Most people are unlikely to know what to do with the tiny components of AMS, let alone how they work. And yet millions of smartphone users use the sensors of the Austrian technology company every day. For example, AMS' semiconductors provide optimized OLED displays or 3D optics. One of the most prominent customers is Apple - the iPhone manufacturer includes AMS on its official list of the 200 most important suppliers. Although the company, which is listed on the SIX, is working on other megatrends such as autonomous driving, smart home or e-health in addition to the smartphone boom, the mid-cap has lagged behind the tech rally in recent years. But in the end AMS was able to gain ground.
In mid-month, the SMIM member climbed above the horizontal barrier in the CHF 17 range and approached the 200-day line. However, it was not enough to jump above the moving average. Rising Covid-19 infection figures in many places and the associated concerns about renewed lockdowns put pressure on the stock markets. AMS fell back towards the outlined resistance line. The subdued investor sentiment cannot stop the operational tailwind. Last week positive signals in this regard came from the subsidiary Osram. The lighting technology specialist, which was recently acquired by the Austrians, no longer sees the prospects for the current 2019/20 fiscal year as bleak as before. The multi-billion dollar acquisition and associated capital measures are considered to be one reason why AMS was particularly hard hit in the Corona sell-off.
Fears that the core business could collapse in the wake of the crisis have not yet come true. In the second quarter of 2020, AMS was able to increase its operating profit by a whopping 84%, with sales growth of 13%. In the current quarter, CEO Alexander Everke wants to increase sales - excluding Osram - by up to almost 24% compared to the previous period and also to improve the margin. Towards the Christmas business Apple could be particularly hard on the Austrians. Experts expect the Californians to present the iPhone 12 soon. Then the bestseller will be 5G-capable for the first time. According to an agency report, Apple has agreed with its suppliers that at least 75 million iPhones will be built in 2020 to use the new mobile phone standard. Nevertheless, it also depends on the general market environment whether the AMS share will quickly make a second attempt to jump over the 200-day line. If investors remain cautious, the sideways movement that has been underway since the end of May could continue. This, in turn, would only start to waver if the share price were to fall due to the support at CHF 15.
Leonteq's Structured Product Offering offers various options for betting on a largely stable performance of AMS. Discount call warrants, also known as call spread warrants, have a rather aggressive orientation. In comparison to the classic warrant, these securities are cheaper. In return, however, they participate in rising prices only up to the cap. For such a product (security: 54237859/SIX symbol: NPDLTQ), Leonteq has fixed the strike at CHF 15, with a maximum of CHF 17. If the underlying instrument ends the term at or above the cap, the warrant would be redeemed at CHF 2. This results in a yield opportunity of almost 50% at the current ask price. If AMS goes out of trading on 18 December at more than CHF 15 but less than CHF 17, the difference between the closing price and the strike is decisive for the redemption. In contrast, investors will go away empty-handed as soon as the technology share has fallen to or below the strike price by then.
A more defensive investment alternative is offered by two freshly issued Softcallable Barrier Reverse Convertibles on AMS. With a maturity of 18 months, the products denominated in CHF differ only in terms of their barrier. Investors who wish to act with particular caution can choose the variant with a protection threshold of 49% of the initial fixing. Under this premise, Leonteq guarantees a coupon payment of 10.30% p.a. The payout is three percentage points higher at a barrier of 59% of the initial level. Either way, as soon as AMS uses up the respective risk buffer, the partial protection expires. In this case, the investment would be exposed to the full risk of the underlying asset. Please also note the softcallable feature: Leonteq can call the issue if the AMS share is quoted at or above the strike price (100% of the initial fixing) on a quarterly observation date - the first review takes place after 6 months. In this case, the nominal and pro-rata coupon would be repaid early.
We look forward to answering all of your questions about our products and how they are traded. Please don't hesitate to get in touch! Phone: 058 800 11 11, email info@leonteq.com or contact us here.
