Tough H1 for Impax, but shares look detached from fundamentals
Impax is hardly the disaster implied by its share price, which is down 31% over six months and 68% over 12 - a forward PE of just 8.5 for a business with £65m of net cash and no debt.
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I recently published my Equity Development note covering Impax’s H1-25 results.
Key points include:
Impax is currently on the wrong side of a common narrative - that sustainable investing is dead. While the ‘ESG bandwagon’ may be dying, the global sustainable fund market has not shrunk, remains vast at over US$3trn in assets, with ample evidence of demand for credible offerings.
Within this space, many competitors’ interest is waning. There are fewer fund launches and more fund closures. With one of the most credible track records, Impax could capitalise. Moreover, investment performance is improving with 71% of AUM outperforming benchmarks YTD, which should be a tailwind making Impax an attractive destination for clients’ capital.
It has noted stronger interest for its offering in its outlook for H2 and beyond with a number of new accounts won. Prospects for its fixed income business, expanded by two recent acquisitions, look especially good with strong demand for active management in the fixed interest space.
Impax has demonstrated impressive nimbleness to keep its financials strong. It has cut over 30 roles (10% of headcount), reducing run-rate annual costs by c. £11m. Its adjusted operating margin of 27% is only slightly below the sector median and should recover rapidly with AUM growth.
The balance sheet remains robust with net cash of £65m and no debt. Cash and on-balance sheet investments (seeding of funds) now make up 37% of the market capitalisation (and that is at the low point of the annual cash cycle due to dividend and annual bonus payments in H1).
Read the full note here. You can also see management’s presentation of H1-25 results here.
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Disclosure: At the time of writing, Paul Bryant was a shareholder of Impax Asset Management and covered Impax as an analyst on behalf of Equity Development Limited. Read Equity Development’s research on Impax here. And please read this link for the terms and conditions of reading Equity Development’s research.