Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Equity Bottom-Up

<ul>
<li>Top miners like <a href="https://www.smartkarma.com/entities/bhp-group-ltd" target="_blank" data-smartkarma-citation="entities:147:1" rel="noopener">BHP Group Ltd (BHP AU)</a> and <a href="https://www.smartkarma.com/entities/teck-resources-ltd-36dbdad5-1430-4d7a-8578-31bc50086f72" target="_blank" data-smartkarma-citation="entities:33343:1" rel="noopener">Teck Resources (TECK US)</a> are signaling their long-term bullish copper intent through their recent corporate actions. </li>
<li>Copper may experience short periods of oversupply, but its long-term outlook makes it one of the best commodities we cover in terms of return potential. </li>
<li>Our best plays in the copper space are <a href="https://www.smartkarma.com/entities/southern-copper-corp" target="_blank" data-smartkarma-citation="entities:16279:1" rel="noopener">Southern Copper (SCCO US)</a>, <a href="https://www.smartkarma.com/entities/teck-resources-ltd-36dbdad5-1430-4d7a-8578-31bc50086f72" target="_blank" data-smartkarma-citation="entities:33343:1" rel="noopener">Teck Resources (TECK US)</a> and <a href="https://www.smartkarma.com/entities/freeport-mcmoran-inc" target="_blank" data-smartkarma-citation="entities:12491:1" rel="noopener">Freeport Mcmoran (FCX US)</a>
</li>
</ul>


Top miners like BHP Group Ltd (BHP AU) and Teck Resources (TECK US) are signaling their long-term bullish copper intent through their recent corporate actions. 
Copper may experience short periods of oversupply, but its long-term outlook makes it one of the best commodities we cover in terms of return potential. 
Our best plays in the copper space are Southern Copper (SCCO US), Teck Resources (TECK US) and Freeport Mcmoran (FCX US)



Copper Primer: What We Like About Copper And What to Play

<ul>
<li>We like <a href="https://www.smartkarma.com/entities/vale-sa" target="_blank" data-smartkarma-citation="entities:23731:1" rel="noopener">Vale (VALE US)</a> for its exposure to high-grade iron ore (95% of EBITDA) and capital return discipline, with a current dividend yield of 8% and 3.5x EV-EBITDA. </li>
<li>The cash flows from the iron ore business could be used to invest in base metals, such as copper, nickel, etc., to enhance the portfolio. </li>
<li>The key risk remains the overhang from the Mariana Dam disaster being settled for  ~25.7 billion USD (vs. the current market cap of 50 billion USD). </li>
</ul>


We like Vale (VALE US) for its exposure to high-grade iron ore (95% of EBITDA) and capital return discipline, with a current dividend yield of 8% and 3.5x EV-EBITDA. 
The cash flows from the iron ore business could be used to invest in base metals, such as copper, nickel, etc., to enhance the portfolio. 
The key risk remains the overhang from the Mariana Dam disaster being settled for  ~25.7 billion USD (vs. the current market cap of 50 billion USD). 


VALE US: Exposure to High-Grade Iron Ore With >8% Dividend Yield

<ul>
<li>Iron ore continued to operate in its band from 95-130 USD/ton over the last few years, with a recent drop from 120 USD/ton to 105 USD/ton on tepid China data.</li>
<li>With incremental news on China's stimulus in the property and infrastructure sectors, we remain confident that iron ore will return to 120 USD/ton in the short term. </li>
<li>We also remain bullish on the 65-62 spread, which has expanded to the teens. <a href="https://www.smartkarma.com/entities/rio-tinto-ltd" target="_blank" data-smartkarma-citation="entities:13:1" rel="noopener">Rio Tinto Ltd (RIO AU)</a> and <a href="https://www.smartkarma.com/entities/vale-sa" target="_blank" data-smartkarma-citation="entities:23731:1" rel="noopener">Vale (VALE US)</a>  are good plays on the spread.</li>
</ul>


Iron ore continued to operate in its band from 95-130 USD/ton over the last few years, with a recent drop from 120 USD/ton to 105 USD/ton on tepid China data.
With incremental news on China's stimulus in the property and infrastructure sectors, we remain confident that iron ore will return to 120 USD/ton in the short term. 
We also remain bullish on the 65-62 spread, which has expanded to the teens. Rio Tinto Ltd (RIO AU) and Vale (VALE US)  are good plays on the spread.


