BlackRock New Engy Portfolio Update
August 16 2013 - 6:09AM
UK Regulatory
TIDMBRNE TIDMBRNS
BLACKROCK NEW ENERGY INVESTMENT TRUST plc
All information is at 31 July 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) 5.9% 7.0% 14.0% 29.7% -33.9% -52.6%
Share price 7.6% 7.6% 14.8% 33.8% -39.0% -59.0%
Source: BlackRock
At month end
Net asset value - capital only (undiluted): 44.64p
Net asset value - cum income (undiluted): 45.02p
Net asset value - capital only (diluted): 44.64p
Net asset value - cum income (diluted): 45.02p
Share price: 40.63p
Discount to cum income NAV*: 9.75%
Subscription share price: 0.250p
Net yield***: 0.37%
Total assets including current year revenue: GBP105.79m
Gearing: Nil
Ordinary shares in issue**: 234,970,781
Subscription shares in issue: 45,629,030
* Discount to NAV based on cum income 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.
Benchmark
Sector Analysis Total Assets (%) Country Analysis Total Assets (%)
Enabling Energy & Infrastructure 28.2 USA 32.0
Energy Efficiency 22.7 Denmark 8.6
Renewable Energy Developers 22.4 United Kingdom 8.4
Alternative Fuels 13.5 France 6.8
Renewable Energy Technology 8.8 Canada 6.7
Net current assets 4.4 China 6.4
----- Germany 5.5
100.0 Portugal 3.6
===== Switzerland 3.3
Finland 2.9
Italy 2.2
South Africa 2.2
Ireland 2.0
Belgium 1.7
Australia 1.4
Brazil 1.3
Japan 0.6
Net current assets 4.4
-----
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 United Kingdom
NextEra Energy USA
Novozymes Denmark
Schneider Electric France
Scottish & Southern United Kingdom
Vestas Wind Systems Denmark
Robin Batchelor and Poppy Allonby, representing the Investment Manager, noted:
The NAV of the Company rose by 5.9% in July.
For reference, the MSCI World Index returned +5.2% and the WilderHill New
Energy Global Innovations, an index that is representative of the sector, added
+8.0% (Datastream, in sterling terms).
After a volatile month in June, July was more muted and saw equity markets
perform well, driven by European equities. At a macro level it was an
encouraging period. European data surprised on the upside with PMIs coming in
above 50, US indicators continued to recover gradually and Chinese data showed
some improvement, interrupting its previous downward trend.
Over the month, the EU commission and China finally came to an agreement
regarding the pricing of Chinese solar panels. The ease of the trade war came
as a relief to the solar market as it not only happened before the 6th August
deadline but more importantly it avoided the punitive tariff of 47.6% on
Chinese modules which the EU commission had proposed. Furthermore, the minimum
price agreed is only 5% higher than the current average price which will have a
limited impact on demand.
In July, the European Parliament also approved plans to move forward with a
review of the European carbon market. The backloading plans were originally
rejected in a similar vote in April. The positive outcome this time around was
supportive of carbon prices in the futures market.
Spain went ahead with its latest energy market reform initiative, which aims at
eliminating the tariff deficit (ie the gap between the cost of production of
energy and the price paid by consumers). The new measures took effect on 13
July and are likely to weigh on the profits of Spanish renewable energy
companies.
Performance
In the Company, solar companies with exposure to China such as Trina Solar and
Wacker Chemie benefited from the news that the EU and China had reached an
agreement and were among the top performers.
Renewable energy technology stocks also performed well in July partly due to
strong order intake numbers in the wind industry. Vestas was the top
contributor to absolute returns.
Energy efficiency holdings Schneider Electric and Johnson Controls added
significantly to returns on the back of encouraging Q2 results.
On the negative side, the uncertainty in the regulatory changes in Spain
continued to hurt our holdings with exposure to the country. EDP Renovaveis
and Acciona were among the top detractors over the month.
LED equipment manufacturers Aixtron and Veeco also performed poorly in July
after both companies reported disappointing results with no signs of a pick-up
in orders.
Portfolio Activity
Over the month, we further reduced our exposure to the Spanish electricity
market through the sale of a Spanish holding company.
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 despite some recent positive newsflow.
The price of a solar module has fallen by approximately 70% from the start of
2009 rendering many producers loss making, and, despite demand growth, the
industry remains over-supplied. We continue to believe that consolidation is
required to create a sustainable industry. We remain cautious on investment in
this area and continue to prefer opportunities among the Renewable Energy
developers.
At the other end of the spectrum, and with some positive momentum due to a more
optimistic industrial outlook, lie the Enabling Energy and Infrastructure
companies and certain Energy Efficiency players who are enjoying bumper growth.
The natural 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 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.
16 August 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.
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