Replies to post #1774 on The Rising Influence of Rising Affluence

[DewDiligence]

Barron’s Roundtable plug for VALE:

Vale is the world's dominant producer of iron ore, which accounts for 76% of revenue. It has a $187 billion market cap. It also produces nickel, copper, alumina and fertilizer. It is a Brazilian company but trades in New York. The company likely had revenue of $43.2 billion in 2010. Iron ore prices could rise 25% this year, lifting revenue by 30%, which translates to $4.40 a share, or 7.9 times earnings. Net debt to equity is 0.2. The company has a huge expansion in the works. Iron-ore tonnage could rise from 311 million metric tons this year to 522 million in 2015. It is driven, to a large extent, by China. Vale generates a 28% return on equity. It will spend $24 billion this year on capex [capital expenditures], and do it all through internally generated cash flow. The company will generate $500 million to $1 billion in free cash. This isn't just a good company. It's a great company… The multiple could rise to 10 or 11 times earnings, and the stock could sell at 45 or 50.

The above comes from the section of the Barron’s Roundtable on the stock picks by Scott Black. See #msg-58842662 for the economic- and market-overview section of the Roundtable.

[DewDiligence]

Vale Is Building Malaysian Iron-Ore Complex

[The purpose of the complex is to facilitate the distribution of VALE’s ore from Brazil to customers in Asia, but the publicly-disclosed details are still sketchy.]

http://www.reuters.com/article/idUSL3E7CK24T20110121?feedType=RSS&feedName=basicMaterialsSector&rpc=43

›Thu Jan 20, 2011 8:23pm EST

KUALA LUMPUR, Jan 21 (Reuters) - Brazil's Vale International is expected to start building a 9 billion-14 billion ringgit ($2.95 billion-$4.57 billion) iron-ore complex in Malaysia by July or August, The Star newspaper reported.

Zambry Abdul Kadir, chief minister of Malaysia's Perak state where the project will be located, said the world's largest iron ore miner would develop the complex including a jetty at the coastal town of Lumut.

"This will be Vale's largest factory outside Brazil. All the necessary acquisitions have been made; it is just a matter of coming out to do it now," Zambry was quoted as saying.

Zambry said the state government had no equity share in the project but would participate in port and logistics operations. There would also be co-sharing with local companies on downstream activities.

Vale is building ore distribution points in Oman and Malaysia to handle Chinamax carriers, which are 400,000-tonne iron ore carriers that are expected to cut costs for Vale and lower freight rates for the entire industry, as the new vessels swell an already oversupplied market.‹