Iron Ore: Disappointing Data Pushed Price Down to 105, Bounce To 120 On Further Stimulus From China

<ul>
<li>We initiated on the iron ore space recently with a short-term bullish call (see: <a href="https://www.smartkarma.com/insights/iron-ore-primer-understanding-the-drivers-of-the-market-ways-to-play-the-sector" target="_blank" data-smartkarma-citation="insights:136452" rel="noopener">Iron Ore Primer: Understanding The Drivers Of the Market, Ways To Play The Sector</a>). </li>
<li>Check out our initiation on  <a href="https://www.smartkarma.com/insights/mount-gibson-mgx-au-iron-ore-pure-play-77-of-the-mkt-cap-in-cash-0-5x-ev-ebitda-with-catalysts" target="_blank" data-smartkarma-citation="insights:136941" rel="noopener">Mount Gibson (MGX AU): Iron Ore Pure Play, 77% of the Mkt Cap in Cash, 0.5x EV-EBITDA With Catalysts</a> ).</li>
<li>Iron ore has a more short-term upside as it bounces off the cost curve in its three-year band (95-130 USD/ton), while China has demonstrated an abundant appetite for restocking. </li>
</ul>


We initiated on the iron ore space recently with a short-term bullish call (see: Iron Ore Primer: Understanding The Drivers Of the Market, Ways To Play The Sector). 
Check out our initiation on  Mount Gibson (MGX AU): Iron Ore Pure Play, 77% of the Mkt Cap in Cash, 0.5x EV-EBITDA With Catalysts ).
Iron ore has a more short-term upside as it bounces off the cost curve in its three-year band (95-130 USD/ton), while China has demonstrated an abundant appetite for restocking. 


Iron Ore Comes Roaring Back! BHP-Anglo, VALE, FMG: What's Hot In the Space

<ul>
<li>Investics Research will initiate coverage of the materials sector in April 2024, starting with iron ore and then gold, coal, and steel in subsequent months (in that order).</li>
<li>The areas of coverage on asset classes will encompass the underlying commodity and the associated equities. </li>
<li>Areas of differentiation would include in-depth coverage of all equities (small/mid and large cap) and actionable tactical ideas on the commodity.</li>
</ul>


Investics Research will initiate coverage of the materials sector in April 2024, starting with iron ore and then gold, coal, and steel in subsequent months (in that order).
The areas of coverage on asset classes will encompass the underlying commodity and the associated equities. 
Areas of differentiation would include in-depth coverage of all equities (small/mid and large cap) and actionable tactical ideas on the commodity.


Introduction: Initiation of Coverage in the Materials Sector

Brazil

Vale S.A. is a Brazilian multinational corporation primarily engaged in metals and mining, and one of the largest logistics operators in Brazil. It is a leading global producer of iron ore and nickel, also producing copper, manganese, ferroalloys, and other base metals. The company operates integrated logistics systems including railways, maritime terminals, and ports. Headquartered in Rio de Janeiro, Brazil, the company was founded in 1942.

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Vale (VALE3 BR)

Copper Primer: What We Like About Copper And What to Play

We initiate with a primer on the copper sector. We elaborate on our fundamental rationale for being bullish on the metal and discuss different ways...

Sameer Taneja

VALE US: Exposure to High-Grade Iron Ore With >8% Dividend Yield

We initiate coverage on VALE US, one of the world's biggest iron ore producers, with high-grade iron ore and low-cost production. The stock trades...

Sameer Taneja

Iron Ore: Disappointing Data Pushed Price Down to 105, Bounce To 120 On Further Stimulus From China

We provide our take on the China data like TSF, auto sales and property that led to the sell-off in iron ore. We provide our rationale for an iron...

Sameer Taneja

Iron Ore Comes Roaring Back! BHP-Anglo, VALE, FMG: What's Hot In the Space

We summarize newsflow in the iron ore market and our take on the BHP-Anglo deal. We also summarize the production reports of Vale/FMG and Champion...

Sameer Taneja

Introduction: Initiation of Coverage in the Materials Sector

We provide readers with an introduction to our initiation on commodities. We also provide a rationale as to how our coverage will be comprehensive...

Sameer Taneja

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