Impax Asset Management Group PLC (LON: IPX)

Impax Asset Management Group PLC is an FTSE AIM UK 50 Index listed Asset Management Company. It is one of the largest investment managers dedicated to investing in sustainable markets globally. The Company invests in companies and assets that are well-positioned to benefit from the shift to a more sustainable global economy. It seeks higher-quality companies with solid business models that demonstrate sound management of risk. The Company offers a well-rounded suite of investment solutions spanning multiple asset classes aiming to deliver superior risk-adjusted returns over the medium to long term.

Recent trend of dividend payments

(Data Source: LSE Website, Research done by Kalkine Group)

The chart above demonstrates the consistent dividend payment done by IPX from FY16 to FY20. In H1FY21, IPX paid an interim dividend of GBX 3.60 per share. It was paid on 16 July 2021.

Growth Prospects

• ESG Investment Strategy: As the world moves toward a sustainable economy, the companies leading the transition to a sustainable economy benefited from policy decisions made by many governments. The investments in these companies have led to more returns for the investors. The Company invest more than 75% of its funds in such companies.
• Global Leader: The Company is one of the largest and longest established investors dedicated to investing in the transition to a more sustainable economy and manage assets for some of the world’s largest investors.
• Strong Pipeline for Potential Investors: Due to the Company's strong performance in the equity market and benefits of the thematic investments in sustainable companies, the Company sees a large pipeline of potential investors, particularly for the Listed Equity strategies.

Key Risks 

• Market Risk: The Company's income is based on the value of AUM, any correction in the market could impact the revenue of the Company. Furthermore, the Group seeds investments in its Listed Equity funds to build a track record to market those funds more effectively. It is therefore directly exposed to the market performance of the funds.
• Forex Risk: A significant percentage of Impax LN's business income is based on assets denominated in foreign currencies, with most costs are in sterling. Any sudden volatility in the currency market could impact the bottom line of the Company.
• Regulatory Risk: The Group’s operations are subject to financial services legislation and regulations, including minimum capital requirements and compliance requirements.
  

Now we will analyse some key fundamental and shareholders statistics of Impax Asset Management Group PLC.

Trading update for Q3FY21 (reported on 7 July 2021)

(Source: LSE Website)

The Company's AUM reached £34.4 billion as of 30 June 2021, an increase of around 14.8% for the quarter and 70.7% YTD. Moreover, the net inflows were £2.3 billion, driven by high client demand.

H1FY21 Financial and Operational Highlights (for the six months ended 31 March 2021 as of 27 May 2021) 

(Source: LSE Website)

• Driven by diversified growth across channels and geographies, the net inflows were £6.8 billion, lifting AUM to £30.0 billion.
• The Company acquired Pax World Management LLC, which will position its North American business for further expansion.
• The strong recovery and bullish movement across markets increased the revenue to £60.6 million from £41.2 million in H1FY20. 
• It resulted in PBT surging to £14.4 million against £8.0 million in H1FY20.

Share Price Performance Analysis

 (Source: Refinitiv, Research done by Kalkine Group)

On 21 September 2021, at 8:00 AM GMT+1, IPX’s shares were trading at GBX 1,196.00, same as the previous day closing price. Stock 52-week High and Low were GBX 1,330.00 and GBX 460.00, respectively.

On a daily chart, IPX's price is sustaining between the middle and lower Bollinger bands. Hence, there could be an uptick in the stock price in the near term.

In the last one year, IPX’s stock has delivered an excellent positive return of ~133.85%. Also, it has outperformed the FTSE All-Share Financial index with a return of about 42.88% and the FTSE AIM UK 50 index with a return of about 36.56%.

Valuation Methodology: Price/Earnings Approach (NTM) (Illustrative)

Business Outlook

IPX had demonstrated sustainable client demand resulted in significant net inflows during Q3 FY21. Moreover, the Company would seek and invest in the opportunities emerging from the transition to a more sustainable global economy. Meanwhile, IPX had expected the rapid vaccination programme would accelerate the global GDP growth and corporate earnings. The post-pandemic fiscal stimulus packages would improve consumer sentiments and create new jobs. Overall, the Company would generate lucrative returns for the shareholders supported by the strong brand, global expansion, and the proven distribution network positions.

Considering the Company’s investment strategies, diversified portfolio across globe, increasing AUM, its continued investments, the improved profitability, liquidity and leverage position of the business on YoY basis, and support from the valuation as done using the above method, we have given a “Speculative Buy” recommendation on Impax Asset Management Group Plc at the current price of GBX 1,196.00 (as on 21 September 2021 at 8:00 AM GMT+1), with lower-double digit upside potential based on 34.08x Price/NTM Earnings (approx.) on FY22E earnings per share (approx.).

*The reference data in this report has been partly sourced from REFINITIV.

*All forecasted figures and Peers/ Industry information have been taken from REFINITIV.

*Dividend Yield may vary as per the stock price movement.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

Disclaimer

References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.

This website is a service of Kalkine Limited. Kalkine Limited is a private limited company, incorporated in England and Wales with registration number 07903332. Kalkine Limited is authorised and regulated by the Financial Conduct Authority under reference number 579414.

The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. No advice or information, whether oral or written, obtained by you from Kalkine or through or from the service shall create any warranty not expressly stated. Kalkine does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation.

Kalkine does not offer financial advice based upon your personal financial situation or goals, and we shall NOT be held liable for any investment or trading losses you may incur by using the opinions expressed in our publications, market updates, news alerts and corporate profiles. Kalkine does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation. Kalkine’s non-personalised advice does not in any way endorse or recommend individuals, investment products or services for your personal financial situation. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional authorised financial planner and adviser. You should be aware that the value of any investment and the income from it can go down as well as up and you may not get back the amount invested.

Kalkine Media Limited, an affiliate of Kalkine Limited, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.