Thursday, 20 October 2022 Reading time : 2 minutes

When the outlook from economic journalists is bleak and markets send mixed signals, it becomes more difficult to find attractive risk-return profiles, especially for risk-conscious investors.

In such situations, barrier reverse convertibles with defensive parameters may be suitable. The still elevated volatility provides attractive option premiums, while low barriers reduce the probability of a barrier hit event.

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(C)BRC on Lonza, Zurich and Richemont with barrier at 49% (CHF)

• BRC: 10% coupon p.a.
• Callable BRC: 13% coupon p.a.
• 12 months maturity
• Termsheet BRC / Callable BRC

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The instrument is in subscription until October 25. Interested investors will find some information on the underlyings below, ZKB Equity Research rates all of them as "overperform".

Lonza
The CDMO (Contract Development and Manufacturing Organization) has not only delivered impressive sales growth for several years, but is also presenting plans to further increase its already attractive EBITDA margin. Thanks to the pharmaceutical company's strong market position and focus on strategic core areas - Lonza sold its life science ingredients segment in 2021 - there should be little in the way of achieving these goals. Lonza is very well positioned in growing drug classes thanks to its high degree of innovation and has a solid balance sheet.

Zurich
The only SMI share that has not performed negatively YTD is that of Zurich Insurance. The share price increase of almost 4% (SMI: -18.7%) is due to the crisis-resistant business model, which allows the company to achieve very good results even in times of uncertainty. These results are also reflected in the dividend yield, which at over 5% is noticeably higher than the SMI average.

Richemont
The luxury goods group Richemont also had price setbacks in 2022. Nevertheless, ZKB Equity Research assumes that the company's results will develop positively, which is not reflected in the current price - among other things, the increasing number of young luxury goods consumers can be seen as a positive price catalyst. By selling shares in Yoox Net-A-Porter, an online fashion retail, Richemont is also strengthening its focus on the growing brand-named jewelry and watches segment, an area in which the company is already in a leading market position.

 

Disclaimer
This communication is for marketing purposes. It is neither an offer nor an invitation to submit an offer, to purchase or to subscribe to securities and does not constitute investment advice. You should consult your advisors before making an investment decision.
Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, financial condition, development or performance of the issuer to be materially different from any future results, financial condition, development or performance expressed or implied by such statements.
The present document has not been drawn up by the research department as defined in the rules of the “Directives on the Independence of Financial Research” published by the Swiss Bankers Association, hence these rules do not apply to this document.
If securities are mentioned in the communication, the base prospectus, the final terms and any key information document may be obtained free of charge from Zürcher Kantonalbank, Bahnhofstrasse 9, 8001 Zurich, VRIS, and from www.zkb.ch/finanzinformationen.