BLACKROCK NEW ENERGY INVESTMENT TRUST PLC: Portfolio Update
BLACKROCK NEW ENERGY INVESTMENT TRUST plc All information is at 31 December 2012 and unaudited.
Performance at month end with net income reinvested
One Three Six One Five Since launch
Month Months Months Year Years (23 Oct 00) Net asset value* (Undiluted) 2.1% 1.9% 4.5% -0.8% -51.3% -61.4% Net asset value* (Diluted) 2.1% 1.9% 4.5% -0.8% -51.3% -61.4% Share price 3.5% 6.5% 10.9% 9.5% -53.0% -66.9% Source: BlackRock
At month end Net asset value - capital only (undiluted): 36.58p Net asset value - cum income (undiluted): 36.80p Net asset value - capital only (diluted): 36.58p Net asset value - cum income (diluted): 36.80p Share price: 33.00p Discount to cum income NAV**: 10.33% Subscription share price: 0.275p Net yield***: 0.5% Total assets including current year revenue: £86.46m Gearing: Nil Ordinary shares in issue****: 234,969,227 Subscription shares in issue: 45,630,584
** Discount to NAV based on fully diluted NAV. *** Based on a final dividend of 0.15p per share in respect of the year ended 31 October 2012. **** Excludes 11,900,000 shares held in treasury.
Benchmark Sector Analysis Total Assets (%) Country Analysis Total Assets (%)
Enabling Energy & Infrastructure 31.4 USA 34.3 Energy Efficiency 22.1 Canada 8.6 Renewable Energy Developers 21.0 Denmark 7.0 Alternative Fuels 16.2 France 6.8 Renewable Energy Technology 4.8 United Kingdom 6.1 Net current assets 4.5 Germany 4.2
----- China 4.1 100.0 Portugal 3.8 ===== Switzerland 3.2 Finland 2.9 South Africa 2.9 Belgium 2.1 Italy 1.9 Brazil 1.6 Australia 1.6 Japan 1.6 Spain 1.5 Ireland 1.3 Net current assets 4.5 ----- 100.0 ===== Ten Largest Investments (in alphabetical order) Company Country of Risk ABB Reg Switzerland EDP Renovaveis Portugal ITC Holdings USA Johnson Controls USA Johnson Matthey UK NextEra Energy USA Novozymes Denmark Quanta Services USA Sasol South Africa Schneider Electric France Robin Batchelor and Poppy Allonby, representing the Investment Manager, noted: The NAV of the Company appreciated by 2.1% in December. For reference, the MSCI World Index returned 0.3% and the WilderHill New Energy Global Innovations, an index that is representative of the sector, gained 5.7% (Datastream, in sterling terms). Positive economic data from China bolstered markets during the month with flash HSBC PMI (Purchasing Manager's Index) rising to 50.9 (a 14-month high) and power consumption rising by 7.6% (yoy). However this positive momentum was somewhat offset by concerns over the looming US fiscal cliff and the potential ramifications of the US slipping back into recession. Reports of financial support from the Chinese Government for the ailing solar sector contributed to an improvement in sentiment towards the sub-sector during the month. A $2bn (13bn yuan) subsidy for domestic solar installations in China will provide some support to solar technology companies in the near term, but is unlikely to resolve the issue of overcapacity and pricing pressure. Performance EDP Renovaveis, the wind farm developer, confirmed that it would be selling a stake in its Portuguese wind farms to China Three Gorges (a Chinese state utility). This news was well received by the market as the transaction took place at an attractive valuation and will help EDP Renovaveis to reduce its debt levels. The share price consequently rose over the month and was a positive contributor to performance in December. Johnson Controls provided the market with an update at their analyst day in December. The company announced that they expect their profits to beat analyst estimates in 2013. Both energy efficiency and power solutions are key strategic priorities for the business and are expected to contribute strongly to profitability over the coming years as these markets continue to grow. The Company's holding in Johnson Controls was a strong contributor to performance during the month as the share price reacted to this announcement. Whilst the broader sector performed well during the month, some sub-sectors struggled to keep pace as investors took profits from holdings that had performed well in November. We highlighted in the November commentary that Vestas, the wind turbine technology company, had successfully renegotiated its credit facilities and does not believe that it will need to raise additional financing in the near term. This news continued to be a tailwind for the company in December and the Company's holding was a key contributor to performance. The aforementioned positive momentum in the solar technology sub-sector benefited the Company in absolute terms and relative to the MSCI World Index. However, for reference as the Company is underweight relative to the Wilderhill New Energy Global Innovations, this was a drag on performance versus this index. Portfolio Activity We took profits in some of our enabling energy and infrastructure and alternative fuels holdings. Outlook The Company has been positioned to benefit from areas of the New Energy sector that are experiencing strong near-term growth. The pain that the Renewable Energy Technology sub-sector has suffered is showing little sign of imminent relief. On top of general overcapacity and falling prices, the wind market is facing some regulatory uncertainty: the production tax credit the industry has benefitted from in the US is set to expire at the end of the year. The price of a solar module has fallen by over 75% from the start of 2009 rendering many producers loss making. The solar industry is reaching the point of consolidation and with a much more competitive cost structure should enjoy resurgence at some point. That moment is sufficiently distant in our view for us to remain cautious on investment in the area and we continue to prefer opportunities amongst the Renewable Energy Developers. At the other end of the sector spectrum, and with a contrasting set of industry fundamentals, lie the Enabling Energy and Infrastructure companies and certain Energy Efficiency players who are enjoying bumper growth. The shale gas revolution and power grid expansion in the US has sparked an investment up-cycle in energy infrastructure spending which continues to gather momentum. Energy Efficiency has also benefited from corporate and government cost saving - legislation to incentivize the adoption of energy efficiency technology is a more appealing option to a cash strapped government than renewable energy subsidies. We continue to believe that sector valuations are generally attractive, both relative to history and to broader equity markets, and there is scope for the positive sector fundamentals to be supported by continued M&A. 16 January 2013 ENDS Latest information is available by typing www.brneplc.co.uk on the internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3 (ICV terminal). Neither the contents of the Manager's website nor the contents of any website accessible from hyperlinks on the Manager's website (or any other website) is incorporated into, or forms part of, this announcement. -0- Jan/16/2013 16:01 GMT