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German Buffett participation: 30 percent buffer for interest and repayment – columns

Advertising. The world’s best-known investor does not seem to think much of stocks from Germany at the moment. Most recently he took a stake in T-Mobile US, but German is essentially the major shareholder Deutsche Telekom in this company. At least one title on our domestic list is held by the reinsurer General Re, a subsidiary of Buffett’s investment conglomerate Berkshire Hathaway: Lanxess – MDAX member and specialty chemicals group. The oracle from Omaha currently owns around 5.3 percent of the company’s shares.

Lanxess emerged from a spin-off from Bayer AG at the beginning of 2005 and has been an independently listed company ever since. The German chemical company develops, produces and sells plastics, additives, specialty chemicals and chemical intermediates. Customers are also helped with the development and implementation of so-called system solutions. Lanxess is active in more than 30 countries and divides its business activity into four segments: Advanced Intermediates (basic and fine chemicals, e.g. for the pharmaceutical industry or the manufacture of coatings), Specialty Additives (especially flame retardant additives), Consumer Protection (consumer protection products) and Engineering Materials (high-performance plastics).

As everywhere at Lanxess, Corona has left its mark on the course of business. In the third quarter of 2020 in particular, the company faced a sharp decline in earnings. The Cologne-based company generated 1.5 billion euros with a Q3 sales decline of 14.3 percent, but this then led to a 28 percent lower operating result of 193 million euros. Business picked up only in the Consumer Protection segment. Sales of disinfectants were roughly at the previous year’s level, but the adjusted operating result rose by more than 7 percent to EUR 59 million. In the significantly larger Advanced Intermediates and Specialty Additives segments, on the other hand, as in the Engineering Materials segment, there were significant sales declines between 14.4 and 19.3 percent and even more severe earnings losses of between 28.6 and 44.1 percent. This shows the unavoidable dependency on companies from the currently heavily troubled automotive, aviation, and oil and gas industries. These companies almost consistently buy in smaller volumes and can also enforce lower prices.

In the meantime, however, the Executive Board is looking more optimistically into the future and has also made the forecast cut in May more concrete. In the automotive industry, customer demand is picking up noticeably. In Asia, where around 25 percent of sales come from, the development is optimistic. The situation is also stabilizing in the USA, where the share of sales is around 20 percent. In Europe, however, the high level of uncertainty remains as the consequences of renewed lockdowns cannot be predicted.

An investment certificate with an attractive interest rate and a generous buffer can represent a sensible alternative to direct investments for interested investors. In this way, investors can benefit from the improved prospects of the underlying asset and limit their risk.

EUR 33.00 interest per period if the 70 percent barrier is maintained

The DekaBank Lanxess Express certificate memory with airbag 03/2027 (WKN DK0ZFA) offers the option of early repayment at the nominal amount (EUR 1,000.00) plus the corresponding interest amount of EUR 33.00 per period including the catch-up effect (memory function) when the repayment thresholds fall. If the price is not above the respective repayment threshold on any of the five valuation days, a maximum payout of 1,198.00 euros per certificate can be achieved with the final maturity in March 2027, if the share closing price on the valuation day maintains the barrier (70.00 percent of the starting value).

If the barrier is not reached on the valuation day, there is a risk of losses. In such a scenario, instead of the nominal amount, investors are given a fixed number of Lanxess shares that have fallen in value. The number of shares (reference number) results from the base price, which is also 70.00 percent of the starting value (airbag function). In addition, as with any certificate, the issuer risk must be taken into account because, in particular in the event of DekaBank’s insolvency, there is a risk of losses or even total loss of the nominal amount invested.

The subscription runs from January 4th, 2021 to January 22nd, 2021, subject to an extension or shortening.

Would you like to receive the column and further information on DekaBank certificates directly by email in the future? Then register for our certificate newsletter right away: at https://www.deka.de/zertifikate/newsletter-anmeldung

Disclaimer: The information contained herein does not constitute a recommendation to buy or sell the financial instrument and cannot replace individual advice. This advertising information does not contain all relevant information about this financial instrument. Before making an investment decision in certificates, potential investors are advised to read the securities prospectus in order to fully understand the potential risks and opportunities of the investment decision. The approval of the prospectus by the competent authority is not to be understood as an endorsement of the securities offered. The securities prospectus and any supplements can be found at https://www.deka.de/deka-gruppe/wertpapierprospekte under the tab “EPIHS-I-20”, the final terms at https://mmscache.deka.de/DE000DK0ZFA8_FT.pdf downloaded. All securities information and the current key information sheet are also available from your Sparkasse or DekaBank Deutsche Girozentrale (www.deka.de), 60625 Frankfurt available free of charge. You are about to acquire a product that is not easy and can be difficult to understand.

If courses / prices are mentioned, these are non-binding and do not serve as an indication of tradable courses / prices. The values ​​given here serve to explain the payout profile of this financial instrument. The values ​​are not a reliable indicator of future performance.

Sales restrictions: Reference is made to special sales restrictions and sales regulations in the various legal systems. In particular, the financial instruments described herein may not be offered for sale or purchase within the United States of America or to or for the benefit of U.S. persons.

Awarded four times – DekaBank’s certificate business. The top placements in the most important awards in the German certificate market underscore the excellent quality of the DekaBank certificate range. More information at www.scope-awards.com/award-2021/zertifikate/gewinner1 as well as under www.zertifikateawards.de

As Head of Private Banking and Product Management at the Deka Group, Hussam Masri is responsible for product development and product management of mutual securities funds, asset management and pension products, certificates and private banking.


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