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Vale SA ADR VALE

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Bargains Hard to Come by as Commodity Prices Buoy Miners’ Earnings and Share Prices

Analyst Note

| Mathew Hodge, CFA |

After treading water in the third quarter, mining stocks have powered ahead. The S&P ASX200 resources index has added just over 21% since our last update in mid-October. Our coverage has moved from a modest average 4% premium to our fair value estimates to now sit at an average 24% premium. Only coal-exposed firms New Hope and Whitehaven are trading in 4-star territory, although a handful of stocks remain moderately undervalued including Glencore, Iluka Resources, Newcrest, and South32. The window of material undervaluation from COVID-19 was brief and the recovery strong, thanks to Chinese government stimulus and expansionary lending. Iron ore has benefited most, while copper and other base metals have also strengthened.

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Company Profile

Business Description

Vale is the world's largest iron ore miner and one of the largest diversified miners, along with BHP and Rio Tinto. Earnings are dominated by the bulk materials division, primarily iron ore and iron ore pellets, with minor contributions from iron ore proxies, including manganese and coal. The base metals division is much smaller, primarily consisting of nickel mines and smelters with a small contribution from copper.

Contact
Praia de Botafogo, 186, Offices 701 – 1901
Rio de Janeiro, RJ, 22250-145, Brazil
T +55 2134855000
Sector Basic Materials
Industry Other Industrial Metals & Mining
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type —
Employees 71,149

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