Hits: 11

7 July 2020

Impax – Q3 Update

Share Price 362p

Mkt Cap £473m

Conflict Disclosure: No Holding 

  • Results Net inflows were 6.6% in the quarter to June which with strong markets resulted in AUM growing 25.8% to £18.1bn. The pipeline of new business is reported to be “attractive”.
  • Estimates Revenue to Sept 20 is anticipated to grow 2% and 10% the following year. AUM is now 23% ahead of where it was a year ago so holders can look forward to substantial upgrades.
  • Valuation EV/AUM 2.6%. PE 29.7X prior to upgrades. Yield 1.7%
  • Conclusion I have allowed the small matter of the low 25.6% operating margin to cloud my views. The inflows are set to continue while the company markets itself as the sustainability fund management company.  I struggle to believe that with an excessive cost base it can be truly sustainable, but I look set to remain wrong for now.

4 June 2020

Impax Asset Mgmt – H1 Results

Share Price 395p

Mkt Cap £515m

Conflict Disclosure: No Holding

  • Results Despite net inflows amounting to 12% of AUM the total AUM was down 4% over the 6 months to March. The company is quick to point out that AUM rose 10% in April. Revenue up 21.8% to £41.2m and adjusted operating profit up 36% to £10.5m. If we deduct share based payments operating profit is up 26%. Outlook is difficult to predict.
  • Estimates £78.4m revenue is anticipated to September and 53% of this has been delivered in H1. Given AUM are 19% ahead of where they were last March that shouldn’t trouble the scorers.
  • Valuation PE 29.7X.
  • Conclusion In my view the market has mistaken this stock for a unicorn. Despite its success and scale the company only delivers 23% operating profit margin post share based payments while Liontrust delivers 36%. It has momentum but it is important to take profits.


7 April 2020

Impax Asset Management – Q2 Update
Share Price 300p
Mkt Cap £391m
Conflict Disclosure: No Holding

Update Net inflows were 6.6% (£1.1bn) in the 3 months to March while the market headwind was 17.2% resulting in £14.4bn AUM.

Estimates AUM is now 8% ahead of March 19 while estimates anticipate 12% EPS growth to September 2019. It would be quite an achievement to not suffer a downgrade in the current market

Valuation EV/AUM 2.6%. PE 23.3X Yield 2.4%

Conclusion My concern that investment in green assets can be highly cyclical has proved unfounded so far as momentum continues. The valuation of the shares is anticipating the momentum will continue.

19 March 2020

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Impax Asset Management – AGM 

Share Price 222p

Mkt Cap £289m

Conflict Disclosure: No Holding

  • Statement AUM at end February was £16.3bn, a rise of 8% over 5 months. During March the funds have generally performed in line with the market with modestly negative net outflows.
  • Estimates  A 12% revenue increase is expected for the year to September 2020. Likely to come down on the back of a 27% market fall in March, but who knows where the market goes between here and September.
  • Valuation PE 17.2 on current estimates.  
  • Conclusion I recall what was called “green” investing being very cyclical in 2008. As soon as there is a crisis ESG gets relegated down the priority list.  The most expensive quoted fund manager could also be the most vulnerable.

8 January 2020

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Impax Asset Management – Trading Update 

Share Price 387p

Mkt Cap £504m

Conflict Disclosure: No Holding

  • Update Net inflows were 5.1% over the quarter to December taking AUM to £16.1bn. The company says with policy makers commitment to a sustainable economy the company stands in good stead.
  • Estimates AUM is up 29% over 2019 while forecasts anticipate 12% revenue growth in the year to September 2020. Revenue looks 10% too low.
  • Culture: The company has no star culture but the flip side is that staff are well paid. Last year 26% operating margin was delivered which is extraordinarily low for a fund manager with £16bn of AUM.  
  • Valuation PER 30X Yield 1.7% EV/AUM 2.6%
  • Conclusion The high rating is anticipating upgrades which are likely to come through. The company is in the right place at the right time. With little operational gearing I find myself unable to pay the price, but the momentum may continue for a while.

4 December 2019

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Impax Asset Management – FY Results 

Share Price 298p

Mkt Cap £388m

Conflict Disclosure: No Holding

  • Results The 21% uplift in AUM over the year drove revenue increase of 12% to £73.7m, a revenue yield of 53 bps. PBT was up 29% to £18.9m. Adjusted operating margin was 24.4%, down from 30% in the prior year. EPS up 35% to 12.2p and a DPS of 5.5p. New dividend policy of paying out 55% to 80 % of PAT which on these numbers would be 6.7p to 9.8p. Net cash £26m and solid outlook. The contribution from the Pax acquisition was lower than expected at £1.3m due to outflows from funds and markets. The consideration for this acquisition is expected to be £36.3m which looks high.
  • Estimates Results look politely ahead of forecasts. And a 22% increase in PBT is expected going forwards.
  • Valuation PER is 23X and yield 1.8%.
  • Conclusion The company is well positioned and highly rated. The operating margin is however lower than the majority of it peers resulting in 25% ROE while it trades at 6.1X NAV. At the current rating there is little room for disappointment. After a strong run in the shares from 230p in September shareholders should be taking profit.

