portfolio activity

 

Impax Asset Management Limited (the "Manager") continues to focus on bottom-up stock picking and profits were taken in companies from across the environmental markets sub-sectors. In addition, macro driven weakness was used to increase the weightings in a number of stocks where the fundamentals remained strong. During the Period, the Company added six new holdings to its portfolio and sold out of three positions.

 

The five largest holdings as at 31 March 2011 are set out below.

 

 

Company

Activity

Country where listed

Portfolio weighting

Xinyi Glass

Efficient glass manufacturing

Hong Kong

4.2%

ENN Energy

Natural gas distribution

Hong Kong

3.7%

Campbell Brothers

Environmental testing

Australia

3.3%

Lee & Man Paper

Paper recycling

Hong Kong

3.2%

Epistar

LED manufacturer

Taiwan

3.0%

 

The five largest holdings illustrate the preference for a diversified sector portfolio. The Company is overweight Greater China compared to the most relevant sector index for the Fund, the FTSE Environmental Opportunities Asia ex Japan.

 

Gearing

 

Since the end of the Period the Company has entered into a two year revolving credit facility.  Under the terms of the facility the Company may draw down loans of, in aggregate, up to US$50 million.  A first loan of US$25 million will be made to the Company on 6 May 2011 and a further $25 million is expected to be drawn down in the next six months.

 

Outlook

 

The Directors and the Manager remain positive on the outlook for the Company. Environmental policy and legislation momentum in the Asia-Pacific region remains strong and many environmental markets sectors are set for strong growth.  The Japanese earthquake has led to a renewed global focus on the renewable energy and energy efficiency sectors as governments reassess the role of nuclear. The Chinese 12th Five Year Plan (published during the Period), contains a number of policies and targets that further improve the prospects for environmental companies.  Given recent weakness in share prices, the IAEM portfolio is attractively valued both versus historic ratings and when compared with current growth expectations.

 

 

The interim management statement will be made available on the Manager's website www.impax.co.uk

3 May 2011


This information is provided by RNS
The company news service from the London Stock Exchange
 
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