Ternium: 1Q11 - Leverage (to the cycle); Our only 1-OW in steels TX reported better-than-expected 1Q11 results today. Net revenues came in at US$2,147mn, in-line with our estimate, with lower cost/expenses leading to a 12% beat at the EBITDA line. EPADR came in at US$1.03/shr, 28% higher than our projection. While partially expected, we believe the results were strong and should be positively received by the market. As a reference, TX has posted a 600bps EBITDA margin expansion during the 1Q11 vs flattish/lower margins for Brazilian steelmakers. We forecast TX's profitability will increase further over the 2Q11. All in, we maintain TX as our top-pick amongst LatAm steelmakers on: (i) attractive valuation levels, trading at 4.2x 2011E EV/EBITDA, an (unjustified) 42% discount to Brazilian peers; and (ii) stronger earnings leverage throughout 2011.