What is the performance of recent investments made by Impax Environmental Markets PLC?

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What is the performance of recent investments made by Impax Environmental Markets PLC?

 What is the performance of recent investments made by Impax Environmental Markets PLC?

Summary

  • Impax Environmental Markets Plc has reported NAV per share, including current financial year revenue items of 387.50 pence.
  • The Company is having a current portfolio valued at 2.9x P/B as of 30 June 2020.
  • The Company has underperformed in comparison to its environmental comparator, FTSE ET100.
  • The Company’s net gearing was 2.5% as of 30 June 2020.

Impax Environmental Markets Plc (LON: IEM) is the LSE listed financial services stock. Based on 1-year performance, shares of IEM have generated a return of 31.99%. Shares of IEM were down by close to 0.47% from the last closing price (as on 09 December 2020, before the market close at 08:40 AM GMT).

Impax Environmental Markets Plc is the FTSE 250 listed Company, which is the UK based investment Company. It invests in companies from alternative energy and energy efficiency sector. The investment trust was launched on 22 February 2002. The main focus of the Company is to increase diversification and to seek out for economically defensive businesses

 

Investment Trust Industry Overview

The Investment trust is a form of investment fund mostly present in the United Kingdom and Japan. Investment trust holds diverse kind of assets: listed equities, government bonds, real estate, private equities etc. It deals with pooling up of investors money by issuing them the number of shares in return, and investors can track the performance of their investment through an indicator called Net Asset Value per share. The industry has been adversely affected by Covid-19 pandemic as the majority of the investors are cautious regarding their investments.

Recent News

On 07 December, the Company has updated regarding the Net Asset Value at the close of business on 04 December 2020. The NAV per share, including current financial year revenue items, is 387.50 pence.

On 07 December 2020, the Company has provided its monthly portfolio update. The portfolio has a substantial contribution from Energy efficiency sector and Water Infrastructure & Technology sector of 25% and 20%, respectively.

(Source: Company update)

The top 10 holdings of the Company as of 31 October 2020 are shown below -

(Source: Company update)

H1 FY20 results (ended 30 June 2020) as reported on 26 November 2020

(Source: Company result)

  • The Company has made a loss for its investments in H1 FY20 ended on 30 June 2020 to negative £14.33 million while it has generated a gain of £107.75 million during the similar period of the prior year.
  • The return on ordinary activities after taxation during H1 FY20 stood at negative £14.67 million while it was £109.58 million during H1 FY19.
  • Regarding the financial position, the Company had a cash balance of £20.39 million as of 30 June 2020 while it was £13.81 million as of 30 June 2019.
  • The Board has announced a first interim dividend of 1.3 pence per ordinary share payable on 28 August 2020.
  • The final or second interim dividend will be announced by the end of Q1 FY21.
  • The Company’s net gearing was 2.5% as of 30 June 2020. The Company has withdrawn £20.0 million of revolving credit facility to bring additional liquidity to take advantage of limited opportunities available.

 

Performance Contribution Analysis

   

(Source: Company result)

  • The Net Asset Value (NAV) of the Company has delivered a negative 1.6% return during H1 FY20 and ended the period at 310.9 pence per share. The Company has underperformed against its global benchmark index MSCI All Country World Index (MSCI ACWI) as the index has generated 0.5% returns for the six months period ended on 30 June 2020.
  • The Company has also underperformed in comparison to its environmental comparator, FTSE Environmental Technology 100 (FTSE ET100), which grew by 18.5% during H1 FY20.
  • The Company has made several new investments during H1 FY20 in bicycle maker Giant Manufacturing and Repligen which supplies filtration technology in medical fraternity, giving defensive characteristics and a minimal environmental footprint compared to baseline technology.
  • The Company has exited from US-based AO Smith which is going through incremental competitive threats in its core home market, and Hong Kong based Hollysys which has shown poor performance regarding investment in China’s railway system during the six-month period ended on 30 June 2020.
  • Regarding the valuation and the growth, the Company is having a current portfolio valued at 2.9x P/B as of 30 June 2020, which is relatively higher than its historical average of 2.4x.
  • The positive contributors during H1 FY20 were renewable energy holdings like EDP Renovave, which produces renewable energy, Xinyi Solar and SolarEdge manufacturing solar energy generation equipment based out in Hong Kong and the UK, respectively.
  • The negative contributors for the period were Ricardo which is an Environmental Support Services company based out in the UK, Sensata Technologies operates in Transport Energy Efficiency, Aalbert, a water infrastructure company and Norma Group deals with Pollution Control.

 

Share Price Performance Analysis of Impax Environmental Markets Plc

(Source: Refinitiv, chart created by Kalkine group)

Shares of Impax Environmental Markets Plc were trading at GBX 423.00 and were down by close to 0.47% against the previous closing price as on 09 December 2020, (before the market close at 08:40 AM GMT). IEM's 52-week High and Low were GBX 435.50 and GBX 226.00, respectively. Impax Environmental Markets Plc had a market capitalization of around £1.12 billion.

Business Outlook

The Company is expecting market conditions to remain volatile for the next few months as investors are keeping their eyes on vaccine development for effective treatment in order to offset the negative impact created by Covid-19 pandemic. The negative impacts are already reflected in the declining economies of developing as well as developed nations. The Company is anticipating its long term outlook to remain positive. However, the Company is well cautious regarding the risk of Global Financial crisis, which would hamper the performance of the Company.

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