Snap shot May 12th, 2009

The green values and the rebound: contrasted behaviours

During the technical rebound, the environmental values reacted in different ways :

  1. Defensive values (green utilities, etc.) : These values did resist well to the decrease movement but were not able to capture all of the rebound. But since the beginning of May (from 4th to 11th), they begin to fill their gap: EDF Energies Nouvelles (+7.8%), Suez Environnement (+5.16%), EDP Renovaveis (+8.54%) or Séché (+8.76%).

    Focus : the comeback of Veolia — click here for more information

    Veolia announced an increasing quarter results of 5% which was superior to the expectations (due to the well resistance of the water activity and the significant growth of the energy activity). The group continues to maintain its strategy of profitability's improvement on the short run in reducing its costs and the sell-off of its non strategic assets. The slow down of the investment's rhythm enables the group to generate recurring cash flows linked to its activity which still offers a high visibility.

  2. Cyclical values (constructors) : These values performed well during April :

    Focus : Vestas, a hope for the wind power sector — click here for more information

    Vestas' results and its capital increase (10%), announced at the end of April, were greeted favourably by the investors (+25% rise since 28.04.2009). This is a significant signal for the upstream of the wind power sector (constructors) as investors preferred to keep apart from this part of the supply chain due to the overcapacity problems and led to the reduction of 1900 employments in Europe. The forecasting of 20% of the sales' growth in 2009 indicates a more rapid restarting of the projects located on the upstream than expected. The extension of the delay period to obtain a credit is no more a constraint regarding these perspectives.

  3. US Values : These values benefited from the acceleration of the development's rhythm of solar or wind American projects, a direct consequence of Barack Obama's measures. The second motor of this growth will be, without any doubt, China which has just tripled its wind power objectives: from 30 to 100 GW in 2020 and doubled its installed capacity objective in the solar sector.

    Focus First Solar : click here for more information

    The stock price of First Solar recorded an increase of 32% during the month. The reporting were superior to the expectations and this increase is also due to the competitive advantage of this technological leader to capture the growth of the US market :

    • The continuing decrease of the costs (5% in Q1 2009) enabled the company to go below 1 $ per watt and therefore be less exposed to the erosion of the margins due to the overcapacity of the modules industry.
    • A better access to credit due to its visibility: the company obtained funds for the building of one of the most important solar farms in Germany (53 MW)
    • A vertical integration strategy enables the company to control the demand of the upstream. First Solar has just signed with OptiSolar a development project of a 500 MW capacity in California, a record in terms of installed capacity in the US.

Which impact on our fund management ? Be able to capture the growth with a defensive approach...

Performance Environnement International, 30% of the portfolio includes US values which were able to capture 100% of the rebound. Over the next months, the fund should benefit from the boom of the renewable energies in China.

One-month performance (April 2009): +11.5% against 11.07% for the MSCI World.

Performance Environnement : as we have anticipated the good reporting of Vestas and Gamesa, we repositioned step by step our investments on less cyclical companies (10% of the portfolio) which enabled us to capture approximately 80% of the technical rebound. We keep apart from the sector such as waste recycling which cyclical business models represent a real risk (linked to the raw material and dropdown of the demand). The liquidity of the portfolio ,which improved due to our repositioning on big caps, enables us to monitor the fund with a significant reactivity. The comeback of the defensive values should favourably impact the performances on May.

One-month performance (April 2009): +11.5% against 14.70% for the Eurostoxx 50.

  • Since the beginning of the year, these two funds record positive performances, outperforming their respective benchmarks.
  • The reporting of the companies' results in the portfolios confirm that the companies are less exposed to the economic context and that their growth perspectives are still intact.
  • Our aim: to reinforce our investments in the sectors which offer significant growth perspectives and in the same time to keep our defensive approach.