Tronox Has Reducing Cyclicality, Pricing Backstops, Reinvestment Economics And Tax Assets

Aug. 31, 2022 7:00 AM ETTronox Holdings plc (TROX)7 Comments

Summary

  • Margin stability agreements coming further into force helping reduce cyclicality, and competitors are getting hamstrung by higher input costs as less ilmenite enters the market from iron ore.
  • Moreover, prices continue to rise for zircon and titanium oxide in their markets, indicating that their use cases in things like housing are not slowing down yet.
  • The APAC exposures seem to not be forming a problem, and the company is guiding for improved pricing in Q3 to drive continued sequential net income growth.
  • Investments in lower-cost replacement mineral sand mines look very promising and show an important reinvestment sink for the company that should justify higher multiples.
  • Zircon volume recovery should create more scale and reduce costs on top of newTRON.
  • Looking for a helping hand in the market? Members of The Value Lab get exclusive ideas and guidance to navigate any climate. Learn More »

titanium metal alloy, used in industry, super resistant metal

RHJ

Published on the Value Lab 26/8/22

We are learning more about Tronox (NYSE:TROX) and it appears very cheap at the moment. There are reinvestment economics to the business. There are tax assets that create a margin of safety around price. They

trox titanium mines

Timelines on Mines (Q2 2022 Pres)

TROX quarter costs

Cost Developments (Quarter) (Q2 2022 Pres)

trox valuation

Valuation (VTS)

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Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in TROX over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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