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A turbo call to capitalize on the acceleration of Arkema’s refocusing

In slightly positive territory since the start of the year, the title of this former subsidiary of Total is doing well. And it is probably not over. The movement can be played with leverage by means of a turbo call.

This former subsidiary of Total, specializing in chemicals, has changed a lot since its IPO in 2006. At the time representing barely half of its turnover, specialty materials with a high technological content will now contribute to 87% of turnover. These are composite materials, adhesives or coatings, segments that are less sensitive to economic conditions. Arkema’s refocus is not complete. The chemist is expected to reinvest a good part of the 1.1 billion euros withdrawn from the sale of its plexiglass division to the American Trinseo to further strengthen its positions in specialty materials. Its objective for 2024 remains to achieve a turnover of 10 billion (against 8.7 billion last year) and most of this gap will be filled by external growth operations. But Arkema does not forget its shareholders either. Part of the proceeds from the sale of the Plexiglas branch could also be used to boost the reduced distribution policy during the health crisis or to finance share buybacks.

Arkema shares must not fall below 66 euros

At 15.2 and 13.3 times the estimated profits for 2021 and 2022, the title of this chemist is not overpriced and it is possible to bet on its further revaluation by means of a turbo call. The one selected is issued by BNP-Paribas with no maturity and with a safety threshold of 65.81 euros below which the share must not fall. Otherwise, the call will instantly lose almost all of its value. This risk is limited, however, due to the large difference between the current stock price and this safety threshold, which leaves the time necessary to unwind the position in the event of an unfavorable trend in the share. Meanwhile, the turbo has a leverage of 2.87 times. Thus in the hypothesis of a further progression of the title to 105 euros for example, the call will gain 29.4%. But conversely, it will lose 30.6% of its value if the share ebbs to 85 euros.

Our advice: buy an Arkema turbo call issued by BNP-Paribas (code: FRBNPP01L6D8); term: unlimited; level of funding: 62.08 euros; security threshold: 65.81 euros; parity: 10 turbos for 1 share; price: 3.33 euros; amount: 1

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