Ternium announced 2008 financial results today. You can read the company’s press release here. Ternium’s EBITDA per ton in Q4 fell significantly from Q3 but remained near the top of the companies we follow on a regular basis on the Nerds of Steel earnings spreadsheet.
Ternium 2008 financial results' st_url='http://www.nerdsofsteel.com/2009/02/24/ternium-2008-financial-results/' displayText='ShareThis'>
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Hi Varun – good question. Replacement value is fraught with local variations. In addition, it’s a very theoretical valuation method that might turn out very differently if actually followed through to construction. In distressed markets, it often provides a valuation that is too high. Take a look at reports of the ThyssenKrupp investment in Mobile, AL to get a recent North American example (absent a full front end) – works out to $725/ton; or the Nucor planned front end investment in Louisiana which proposed $3Bn for 6MT of iron in two phases. Those projects combined would indicate something like $1,200/ton for an integrated facility in North America which is in the typically cited range.
That said, no one method can provide all the valuation answers so earnings multiples, discounted cashflow methods etc., as well as replacement cost should all be compared to get a range of values of a specific asset. We have plans to do something on valuations soon, so keep watching.
thank you very much for you reply James. i will be eargerly waiting for your articles on valuatons.