These Catalysts Could Drive Vale’s Valuation in 2018
Vale (VALE) now has a forward EV-to-EBITDA multiple of 5.4x. This implies a discount of 24.0% to its past five-year average multiple.
According to Thomson Reuters’ data, 41.7% of Wall Street analysts recommend a “buy” for Vale, while half have a “hold” rating on the stock.
Vale (VALE) posted net debt of ~$21.1 billion at the end of 3Q17, compared with $22.1 billion at the end of 2Q17.
Vale’s base metals production rose in 3Q17, with copper production jumping 16.0% and nickel production climbing 10.2% sequentially.
Vale’s (VALE) coal production in Mozambique reached a quarterly record of 3.2 million tons in 3Q17. This implies 38.3% YoY (year-over-year) growth.
Vale’s (VALE) Ferrous division accounted for ~87.6% of its adjusted EBITDA in 3Q17, compared with ~82.0% in 2Q17.
Vale (VALE) released its 3Q17 results on October 26, reporting earnings per share of $0.40, compared with the analysts’ estimate of $0.32.
China’s aggregate financing rose to a six-month high in September to come in at 1.8 trillion yuan.
According to the China Association of Automobile Manufacturers, auto sales (XLY) in the country stood at ~2.7 million vehicles for September 2017. This implies growth of 5.7% year-over-year.
China’s new home prices had grown 8.3% year-over-year in August, which decelerated to 6.3% in September.
The most-traded January rebar contract on the Shanghai Futures Exchange climbed 4.3% to 3,776 yuan per ton.
In September, China imported 103 million tons of iron ore for 11% growth year-over-year.
The iron ore port inventories have remained elevated, reaching ~141.5 million tons in June 2017.
Iron ore shipments from the major Australian and Brazilian (EWZ) ports represent the lion’s share of the overall iron ore exports.
Vale SA’s (VALE) iron ore quarterly production for 3Q17 has set another record. VALE produced 95.1 million tons of iron ore, 3.3% higher year-over-year.
Due to China’s appetite for imported iron ore, the stockpiles at Chinese ports are growing. This trend led China to shift from lower-grade material to higher-grade, low-impurity material.
Of the eight analysts covering Cleveland-Cliffs (CLF), five rated it a “hold.” Another 22% rated it as a “buy,” and the remaining 13% recommended a “sell.”
Cleveland-Cliffs’ (CLF) total debt at the end of 3Q17 was $1.7 billion, and its net debt was $1.4 billion.
The cash cost of goods sold for Cleveland-Cliffs’ APIO division was $40.50 per ton in 3Q17, or 20% higher year-over-year and 11% higher sequentially.
APIO’s 3Q17 sales volumes came in at 2.2 million tons, reflecting a 20.0% decline year-over-year and a 10% sequential decline.