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Impax Asian Env Mkt (IAEM)

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Friday 04 November, 2011

Impax Asian Env Mkt

Interim Management Statement

RNS Number : 4885R
Impax Asian Environmental Mkts Plc
04 November 2011
 



Impax Asian Environmental Markets Plc (the "Company")

Interim Management Statement

For the three months ended 30 September 2011

 

This interim management statement covers the period from the 1 July 2011 to 30 September 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 undiluted NAV per Ordinary Share (excluding current year net revenue) declined by 26.8% from 118.5p to 86.8p whilst the MSCI AC Asia Pacific ex-Japan Index and the FTSE Environmental Opportunities Asia Pacific ex-Japan Index fell by 19.1% and 29.0% respectively (price returns in pounds sterling). 

 

Global equity markets experienced a major correction throughout the third quarter of 2011 as a result of renewed concerns about European Sovereign debt and a downgrade to the US debt rating. Environmental markets underperformed as concerns about European government budget cuts weighed on the renewable energy sector, and fears of a double-dip recession negatively impacted industrial and technology related energy efficiency stocks. Emerging Markets underperformed global equities as concerns about inflation and rising interest rates persisted, risk appetite declined, and Chinese companies with smaller capitalisations were de-rated.  In contrast, the Japanese market outperformed as the economy weathered the disruptions of the earthquake better than was expected.

 

Gearing

 

On 28 April 2011, the Company entered into a two year US$50 million revolving credit facility; a decision that was supported by the fact that the valuation of the companies in the portfolio had fallen to a level that was attractive compared with both historic levels and expected growth rates.  US$25 million was drawn down in May which remained outstanding at 30 September 2011.

 

Portfolio Activity

 

During the Period, the Company added two new holdings to its portfolio and sold out of four positions. Share price weakness resulting from macro-economic concerns was used to increase the weightings in a number of stocks where the fundamentals remained strong. The five largest holdings as at 30 September 2011 are set out below and illustrate the Manager's continued preference for a diversified portfolio.

 

 

Company

Activity

Country where listed

Portfolio weighting

Horiba

Environmental and engine testing

Japan

4.1%

China Longyuan

Renewable IPP

Hong Kong

4.1%

ENN Energy

Natural gas distribution

Hong Kong

4.0%

Yingde Gases

Industrial gases

Hong Kong

3.9%

Daiseki

Hazardous waste management

Japan

3.8%

 

 

Outlook

 

The Manager's global macroeconomic outlook remains cautious. However, there are signs that Asian inflation is peaking and that a hard landing in China is less likely.  Against such an uncertain economic background market volatility is likely to be a continuing feature in the foreseeable future.

 

Environmental policy momentum remains encouragingly strong, in particular in China where the latest Five Year Plan includes the creation of a number of environmental sectors as strategic industries and commits to substantial investment, notably US$450 billion in waste and water infrastructure.  In addition, post Fukishima, Japan has increased emphasis on renewables and energy efficiency policy.

 

In the view of the Manager and the Board, recent share price weakness provides a good entry point for investors willing to take a long-term view on a sector with such compelling fundamentals.

 

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

 

 3 November 2011


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