ArcelorMittal S.A. (AMSYF)

I seldom post on this MT message board despite that I own this stock more than 10 years. My stock got reverse split. It was a 1 for 3 split. I ended buying more shares to make my holdings into an even lot. I also bought some TECK. I bought these base metal stocks to balance my portfolio. I made some good gains in TECK. MT was trading a little over TECK for some time. When MT and TECK were trading about even, I decided to unload my TECK and roll the proceed into MT. That was a mistake, TECK advanced and MT tanked. While both stocks are down now, TECK still trades above MT.
I could have got out of MT and protected my profits but I decided to hang on. The war in Ukraine and the pandemic stuns the economy. It is no wonder that the base metal stocks are heading down and staying down. However, once the War in Ukraine is done, there should be massive rebuilding of infrastructures. Base metal stocks would be bouncing back in a big hurry. The price of the commodity would jump along with the demand. Pandemic is easing in most of the Western countries. While people are still catching CONVID, the death rate is small.
I am in for the long term. I don’t think this war could last that much longer. I already have enough shares in MT and do not want to overload in a single sector. Otherwise, I would be tempted to add some more.

Want to get in MT.
Sold a Aug 5 put for strike 23 for 0.22 cents premium.

Is there any foreign tax withholding in Luxembourg?

PE now under 1.5

Timing is everything, trying to figure out when this
turns around?

Yesterday's 10.15 percent rise may have been impacted by recent reports alluding to negotiations between MT and countries like France and Germany to achieve cleaner manufacturing. These talks involve state subsidies for retrofitting steel plants with green technologies and tariffs applied to imported steel made with high carbon emissions. Growing public an investor interest in green processes is abetted by the EU's commitment to carbon neutrality by 2050 (among 60 countries that have done so, with China, India, and the USA not committing) and steel production contributes about 8 percent to global carbon emissions, far too large to ignore. Incorporation of embryonic green technologies in this space may add 50 percent or more to manufacturing costs, but increasing adoption and expected innovations are expected to drive down costs. MT's deep capital resources and political connections may comprise a competitive advantage in the race to reduce reduce carbon emissions from steel production, balancing or overcoming the large investments required. If investors perceive MT as forward-thinking and forward-acting on environmental concerns, its market valuation may benefit. Longer term, if MT invests now and in the coming decade, it will position itself to compete effectively as regulations begin to bite and expectations for greener manufacturing rise. MT's management of these challenges will significantly impact its performance in coming years.

Why ArcelorMittal's Stock Could Rise Another 50%?
3:12 AM ET 5/29/20 | TREFIS

ArcelorMittal's stock (NYSE: MT) We believe that the market is still undervaluing the company, and we estimate ArcelorMittal's valuation to be $15 per share - roughly 50% ahead of the current market price. Our price estimate takes into account the latest earnings as well as the company's guidance.

Company Overview and General Reference

ArcelorMittal is one of the largest global steel companies, with its customers spread across the Construction, Transport (including automotive), and Oil & Gas industries. The company operates in various geographies and faces competition from US Steel, Nucor, Nippon Steel, etc.
Though ArcelorMittal reported a 23% y-o-y reduction in revenue in Q1 2021 with net loss of $1.1 billion as against a profit of $0.4 billion a year ago, the company remains well on course to meet its near-term net debt target of $7 billion. Management has also announced steps to cut down on fixed costs in order to support margins and new liquidity enhancing measures in 2020, which together has placed ArcelorMittal in a better position to deal with the current crisis, compared to its rivals like US Steel.

Company Revenues

ArcelorMittal reported $70.6 billion in total revenues for full-year 2019. This includes 5 operating segments-

NAFTA: $18.6 billion in 2019 (26% of total revenues). Flat, Long, and Tubular operations of the USA, Canada, and Mexico
Brazil: $8.1 billion in 2019 (11% of total revenues). Flat operations of Brazil, and the Long and Tubular operations of Brazil and its neighboring countries including Argentina, Costa Rica, Trinidad and Tobago, and Venezuela
Europe: $37.8 billion in 2019 (53% of total revenues). Flat, Long, and Tubular operations of the European business, as well as ArcelorMittal Distribution Solution (AMDS)
ACIS (Africa & Commonwealth of Independent States): $6.8 billion in 2019 (10% of total revenues). Steel sheets and plates as well as tubular items like pipes, that are made by rolling processes in ACIS region
Mining: $4.8 billion in 2019 (7% of total revenues). Iron ore and coal operations

Corporate and Eliminations of $5.4 billion constitute -7% of revenue

For 2020, we expect the company's revenues to decline significantly to $60 billion on the back of a drop in global steel prices and lower demand due to the pandemic. We discuss ArcelorMittal's revenues by operating segments over the years along with forecast in detail in a separate dashboard along with comparison with peer US Steel.

