A turbo call to play a Plastic Omnium catch

Severely sanctioned yesterday following the publication in the third quarter of sales below expectations, this automotive supplier is maintaining its annual profitability targets and has the means to take advantage of the recovery in the Chinese market.

Among the disappointments of this third quarter publishing season is automotive supplier Plastic Omnium. Controlled by the Burelle family (58.7% of the capital) and specialized in modules (bumpers, tailgates) and intelligent bodywork systems (front block, fuel system) and hydrogen storage systems, the OEM was (too) severely sanctioned on the stock market yesterday. In question, the publication of a turnover lower than expectations. Expected to be around 2.15 billion (including the equity method) and 1.99 billion for the consolidated scope, the volume of invoices showed an organic decrease of 3.1% to 2.1 billion and 4.9 billion. % to 1.92 billion in its consolidated form. A performance lower than that of global automotive production, down 4.3% over the last three months (after -33% in the first half of the year) while the equipment manufacturer is used to doing much better. Moreover, its ambition to outperform its reference market by 5 points over the year is no longer mentioned by the group. Most importantly, profitability targets are maintained. Thanks to the implementation of a savings plan of 240 million per year by 2022, the gross operating margin should return to above 10% from the second half of this year, along with profitability current operating income of at least 4% and generating cash flow of over 250 million. Which, for the full year, should lead to a gross operating margin of over 8% and a positive operating margin. But beyond these quantified projections, Plastic Omnium has a strategic advantage to benefit from the already significant recovery of the Chinese market with an industrial tool of 29 sites located in the country.

3.85 times leverage

At 14 and 9 times the estimated profits for 2021 and 2022, the title is not very expensive compared to an average ratio of 13.4 times observed over the period of 2013-2019 and in view of the strength of the balance sheet (debt net limited to 49% of equity at year end). A turbo call makes it possible to bet on a rebound of this quality value. The selected certificate is issued by BNP-Paribas without expiry and with a security threshold of 16.6 euros, below which the share must not fall. Otherwise, the turbo will be immediately deactivated and the investor will have lost almost all of their down payment. However, the large difference between this threshold and the current prices of the security reduces the risk profile of the call and provides the time necessary to unwind the position in the event of an unfavorable change in the security. Meanwhile, the turbo has an interesting leverage of 3.85 times. So in the hypothesis of a rebound of the action to 23.50 euros for example, the call will appreciate by 40.3%. But conversely, if the stock continues to fall to 19 euros, the certificate will lose 38.6% of its value.

Our advice: buy a Plastic Omnium turbo call issued by BNP-Paribas (code: FRBNPP01NEB2); term: unlimited; level of funding: 15.6595 euros; security threshold: 16.6 euros; parity: 10 turbos for 1 share; price: 0.57 euro; portion: 1.


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