Vale SA is a mining and metals company based in Brazil. We think that this investment will help diversify out portfolio and give us some exposure to Brazils metal and logistics market.

Value proposition trading at just over 3.5x P/E with a 10%+ dividend. Vale is the largest iron ore and nickel producer globally. Located in Brazil, the company has been discounted because of the potential mining royalties proposed by Lula, one of the presential candidates. While the election results have entered a run-off for the 2nd round, Lula might not win despite favorable poll results. More broadly, we believe that while iron ore prices have slumped, Vale is trading at a deep discount (around 50%) to its peers from EV/EBITDA perspective, and the company has demonstrated consistent, strong cashflows and balance sheet. Its cyclical adjusted operating profit would have to contract by 50% before hurting the 10% dividend yield. Overall, we will establish a small position for Vale and closely monitor the market reaction to the election results, but are confident in the value of Vale.

Vale is a Brazilian multinational corporation engaged in metals and mining and one of the largest logistics operators in Brazil. Global metal price continues to soar, so we decide to add more exposure to the supply-side sector. Also, Brazil’s daily new cases of Covid has maintained relatively stable at a lower end, so we expect a recovery in the constructions industry, which is of heavy demand for metals as raw material.

As one of the world’s largest mining companies, Vale is well positioned to take advantage of expected increases in government and commercial investment following the height of the pandemic. The company operates several copper mines in Chile, giving us further exposure to one of the country’s key industries as we expect its recovery to continue.