8 October 2019

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Impax Asset Management – AUM Update 

Share Price 246p

Mkt Cap £321m

Conflict Disclosure: No Holding

  • Update Net Inflows of 1.6% combined with 1.9% help from the market to increase AUM to £15.05bn over the quarter to September. For the full year AUM is now up 20%.
  • Estimates Forecasts anticipate £17.5m PBT for the year to September and a further 21% growth in the year ahead to £21.1m, EPS 12.7p which look reasonable in the light of 20% AUM growth.
  • Valuation PER 19.4X the year ahead and yield 2%. EV/AUM 2%
  • Conclusion The shares are cheap on an EV/AUM basis and expensive on a PER basis by virtue of the low operating margins the company achieves. Better operational gearing to the environmental theme can be obtained at Liontrust where the PER is 13.4X.

8 July 2019

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Impax Asset Management – AUM Update  

Share Price 280p

Mkt Cap £365m

Conflict Disclosure: No holding

  • News The time honoured tradition of the strong quarterly update coming out early kicks off with Impax starting the June quarterly fund manager updates today. Net inflows were 1.9% over the quarter and a very strong market performance meant AUM was up 10% over the quarter to £14.5bn. This is put down to the transition to a more sustainable economy.
  • Estimates Pre tax profit is expected to grow 20% to £17.6m in the year to September 19. With AUM 23% ahead of 12 months ago this should be achieved without breaking sweat.
  • Valuation PER 21.2X yield 1.8%%
  • Conclusion Operating margins are 25% which is lower than any other comp at this scale of AUM.  The top line looks set to grow well but on 21X and with less operational gearing than comparators investors will make more money elsewhere. This is one to send the CV to instead.  

5 June 2019

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Impax Asset management – H1 Results 

Share Price 279p

Mkt Cap £365m

Conflict disclosure : No holding

  • Results Revenue up 31% to £33.8m and PBT up 69% to £9.3m. Adjusted EPS down 10% from 4.8p to 4.4p which I think is a typo as the notes show the EPS increasing from 3.6p to 6.2p. Average revenue run rate was 55 bps on £13.3bn AUM.
  • Estimates The forecasts to September 2019 are for £69.9m revenue of which 48% has been delivered in H1.  With fund performance strong this looks undemanding and we may get upgrades (again) over the next 3 months.
  • Valuation PER 21X yield 1.75% which may be anticipating upgrades
  • Conclusion I struggle to view this as a long term holding largely because of the 45% bonus pool payout which is higher than for any comparators.  But that has been very wrong for some time.  It may well keep going.

8 April 2019

Impax Asset Management – AUM update 

Share Price 235pp

Mkt Cap £306m

Disclosure No holding

  • Update The first asset manager to report quarterly flows to March is always a good one. Net inflows were 4.6% over the quarter to March. Positive markets meant that total AUM was up 15% to £13.25bn.
  • Estimates Estimates look for 6% revenue growth in the year to September 2019. With AUM up 6% over H1 this looks an undemanding forecast.
  • Valuation PER 19.8 and yield 2%. EV/AUM is low at 2% on account of the low level of profitability of the AUM relative to the scale of the AUM.
  • Conclusion This company has a strong niche in environmental funds and consequently is harvesting AUM rapidly. The low operating margin of 23% is because the costs are too high for the scale of the business. With the business no prioritising shareholder returns I find myself preferring Liontrust which has a strong ESG franchise and consequently strong flows. Liontrust trades at 2.5% EV/AUM and operating margins of 31%.

7 January 2019

Impax Asset Management -AUM update 

Share Price 205p

Mkt Cap £268m

  • Update AUM decreased 8% over the quarter to December which is made up of 10.6% market declines and net inflows of 2.9%. Fixed income, smart beta and US suffered outflows while the thematic equity funds continued to drive inflows
  • Estimates At December 2017 Impax had £11.3bn AUM which was £11bn by March 18. This is now £11.6bn AUM. Against this backdrop the 15% revenue growth forecast for the year to Sept 19 may be aggressive
  • Valuation EV/AUM is 2.1%. PER 16.2X and yield 1.8%
  • Conclusion The shares are off 26% from their highs and this remains a market play. Given market uncertainties and US outflows perhaps not quite cheap enough yet. The other fund managers yet to report could be interesting this year.

6 December 2018

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Impax Asset Management – FY Results  

Share Price 218p

Mkt Cap £284m

  • Results The company reports AUM up 72% largely as a result of the US acquisition. Net inflows over the year to Sept 18 were 14% which were weighted towards the early part of the year with net inflows slowing post the acquisition of Pax. Revenue was up 101% to £65.7m and PBT up 150% to £14.6m delivering a 22% PBT margin. Adjusted EPS was 12.4p and the normalised DPS for the year was 4.1p. Since the period end AUM has declined to £12.2bn as a result of markets but inflows continue and performance is strong
  • Estimates At the period end the revenue run rate was £69m giving a revenue yield on the AUM of 56 bps. Forecasts to September 2019 assume £78m of revenue which will need better markets or strong inflows to achieve
  • Valuation Forward PER is 19.1X and yield 2.5%. EV/AUM is 2.3%. Cheap on an EV/AUM basis but because of the comparatively low operating margins the PER is high.
  • Conclusion The shares are up 311% over the last two years. Net inflows continue at a slower rate but with the shares looking expensive there may be cheaper stocks elsewhere in this market.