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Ternium S.A. Message Board

  • laluz_brillante May 4, 2011 5:50 PM Flag

    Great Earnings.

    Earnings of $1.03 a share this QUARTER. $.84 without FX gain on Mexican subsidiary US debt or Sidor repayment.

    Tons shipped and prices increased as expected. Shipments will increase in Q2 as well.

    The Siderar dividend issue should be resolved soon. Trading in Siderar is currently halted on the Argentine Bolsar.

    The Argentine government announced it will not sell its 26% stake in Siderar to Techint. Fine, $700 million cash saved for now.

    Siderar trades at roughly 5x earnings. Ternium owns 69% of it. Its already discounted for political risk.

    Ternium closed at 1.13 x book value. Really, who could build and compete with them in Latin America and Mexico for less than their depreciated book value? No wonder Nippon chooses to partner with them.

    How low the lows were today. Some funds just don´t want Argentine companies due to the government interference and perceived risk. But those are already discounted and the external clouds should clear soon.

    I bet we will see $40 by June, $45 by October. How, from $33 now you ask in astonishment? Hedge funds, short covering, and Elections.

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    • 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.

18.41-1.41(-7.11%)Jun 24 4:04 PMEDT