V-shaped share price recovery looks justified

Client inflows remained strong during the Q1 market rout, when many funds around the world saw some of the largest outflows in decades . That has contributed to achieving year-on-year revenue growth of 22% (£41.2m in H1-20, up from £33.8m in H1-19), adjusted operating profit growth of 36% (£10.5m vs £7.7m), and probably most importantly in such uncertain times, a further strengthening of Impax’s net cash position, up 112% from £9.7m to £20.6m. The interim dividend has been increased by 20% to 1.8p (2019: 1.5p).

In the post-results period, AUM has recovered rapidly, jumping from £14.4bn on 31 March 2020 to £17.3bn on 31 May 2020. That is a 27% annual increase measured from 31 May 2019 to 31 May 2020.

Impax has proven itself a top performer when it comes to producing long-term returns for investors. That, alongside having an attractive product suite and established distribution channels in the major capital markets of Europe, the USA and China, has resulted in it being a clear winner when it comes to attracting AUM. In a comparison with a London-listed peer group of asset managers, it ranked first in net AUM inflows during the Jan-Mar 2020 quarter and was in the top quartile over the year Apr 2019 – Mar 2020.

The V-shaped share price recovery from the March crash looks justified, and the current price of 381p is only slightly higher than our discounted cash flow valuation of 360-370p. We also remain encouraged by the macro-trend of huge amounts of capital shifting to Sustainable Investing, with Impax being a leader in that space.