Inter cuts share price target by 17%; see what to expect from the mining company – Money Times

OK
Lower-than-expected production and sales figures make Inter reduce target price for Vale shares (Image: REUTERS/Adriano Machado)

After OK (VALE3) publicize your production and sales report referring to the second quarterO Inter Research cut the share price target for 2022 by 17%, from R$100 to R$83, and kept “neutral” recommendation.

The mining company’s numbers came in below expectations, say analysts, highlighting the difficulties of company to resume its previous pace of production

In reviewing the target price, the bank incorporated the mining company’s new expectations, as well as the more challenging in terms of demand steel and iron ore in China and pressures on costs, which should last for the year.

What impacts Vale?

Inter specialist Gabriela Joubert explains that thes fears of a stronger economic slowdown than expected in the largest Asian economy and largest consumer market metallic commodities have negatively affected the steel industry and mining and other sectors linked to the Chinese market.

The DChina’s GDP data between April and June below expected — with advance of 0.4% against the forecast of 1% expose the negative effects of thetic of lockdowns and restrictions adopted by the government to contain the advance of covid in the country.

Furthermore, even with the list of stimuli recently announced, the analyst has observed difficulties in advancing activity indicatorslife of.

“With deteriorating expectations and demand trending downwards, we could expect a stronger correction of the prices of iron ore, however, the restrictions on the supply side have contributed to the maintenance prices at still high levels”, says Joubert from Inter.

Despite this, the bank maintains thepricing for MF62 (standard product) at US$ 100/t, considering the unavailability on the supply side, following cuts in guidances for this year
of important players in the segment and, now, also for Vale.

Next to mbasic etalsthe Inter analyst says that there is “potential to generate value, but first the house needs to be tidied up”.

Vale has faced major challenges in its base metals operation. Joubert explains that the strikes in canada and the parades for longer-than-expected and unscheduled maintenance, caused the company to revise its guidance for copper from 330-355kton to 270-285kton for this year.

“Even having maintained the projections for nickel, we believe that the goal will hardly be reached and we are already consideringlower production also for nickel in our model. Despite the bad weather for this year, we still believe in the potential of this segment and in the value that this unit can generate for stakeholders of the company”, evaluates Inter.

The analyst also points out that recent partnerships for the supply of low carbon nickel and quality for battery manufacturing, especially in a market with great potential, as North America, can put Vale one step ahead of its competitors for a
increasingly electrified future.

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Disclaimer

O Money Times publishes informative articles of a journalistic nature. This publication does not constitute an investment recommendation.

About Yadunandan Singh

Born in 1992, Yadunandan approaches the world of video games thanks to two sacred monsters like Diablo and above all Sonic, strictly in the Sega Saturn version. Ranging between consoles and PCs, he is particularly fond of platform titles and RPGs, not disdaining all other genres and moving in the constant search for the perfect balance between narration and interactivity.

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