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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (25581)	12/20/2006 9:30:00 AM
From: Grommit	Respond to of 79147

rr -- thanks. i sill own BNI from jan 04 & may 05, and have recently thought of unloading some. guess i will hang on for "the ride" finance.yahoo.com

To: Paul Senior who wrote (25581)	12/22/2006 3:18:21 PM
From: fp_scientist	Read Replies (3) \| Respond to of 79147

Paul, Re: Ternium (TX) Message 23120941 Merrill Lynch out with a 37-page report saying this is the steel company to own. Price target of $38, heavily discounted from their $53 NAV based on 10-year discounted cash flow, after adding all kinds of risk factors for latam, blah-blah-blah. This one is going higher. fp Initiating coverage with Buy, PO US$38/ADR Total return potential of 48% in 12-mth, top pick in Latam Steels Our price objective of US$38/ADR was set considering a target multiple of 4.5x 2007E EV/EBITDA which represents 71% to company’s NAV of US$53/ADR estimated through 10Y DCF. Stock would trade at 17% discount to global average at the target multiple. Ternium is our new Top Pick among Latam Steels in the place of Usiminas. (USSPF, Buy rating, C-1-8 and Price objective of R$106/sh). Highly profitable steel company at 37% discount to Global Fundamentals do not appear to justify this significant discount on 2007E EV/EBITDA: (1) Ternium should generate EBITDA per ton of US$225 or 17% above ML’s global average; (2) 2007E EBITDA margin 1.6x global average; (3) FCF yield of 14% in 2007; (4) has only one class of share; (5) listed ADR in NYSE and (6) well recognized controlling group (Techint). We believe that sooner rather than later investors will recognize this discrepancy. It is also a growth play Based on approved projects Ternium’s production will grow 5% pa up to 2009, but the company’s portfolio of assets would easily allow it to add another 4-6mn tons pa of steel capacity (34-54% on current capacity) around 2010-2012. These projects would be highly profitable as they are all brownfields (lower capex/ton). Well diversified assets base provides low margins volatility We estimate that 80% of Ternium’s shipments are to domestic Mexican, Venezuelan and Argentinean market, steel consumption CAGR (02-05) in these markets was 2.4x Global and Latam steel consumption growth.