Intermoney | Acerinox (ACX) communicated on Thursday to the National Securities Market Commission (CNMV), with the market closed, that they had reached an agreement with Worldwide Stainless for the transfer of its Bahru plant (Malaysia) for $95m. The final closure is expected to take place at the end of November 24. Acerinox had ceased operations at the Bahru plant on 29 May 2024, due to accumulating losses of €527m since 2018, hurt by the market situation in Asia, where prices were unsustainable due to Chinese overproduction.
Assessment: Positive news, as Acerinox had initially decided to close the plant and transfer the production lines to Europe, but we think this solution is better. The Bahru site had been valued at around $40m, so the $95mn price seems attractive for Acerinox. This sale reduces debt from €191m in 2Q24 to €96m (0.2x EBITDA).
Although the sector is not going through its best moment, we think Acerinox is trading at an excessive discount (3.4x EV/EBITDA; 6.5x P/E). Moreover, in recent years it has achieved diversification, both geographically, increasing its exposure to a much more stable market such as the US, and by sector, entering the high-yield alloys market (20% EBITDA), which allows it to be more resilient to the economic cycle. We reiterate our buy recommendation, with a P.O. of €15/share.
