Vale SA

Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Vale SA, (NYSE: VALE) formerly Companhia Vale do Rio Doce, is a Brazil-based metal and mining company which is primarily engaged in producing iron ore and nickel. The Company also produces iron ore pellets, copper, platinum group metals (PGMs), gold, silver and cobalt. Vale is engaged in greenfield mineral exploration in five countries and operates logistics systems in Brazil and other regions in the world, including railroads, maritime terminals and ports, which are integrated with mining operations.

Kalkine’s Dividend Income Report covers the Company Overview, Key positives & negatives, Investment summary, Key investment metrics, Top 10 shareholding, Business updates and insights into company recent financial results, Key Risks & Outlook, Price performance and technical summary, Target Price, and Recommendation on the stock.

Price Performance:

• VALE's share price has been corrected by 3.57% in the past three months. Simultaneously, in the long term, the stock has corrected by 20.62% over the past six months.

• The stock is leaning towards the lower band of its 52-week range of USD 16.08 and 52-week low price of USD 9.66, with the current price near an important support area of USD 9.50- USD 10, therefore an expectation of upward movement if the levels sustain.
• The price is currently below both its short-term (50-day) SMA and long-term (200-day) SMA, with the current RSI of 35.63, downward trending, with expectations of consolidation.

1.2 The Key Positives, Negatives, and Investment summary   

1.3 Top 10 shareholders:

The top 10 shareholders together form ~5.86% of the total shareholding, signifying diverse shareholding. Goldman Sachs International, and Capital International Investors, are the biggest shareholders, holding the maximum stake in the company at ~0.82% and ~0.81%, respectively.

1.4 Dividend payments with impressive dividend yield:

Vale S.A. has announced plans to distribute USD 1.6 billion in interest on capital to its shareholders in September 2024, in line with its minimum dividend policy for the first half of the year. This reflects the company’s continued commitment to value creation and shareholder returns. In addition to dividends, Vale allocated USD 114 million towards its ongoing 4th share buyback program during the quarter, with 33.1 million shares repurchased, representing 22% completion of the buyback initiative. These measures highlight Vale's focus on balanced capital allocation, enhancing both dividend distribution and shareholder equity through repurchase strategies.

1.5 Key Metrics

Vale S.A. has demonstrated fluctuations in its financial performance from 2017 to 2023. In terms of revenue, the company saw steady growth, peaking in 2021 at USD 54,390 million before declining to USD 41,670 million in 2023. Gross profit followed a similar trend, reaching its highest in 2021 at USD 32,660 million, then decreasing to USD 17,634 million in 2023. Compared to 2017, where revenue stood at USD 36,814 million and gross profit at USD 14,586 million, the figures in 2023 represent a slight overall improvement despite the recent downturn.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

 2.2 Insights of Q3FY24:

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary:

4.1 Technical Summary:

 Price Performance:

• VALE's share price has been corrected by 3.57% in the past three months. Simultaneously, in the long term, the stock has corrected by 20.62% over the past six months.

• The stock is leaning towards the lower band of its 52-week range of USD 16.08 and 52-week low price of USD 9.66, with the current price near an important support area of USD 9.50- USD 10, therefore an expectation of upward movement if the levels sustain.
• The price is currently below both its short-term (50-day) SMA and long-term (200-day) SMA, with the current RSI of 35.63, downward trending, with expectations of consolidation.

4.2 Fundamental Valuation

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is November 12, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

 Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

 Stop-loss: It is a level to protect against further losses in case of unfavorable movement in the stock prices.