Net Income and EPS

Net income margin increased from 3.1% in 2016 to 6.8% in 2018, before turning negative at -3.5% in 2019. The company reported a loss in 2019 due to a drop in revenue on account of lower steel prices due to US-China trade war, while cost of sales remained high as the price of primary input - iron ore - did not see a corresponding drop.
Thus, after increasing from $1.86/share in 2016 to $5.04/share in 2018, EPS dropped to -$2.42/share in 2019.
The company is expected to report losses in 2020 as well, however, the margins are still expected to be much better than its competitors.
The management has been proactive and is focused in reducing its fixed cost in order to support margins, for which some important steps announced are - a) temporary labor cost savings; salary cuts; reduction/elimination of contractors, overtime reduction etc. b) reduction in repairs and maintenance (R&M) expenses: spend expected to be lower due to lower operating rates; and c) reduced SG&A expenses: Fixed cost savings achieved from countries in which the company operates where the currency has depreciated, as well as reduced SG&A expenses such as IT, travel, sales and marketing expenses, consultancy fees etc.
We expect ArcelorMittal to report net income margin of -5% in 2020, which is likely to be much better than -8% in the case of US Steel.

Share Count and Revenue Per Share

As the company is likely to report losses, we use the P/S multiple for valuation.
Share repurchases over the years have decreased share count from 1,024 million in 2017 to 1,013 million in 2019. This figure is expected to drop to 1,010 million in 2020, giving a revenue per share of $59.41 in 2020, much lower than the $69.71 in 2019 due to lower revenues.
As per ArcelorMittal valuation by Trefis, we have a fair price estimate of $15 per share for the company's stock, which values each share at a P/S multiple of 0.25x. This is higher than the current

Steel will always be needed and people want greener companies …. No getting around it. MT has been innovative and will make steel production as green as it can feasibly become. It’s investment in Form Energy Co fits this green steel agenda. Form Energy seems to be onto a better battery technology that can store massive grid energy for many days cheaply; offering a smoother flow of electricity to a grid even if winds aren’t blowing or the sun isn’t shining. MT will capitalize on this success through its investment AND supplying iron & steel to the process on many levels …. The batteries themselves, wind turbines, grid infrastructure etc. So the investment is a win-win for MT and investors. Green steel will catch on.

Hey all. Not the reaction we are all looking for, I totally get that, but lets be honest with ourselves. If you are here for a quick profit then you are in the wrong investment. MT is the largest steel producer in the world. As the world economy succeeds so does this company. As investors, we invest in the future, not the present. Earnings were very very strong, but there was a huge reduction in workforce and a swapping out of upper management. This drop is to be expected as uncertainty is causing panic. I will reiterate, MT is a long term, value investment. Stop checking it every minute. Let it set and in a month, 6 months, hell maybe even 4 years time you will see a nice ROI. Wish you all the best of luck. Have faith in the strong earnings report and ability of this company to always bounce back into prosperity.

Shares swooned on February 11 despite earnings that exceeded expectations and communications from the company that the outlook for the coming year is rosy, share buy-backs (in the amount of $650MM) are in the offing, and reinstatement of the dividend is coming. How did MT manage such a disappointing market reaction? It also announced that Aditya Mittal, the 45-year old son of the outgoing CEO and owner of 30 percent of the company, will be the new CEO. Mr. MIttal, Jr., may be knowledgeable and talented, but his promotion does not inspire confidence that MT selected the best person to lead a company with complex, capital intensive international operations and supply chains. Instead, it hired as if it were the corner grocery. Nepotism in this company is a continuing concern. This equity has upside from here, but share appreciation will be held back for years until the market comes to see that MT places wealth creation for investors ahead of family interests.