STOCK - STEEL PRODUCTION - ACERINOX SA ANALYSIS

Acerinox, S.A. is a stainless steel production conglomerate group based in Spain.

Debt/equity: 92% dropped from 2023 to 2024. OK

- PB: 0.9. undervalued

- Dividend: 5.5 - 6.6 %.

- Difficulty shown by numbers and interpetable with second picture below: drop in price and global steel production demand. Linked to real estate market in China.   

Acerinox has experienced a significant growth in recent years, driven by strong demand for stainless steel, particularly in the construction and automotive sectors. The company's financial results have been impressive, with increasing revenues, profits, and market share.

Here are some key highlights from Acerinox's financial performance:

Revenue growth: Acerinox has consistently increased its revenues over the past several years, primarily due to higher sales volumes and improved pricing. This growth has been fueled by strong demand for stainless steel products in both domestic and international markets.

Profitability: The company's profitability has also been on the rise, with increasing net income and operating margins. This is a result of effective cost management, improved operational efficiency, and favorable market conditions.

Market share: Acerinox has expanded its market share in the global stainless steel industry, solidifying its position as a leading player. This growth has been driven by strategic acquisitions, investments in new production capacity, and a focus on product innovation.

Dividend payments: Acerinox has a history of paying dividends to its shareholders, reflecting its strong financial performance and commitment to returning value to investors. 1  

Overall, Acerinox has demonstrated a strong track record of financial growth and stability. The company's positive outlook is supported by the continued demand for stainless steel and its ability to capitalize on market opportunities.

 Acerinox has a history of paying dividends to its shareholders. 1 While there might have been occasional fluctuations in the dividend amount or frequency due to factors such as market conditions, economic downturns, or company-specific circumstances, the company has generally maintained a consistent dividend policy.

Why this reduction in price?

While the company does not have production facilities there, it has a commercial presence to market and distribute its high-quality stainless steel to Chinese customers. Acerinox's products are used in various industries within China, including construction, automotive, and consumer goods.

The Chinese housing crisis, also known as the property bubble burst, began to escalate in 2021. This period saw a significant decline in property prices, a slowdown in construction activity, and a rise in defaults on mortgage payments.

While the crisis's roots can be traced back to several years of rapid property price increases and government policies aimed at cooling the market, the turning point came in 2021 when several major property developers, such as Evergrande, faced liquidity problems and were unable to meet their debt obligations. This led to a loss of confidence in the property market and a cascading effect on the broader economy.

Also car production is going to be lower throguh all the 2024. Steel is used also in automotive. Consequently, the production and the request of semi finished product is lower.

Price target: 12.50

Low price extimated target: 8. eur

Possible bottom: 8.5 (technical an. - already reached)

Consensus: BUY

If overlapped, Acerinox has the same price behaviour of other company as:

• Arcelor mittal -> same behaviour

• US Steel -> similar: actually undervalued

• Nippon Steel -> similar: actually under valued

These stocks are not only replicating each other the same bahaviour., but are following the price of the steel during the year. It is an additional sign that it is a market weakness and not something connected to the single company.

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