Is it worth (VALE3) above R$100 again? See Tiago Reis’ opinion

A OK (VALE3) released its quarterly results this week, showing US$1.68 billion in profit, a figure that was below market consensus projections, as well as other relevant balance sheet lines, such as Ebitda and net revenue.

Despite this scenario and the context of falling Vale sharesthe founder and chairman of Suno, Tiago Reiscomments that he remains optimistic with his thesis about the mining company.

Asked about the possibility of the shares returning to around R$100, the founder of Suno says that “yes, it is possible”, especially considering the share buyback strategy and the dividends over time – composing what is known as ‘total return’.

For the expert, looking purely at short-term numbers would be a myopic analysis, and would dismiss Vale’s full potential.

Tiago comments that, in a scenario in which the company is able to show good growth and better navigate a favorable scenario, the shares VALE3 could surpass the price of R$100 again.

“The quarterly results are very predictable, since it releases its production report and the price of ore and exchange rates are public, and with this data it is possible to create a spreadsheet and arrive at the company’s results without many surprises. I don’t look at the results of the quarter, I’m looking at the next five, ten, fifteen years”, she comments.

“When I look at this, I see an ultra-competitive company, with the purest ore reserves in the world, which has a very high value and should rise even further”, he adds.

Reis comments that he has “no doubt” that there will be a strong demand for iron ore of Vale for the coming years and decades and cites a macroeconomic factor that should favor the company: the fact that several countries, such as India, should have great demand due to their expected economic growth and the fact that they are countries with a per capita income. capita similar to that of China in years past, during the commodities boom.

Furthermore, it highlights that despite the bumps in the Dalian stock market in recent months, iron ore continues to have a price close to the average of the last 10 years (around US$ 120 per ton).

Are Vale’s dividends satisfactory?

According to data from Status Invest, the Vale dividends represent a dividend yield (DY) of 11.1%, with R$6.98 paid per share in the last 12 months.

Tiago Reis comments that it is possible that the company will even increase dividends in the future.

“Vale could increase if it wanted. What I believe Vale management has done: they have maintained a constant dividend and over time, especially if the shares are cheap, they do buyback programs,” he explains.

According to Reis, this is a very common practice in the United States, and the impression is that the mining company has followed a strategy along these lines.