ACERINOX: EVERYTHING FLOWS (ANÁLISIS BANCO SABADELL)
A better-than-expected operating scenario leads us to upgrade our estimates and T.P. BUY.A better-than-expected operating scenario in 4Q’20 (strong demand, low inventories and higher prices) and the improved outlook for 2021 lead us to upgrade our estimates (+8% 2021/23e) and T.P. to € 11.00/sh. (+21% upside and +21% vs. previous T.P.). We believe that the operating newsflow will continue to be positive, while its main risk is the possible revision of the protectionist measures in the US, although we expect it to maintain control on Asian manufacturers. Moreover, we could see news on a strategic alternative in Bahru that would be an additional catalyst. The company will generate ~8.4% of operating FCF yield on average in 2021-23e, which ensures a robust financial position (2.4x ND/EBITDA’20e and a favourable dividend (~5% yield). The stock is trading at ~8x EV/EBITDA’21e vs. ~10x historically.
Acerinox is the parent company of a group engaged in the manufacture and sale of flat and long stainless steel products, and stainless steel wires. Co.'s major products include slabs, billets, black coils, plates, hot-rolled coils, hot-rolled sheets, flat bars, hot-rolled re-bars, hot-rolled black bars, engraved sheets, cold-rolled coils, cold-rolled sheets and circles. Co. also provides long stainless steel products, such as wire rods, angles, hot rolled flat bars, hot rolled re-bars, reinforced bars in coils, cold rolled re-bars, hot rolled black bars, cold drawn bars, and smooth turned bars. In addition, Co. offers wires, welding wire bars, and bars for electrodes.
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