TX - Ternium Leveraging A Steel Supply Imbalance With Demand Growth Opportunities Coming Later

• Ternium has continued to beat sell-side expectations, as inadequate steel supplies have kept global steel prices elevated, while very efficient operations have leveraged that into strong EBITDA and cash flow.
• Managing an upcoming cash surplus is a key unknown and sentiment risk - there are opportunities to add more value-added capacity, but dividends should matter too.
• Construction and industrial recoveries in markets outside of Mexico can be important drivers in 2022/23, while Mexico's formal construction sector is more of an unknown.
• Ternium shares do still look undervalued, but investors would do well to be cautious about overstaying their welcome ahead of an eventual downturn in sentiment.

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