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Vale SA. Presented by: Harpreet Singh Johannes Tannert. Disclaimer.

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vale sa

Vale SA

Presented by:

Harpreet Singh

Johannes Tannert

disclaimer
Disclaimer

This is to certify that the opinions expressed in this presentations are essentially those of the presenters and do not represent the opinions expressed by FMA. The charts and data collected are from reliable sources and no agreement was breached while presenting this data.

This presentation is intended to analyze VALE SA for investment purposes.

summary agenda
Summary/Agenda
  • Introduction
  • Overview – Mining Sector
  • Company Overview
  • Outlook – Mining Sector
  • Technical Analysis
  • Recommendation
sector consideration
SectorConsideration
  • High risksworldwide
  • Sectorswhere companies are not concentrated on one region
  • High futuredemand
  • ConsideredSectors:
    • Consumer Goods
    • Pharamceuticals
    • Mining
  • FMA Portfolio
mining sector
Mining Sector
  • Largestsegments: Iron, Aluminium andCoal ; Dependent on steel
  • Cyclical, highlycompetitive
  • Biggest Producers: Australia, Brazil
  • Biggest Demand: China, India
  • Market canbedividedinto Major and Junior Companies
  • Junior Companies mainlyexplorenewareas, veryrisky
  • Market controlledby a fewcompanies; biggest BHP Billiton, Vale, Rio Tinto
overview of the company
Overview of the company
  • Name: VALE
  • Market Capitalization: US $ 120 bn
  • Sector: Mining Energy Logistics Steelmaking
  • Listed on: NYSE, BM&F BOVESPA, Euronext Paris, The Stock Exchange of Hong Kong Limited
  • Second largest mining company in the world
  • Leader in Total Shareholder Return (38.1% for 2001-2010)
vale sector distribution
Vale sector distribution

Areas in which VALE is involved in mining

source: vale.com.br

vale global presence
Vale global Presence

source: vale.com.br

sustainability
Sustainability
  • Introduced programs like Vale Carbon Program to control carbon foot print.
  • Big investment in Bio-diversity
    • Botanical Gardens
    • Natural diversity parks
    • Heritage Reserves
  • Started Environmental Management System in 2010 aimed at waste management and pollution reduction
  • The Vale Fund for Sustainable Development works in partnership with public sector companies to support projects aimed at a sustainable development
  • Vale foundation: Works for improving the Economic, Environmental and Social conditions
financials
Financials

source: vale.com.br

segmented earnings
Segmented Earnings

source: vale.com.br

dividends
Dividends

source: vale.com.br

vale key ratios
Vale- Key ratios

source: stock-analysis-co.net

dailyfinance.com

stock price history
Stock Price History

source: ycharts.com

vale in news
Vale in news
  • Vale voted as one of the 6 ‘must-own-Brazilian’ stocks for the next decade.
    • Source: seekingalpha.com
  • Vale listed as one of the 7 stocks with yields as high as 16%.
    • Source: seekingalpha.com
  • Vale plans to offer notes due 2022 through its subsidiary- Vale Overseas Limited and the proceeds are to go towards corporate business.
    • Source: Vale press release
  • Vale sees little effect to iron ore market from Brazil rains
    • Source: Vale newsroom
productivity opportunities until 2030
ProductivityOpportunitiesuntil 2030

Source: McKinsey & Company

outlook potential shortages
Outlook: Potential Shortages

Source: McKinsey & Company

outlook steel demand
Outlook: Steel Demand

Source: McKinsey & Company

world s teel production growth rate
World Steel Production (growth rate)

Source: Short Range Outlook by World Steel Association

iron ore prices
Iron oreprices

Source: Goldman Sachs & Partners AustraliaPty Ltd

  • Iron oreshortage 2012 and 2013
  • Over-Supplyfrom 2014 on
nickel supply demand
Nickel Supply/Demand

Source: Macquarie Research, September 2011

nickel imports by china
Nickel imports by China
  • Nickel prices fell from over $29,000 to under $17,000
exploring expenditures
ExploringExpenditures

Source: McKinsey & Company

technical analysis
Technical Analysis
  • 52 weeklow:
  • $24.26
  • 52 weekhigh:
  • $37.25
  • Current:
  • $24.46
risk assesment
Risk Assesment

Opportunities

Risks

Price drop in 2014

Dependence on Economic Situation

ExploringExpenses

  • Strong Emerging Markets
  • High demandof Iron, Steel and Nickel
  • Joint Ventures and Investments only in 2012 around $13 Billion, among others, in Brasil, China and Africa
  • High Dividends

Recommendation:Buy