BLACKROCK NEW ENERGY INVESTMENT TRUST PLC: Portfolio Update
BLACKROCK NEW ENERGY INVESTMENT TRUST plc All information is at 31 January 2013 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) 7.7% 11.0% 13.8% 4.4% -36.9% -58.4% Net asset value (Diluted) 7.7% 11.0% 13.8% 4.4% -36.8% -58.4% Share price 7.7% 13.3% 16.5% 15.1% -40.5% -64.3% Source: BlackRock
At month end Net asset value - capital only (undiluted): 39.43p Net asset value - cum income (undiluted): 39.49p Net asset value - capital only (diluted): 39.43p Net asset value - cum income (diluted): 39.49p Share price: 35.38p Discount to cum income NAV**: 10.41% Subscription share price: 0.275p Net yield**** 0.4% Total assets including current year revenue: £92.78m Gearing: Nil Ordinary shares in issue***: 234,969,227 Subscription shares in issue: 45,630,584
** Discount to NAV based on fully diluted NAV. *** Excludes 11,900,000 shares held in treasury. **** Based on a final dividend of 0.15p per share in respect of the year ended 31 October 2012.
Sector Analysis Total Assets (%) Country Analysis Total Assets (%)
Enabling Energy & Infrastructure 30.7 USA 33.9 Energy Efficiency 22.0 Canada 8.3 Renewable Energy Developers 21.9 Denmark 7.6 Alternative Fuels 14.9 France 6.7 Renewable Energy Technology 5.1 United Kingdom 6.7 Net current assets 5.4 China 4.5
----- Germany 4.3 100.0 Portugal 3.9 ===== Switzerland 3.2 Finland 2.8 South Africa 2.8 Italy 2.2 Belgium 1.9 Australia 1.6 Brazil 1.6 Ireland 1.3 Spain 0.7 Japan 0.6 Net current assets 5.4 ----- 100.0
Ten Largest Investments (in alphabetical order)
Company Country of Risk ABB Reg Switzerland Altagas USA EDP Renovaveis Portugal ITC Holdings USA Johnson Controls USA NextEra Energy USA Novozymes Denmark Quanta Services USA Schneider Electric France Transcanada Canada
Robin Batchelor and Poppy Allonby, representing the Investment Manager, noted:
The NAV of the Company appreciated by 7.7% in January.
For reference, the MSCI World Index returned 7.6% and the WilderHill New Energy Global Innovations, an index that is representative of the sector, gained 10.3% (Datastream, in sterling terms).
Equity markets started the year with a spring in their step. US policy makers managed to avert the 'fiscal cliff' and agreed to suspend the country's debt ceiling which was hovering ominously above current borrowing levels. Some encouraging economic data, particularly from China, also gave sentiment and risk appetite a lift.
China has made a significant commitment to renewable energy and further supportive rhetoric was forthcoming in January. Smog reached record levels in Beijing raising pollution concerns and factories were closed and government vehicles taken off the roads in response. The administration also announced plans to increase its target for solar-power installations in 2015 by 67%.
Spain took further measures to reform its energy industry. The government has been grappling with an energy budget deficit, but is reluctant to increase energy costs for its austerity-burdened population. Among the latest set of measures, the government will cease the linkage between power tariffs and consumer price index inflation as well as move renewable energy assets onto fixed feed-in tariffs, to the detriment of the companies exposed. The overhaul is intended to save between €600 and €800 million a year.
Performance Novozymes, the leading enzyme manufacturer, announced robust results during the month and guided positively. The stock contributed strongly to absolute performance. The limited exposure the Company has to the Chinese solar industry also performed well on the back of the statements of government support.
The Company's position in Johnson Matthey, the auto-catalyst manufacturer, detracted from performance as the company offered a weaker than expected update citing soft European auto sales and risks to the renegotiation of one its important supply contracts.
Portfolio Activity We initiated a holding in a UK energy infrastructure company and trimmed our US energy infrastructure exposure on the back of some strong performance.
We also exited a Spanish new energy company on the less favourable pricing environment.
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 benefitted 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 subsidy.
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.
At a General Meeting of the Company held on 25 July 2012 shareholders approved the removal of the requirement for an annual continuation vote and replaced it with the obligation for the Board to put forward proposals that shareholders be given the opportunity to elect to receive an amount per share in cash of NAV less applicable costs, shortly after the AGM in 2014.
15 February 2013
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.
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