- Shares tumble 13%, reversing three weeks of gains
- Sales, operating profits and inflows all positive
- Weak markets creating headwinds
Even though it posted strong gains in sales and operating earnings for the six months to March, shares in specialist sustainable investment firm Impax Asset Management (IPX) tumbled 13% to 704p in early trading.
A drop in net assets in April and fears of weak markets impacting inflows appear to have spooked investors out of the stock.
SOLID PERFORMANCE
Impax pulled in £2.5 billion of net new money in the first half, although the rate slowed to £0.5 billion in the second quarter due to the slump in markets caused by the invasion of Ukraine.
The increase took total AUM (assets under management) to £38 billion against £30 billion in the same period last year.
Meanwhile, revenues increased 46% to £88.6 million and operating profit increased 64% to £34 million, leading to pre-tax profits more than doubling from £14.4 million to £32.7 million.
‘Amid considerable market volatility surrounding the Russian invasion of Ukraine, the business once again demonstrated its resilience’, said chief executive Ian Simm.
‘Our investment approach, with its careful attention to risk and a focus on quality companies, continues to attract asset owners that are seeking to build robust portfolios focused on the transition to a more sustainable economy’ added Simm.
MARKET HEADWINDS
While the surge in energy prices caused by the war in Ukraine reinforces the long-term case for renewables, in the short term the shift by investors into ‘value’ stocks like commodities and financials did the fund and companies at the forefront of sustainable investing no favours.
The FTSE Environmental Opportunities All-Share Index fell 4.5% between the start of January and the end of March, while Impax registered a negative market movement in its equity holdings of £1.6 billion over the first half.
Even so, eight of Impax’s 10 largest strategies continue to beat their benchmarks over three years and seven out of nine strategies with five-year track records also outperformed.
EXPERT VIEW
Analysts at Peel Hunt described the first half results as ‘positive, albeit conditions became more challenging as the period progressed’.
‘The general message from the statement remains the powerful structural factors that are driving interest in the sector.’
‘Whilst markets impact full-year expectations, Impax remains well positioned competitively, with strong distribution relationships’, they added.
Impax’s funds are predominately Article 9, which means they have sustainable investment or a reduction in carbon emissions as their objective, which is a competitive advantage according to Peel Hunt as advisers are now required to engage with clients about their attitude to sustainable investing.
Given a drop in assets to £37 billion after the period end and the prospect of weaker markets continuing, the analysts shaved their 2022 and 2023 forecasts for revenues, earnings and assets while trimming their price target from £12.60 to £12.
However, considering the 43% fall in the shares over the last six months, they flagged the firm’s attractive valuation and yield.
