- Earnings climb despite negative markets
- Assets recover post year-end
- Shares rally on better results
In a year which has seen sustainable and ESG (environmental, social and governance) driven investments come under pressure, specialist manager Impax Asset Management (IPX) has delivered a better-than-expected result.
Impax shares, which have almost halved in value this year, jumped 6% to 767p in response to the update.
EARNINGS GROW DESPITE WEAK MARKETS
Group revenues for the year to September grew 22.6% to £175.4 million, feeding through to a 22.4% increase in earnings to 42.1p per share which was well ahead of market estimates, while the dividend was raised 34% to 27.6p per share.
The firm attracted £2.9 billion of net inflows, down on 2021’s stellar figure of £10.7 billion but still a notable achievement given the difficult market for ‘green’ and sustainable investments which tend to be long-duration and have been sold off this year as interest rates have risen and geopolitical tensions have increased.
Total assets under management dipped 4% to £35.7 billion due to negative market movements, as flagged in the firm’s October trading update, but on a positive note the geographic spread of its client base continues to grow with almost 80% of assets coming from clients outside the UK.
Most of the inflows were into the Global Opportunities, US Large-Cap, Leaders and Climate strategies with a new fund launched in the UK and two new mandates won in the US and China.
During the year, the company hired new heads of distribution for North America and Europe & Asia-Pacific and invested heavily in its business to support growth leading to a 26% increase in headcount.
Chief executive Ian Simm remains positive on the outlook: ‘Looking ahead to 2023, for companies exposed to the transition to a more sustainable economy, the current environment is providing positive tailwinds.
‘Over the longer term, we expect the rise in input prices to drive an increased focus on energy- and resource-efficiency and to accelerate the shift to diversify energy supplies and decarbonise economies.’
WHAT DO ANALYSTS THINK?
Alexander Bowers at Berenberg said both earnings per share and operating margins were ahead of his forecasts thanks to ‘resilient net inflows and effective cost management’.
Bowers also noted that as of the end of October assets under management had risen to £37.4 billion, back above their September 2021 level once again, and markets are supportive with the MSCI All Country World Index gaining 12% since the firm’s year-end.
After a fall of nearly 50% in the stock price this year, which has brought the prospective PE (price-to-earnings) ratio down to 19 times, Bowers sees the current price as ‘attractive entry point for a company that is well positioned to benefit from the structural sustainability growth story’.
