Market turbulence in Q1 2022 (Q2 of Impax’s FY22) has certainly been a speedbump. AUM fell £3.3bn (8.1%) from £41.4bn on 31 Dec 21 to £38.0bn on 31 Mar 22. However, we think it is just that - a speedbump, with recent developments in the world of sustainable investing and geopolitics making Impax’s longer-term fundamentals even stronger.
A growing backlash against greenwashing will favour the most credible sustainable investment managers such as Impax, and dramatic moves to reduce dependency on Russian fossil fuels will certainly accelerate the shift to renewable energy, which also favours Impax.
Impressively, despite such turbulent market conditions, net inflows of £0.5bn were recorded during Q2 (Q1: +£2.0bn). Over the full H1 of FY22 (Oct 21 – Mar 22) AUM has actually grown by 2.2% (AUM on 31 Sep 21: £37.2bn).
The AUM dip has led us to trim our short-term forecasts, with revenue estimated to grow by ‘only’ 28% in FY22 to £184m (previous forecast: +35% to £193m), and adjusted operating profit to grow by 22% to £68m (previous forecast: +31% to £73m).
Our fundamental valuation is 1,260p per share, 34% above the current share price albeit down from 1,450p per share.
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