Ternium S.A. Ternium S.A. American Depositary Shares (each representing ten shares USD1.00 par value) (TX) fair value

ACCE thesis

Ternium, the Latin American flat-rolled steel producer, makes hot-rolled and cold-rolled coil, coated steel and tubular products, selling mainly into construction, automotive and appliance supply chains in Mexico, Brazil, Argentina and the United States. Its edge is a vertically integrated base in Mexico, with captive iron ore and self-supplied energy, which keeps unit costs low against imports and gives it a regional position that is hard to replicate. Revenue growth of 10.0% is the number to probe, since it has to be separated into volume recovery versus price, and the 12.2% operating margin against a 17.7% gross margin shows how much of the earnings line depends on steel pricing cycles. At a forward P/E of 8.5 against a trailing 15.8, the market is pricing in a sharp earnings step-up, so the question for the deeper work is whether that consensus recovery is credible, and what return on equity of 4.4% says about capital efficiency through the cycle.