Vale (VALE3): A major stock advance is expected to happen in 2026, says BTG Pactual. And in 2024?

In a report released after Investor Day on OK (VALE3), analysts at BTG Pactual (BPAC11) believe that the big breakthrough in the mining company’s stock history is expected to occur only in 2026.

“The most important advance in Vale’s share history (in numerical terms) is expected to occur in 2026, with tangible progress in laying the foundation for a very profitable approach for the future,” analysts Leonardo Correa and Caio Greiner highlighted.

However, despite the”iron ore market be stricter at this time,” the institution believes Vale’s profits expected to accelerate in 2024.

The company’s management also believes that some topics presented during the Investor Day should translate into value creation for the company Vale shareholder, BTG said. One of the examples was Vale’s access to a broader investor base and no dams at emergency level 3 until 2025.

What does BTG say about Vale’s dividends for 2024?

In the report, BTG Pactual recalls that the company has also strengthened its cost efficiency program, working to offset inflation, with a new orientation aimed at maintaining the fixed cost base for the period iron ore to $6.1 billion (up from $6.3 billion in 2022).

“Vale has also strengthened its disciplined approach to capital allocation, having paid a dividend yield of 46% since 2020, which we expect to remain going forward,” they assessed.

BTG: Vale’s production should improve gradually

For BTG, Vale has experienced a series of operational setbacks in recent quarters, which have affected sentiment regarding the extraction. However, the bank is increasingly convinced that the company’s poor operational performance is behind it and that production/shipping performance and costs should continue to improve gradually.

“We believe there is very little price to pay for self-help Vale documents Right now. We expect the fourth quarter to improve on all fronts: volumes, pricing and costs, increased earnings momentum within our coverage.”

Vale also continues to be one of BTG’s favorite names for reacceleration exposure economy of Chinaas the government strives to achieve its growth target of around 5% for the year.

“Iron ore prices continue to remain quite good (already at ~US$130/tonne), with prospects for healthy demand from the Chinese steel industry. Vale is trading at ~4x EV/Ebitda 2024, and we expect earnings of 12-13% for 2023/24, including buybacks,” the analysts added.

BTG has a “buy” recommendation for Vale shares, with an indicative price of US $19.00 (R $93). For ADRs, the target price is $14.90. This Wednesday (6) the VALE3 documents they trade at R$73 and, in New York, at US$14.91.

Vale (VALE3) expects iron ore production of up to 320 million tonnes in 2024

AVale announced on Tuesday morning (5) that its iron ore production is expected to end in 2023 at 315 million tonnes (Mt). For 2024 the estimated production of the material is between 310 and 320 Mt, while for 2026 the volume is expected to be between 340 and 360 Mt.

According to the mining company, for pellets and briquettes, the expected volume for this year is 37 million tons, next year the number will rise up to 42 million tons and up to 55 million tons in 2026.

Again according to the company, the Vale’s nickel production it is expected to reach 165 thousand tonnes (kt) in 2023, from 160 to 175 kt in 2024 and from 210 to 230 kt in 2026.

OR volume of copper produced by Valein turn, this year it is expected at 325 kt, while it should reach up to 355 kt in 2024 and up to 410 kt in 2026.

The company also reported that it expects Ebitda (earnings before interest, taxes, depreciation and amortization) of between $15.2 billion and $31.0 billion in 2026, depending on iron ore prices.

The income from Vale’s cash flow to shareholders in 2026 can range from 5.2% to 23.2%, depending on the mining company.

Vale’s investments for the next few years

In relation to Vale’s investmentsthe mining company expects a total investment of around $6 billion this year and $6.5 billion from 2024 onwards.

Over the next few years, the mining company plans to invest between $3.5 billion and $4 billion annually in steelmaking solutions and between $2.5 billion and $3 billion in metals for the energy transition.

Vale said it also expects to shell out $6.3 billion in fixed expenses in 2023 and $6.1 billion in 2024.

For appointments in Brumadinhoe Mariana, the OK total projected expenditures of $2.9 billion in 2023, $3 billion in 2024 and 2025, $1.9 billion in 2026, $1.3 billion in 2027, and averaging $400 million over the years from 2028 to 2035.

Vale stock performance

Source: Terra

Rose

Rose James is a Gossipify movie and series reviewer known for her in-depth analysis and unique perspective on the latest releases. With a background in film studies, she provides engaging and informative reviews, and keeps readers up to date with industry trends and emerging talents.