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1、Kaan Peker,90,80,70,60,Rio Tinto Ltd,19.9,1,2,Deutsche BankMarkets Research,RatingBuyAustralasiaAustralia,CompanyRio Tinto Ltd,Date8 August 2012Results,M&M-DiversifiedResources,Reuters,Bloomberg,Exchange Ticker,Price at 8 Aug 2012Price target-12mth52 week range(AUD),54.8994.0074.52-50.51,RIO.AX,RIO
2、AU,ASX,RIO,ALL ORDINARIES,4,333,1H12-Growing where it countsPaul YoungResearch Analyst,A clear growth strategy focused on maximizing returnsThe 1H result was slightly better than expected;earnings of US$5.2bn,2012capex guidance of US$16bn(down slightly),a US72.5c interim dividend(always half the pri
3、or year),some cost cutting initiatives,and lots of talk abouthigh returning iron ore growth and more longer dated growth options outsideof iron ore.The company is well positioned for a market turnaround in 2013,with c.7%production growth(mainly from iron ore and copper)which could beexceeded(the Pil
4、bara expansion appears early),a strong balance sheet(20%gearing),and low cost operations.The strategy is to invest in high returningprojects and phase expansions in-line with demand.Buy on valuation.Capex flexibilityIt is clear that Rio has flexibility on capex.Guidance for 2012 is US$16bn downfrom“
5、In excess of US$16bn”.This implies that 2H capex of US$8.4bn mightbe the peak spend over the medium term,considering approved capex for,(+61)2 8258-2587paul-Rob CliffordResearch Analyst(+44)20 754-Research Analyst(+61)2 8258-Price/price relative,2013 is c.US$14bn.We model US$15.3bn as we expect furt
6、her capexapprovals for Pilbara 353 and the Oyu Tolgoi UG.Net debt increased byUS$4.7bn to US$13.2bn during 1H,however gearing is just 20%(ND/E).Cashflow from operations(pre-tax)was US$7.8bn,however tax paid(US$3.8bn)and working capital(US$1.5bn)impacted cash flow,but this should partlyreverse in the
7、 2H.Potential divestments(diamonds)might also assist.50,Cost cutting a focus although iron ore costs are well contained,8/10,2/11,8/11,2/12,In a sign cost pressure might be slowly easing,Rio is seeing the increases,abating somewhat.Other cash cost impacts(true uncontrollable costs)only,ALL ORDINARIE
8、S(Rebased),increased by 2%during the half.Head office cuts and the reversal of one-offcosts in aluminium should also help.The Pilbara is the major cause of concernwith cost increases running at around 6.5%per annum,however iron ore costswere still just US$25/t(FOB)vs.a realized price of US$129/t(FOB
9、).,Performance(%)AbsoluteALL ORDINARIES,1m-5.03.2,3m-11.8-1.0,12m-20.06.8,Pricing in no iron ore growth beyond 353,no aluminium,and parity AUD,Stock data,Removing Pilbara growth beyond 353 and the aluminium division(probablyjustifiable with negative earnings),combined with running parity AUDUSDforev
10、er,reduces our NPV to c.A$54/sh,so we see limited downside.Valuation and risksOur A$94/sh PT is set in-line with our NPV(assumes an 8.9%WACC).Key risksinclude;weaker commodity prices and higher capex.Forecasts And Ratios,Market cap(AUDm)Market cap(USDm)Shares outstanding(m)Key indicators(FY1)ROE(%)R
11、OA(%),101,659107,3671,852.111.4,Year End Dec 31Net Profit(USDm)%ChangePER(x)Source:Deutsche Bank estimates,company data,2010A13,9860.0%9.7,2011A15,5490.0%9.6,2012E10,8833.8%9.9,2013E13,598-0.1%7.9,2014E13,4850.4%8.0,Net debt/equity(%)Book value/share(USD)Price/book(x)Net interest cover(x),21.630.551
12、.975.3,Pre-exceptionals/extraordinariesMultiples and yields calculations use average historical prices for past years and spot prices for current and future years,EBIT margin(%),25.3,_Deutsche Bank AG/SydneyAll prices are those current at the end of the previous trading session unless otherwise indi
13、cated.Prices are sourcedfrom local exchanges via Reuters,Bloomberg and other vendors.Data is sourced from Deutsche Bank and subjectcompanies.Deutsche Bank does and seeks to do business with companies covered in its research reports.Thus,investors should be aware that the firm may have a conflict of
14、interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.DISCLOSURES ANDANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1.MICA(P)072/04/2012.,0,0,30,8 August 2012M&M-Diversified ResourcesRio Tinto Ltd,M
15、odel updated:08 August 2012,Fiscal year end 31-Dec,2009,2010,2011,2012E,2013E,2014E,Running the numbers,Financial Summary,AustralasiaAustraliaM&M-Diversified ResourcesRio Tinto Ltd,DB EPS(USD)Reported EPS(USD)DPS(USD)BVPS(USD)Valuation MetricsPrice/Sales(x),3.372.570.4522.371.8,7.117.281.0829.732.4,
16、8.163.061.4528.012.5,5.866.251.6330.552.0,7.327.321.6636.151.9,7.267.261.7541.571.9,Reuters:RIO.AXBuyPrice(8 Aug 12)Target Price52 Week rangeMarket Cap(m),Bloomberg:RIO AUAUD 54.89AUD 94.00AUD 50.51-74.52AUDm 101,659,P/E(DB)(x)P/E(Reported)(x)P/BV(x)FCF yield(%)Dividend yield(%)EV/SalesEV/EBITDAEV/E
17、BIT,12.316.22.74.81.12.58.612.1,9.79.52.610.11.62.76.67.7,9.625.72.25.21.82.75.96.8,9.99.31.9nm2.82.47.39.6,7.97.91.63.02.92.35.56.8,8.08.01.45.13.02.25.56.9,USDm 107,367,Income Statement(USDm),Company ProfileRio Tinto is a global diversified mining company withinterests in aluminum,borax,coal,coppe
18、r,diamonds,gold,iron ore,titanium dioxide feedstock,uranium andzinc.Rio Tintos key mining operations are located inAustralia,New Zealand,South Africa,South America,theUnited States,Europe,and Canada.Rio Tintosmanagement structure is based primarily on six principalglobal products businesses Aluminiu
19、m,Diamonds,Copper,Energy(coal and uranium),Industrial Minerals,and Iron Ore supported by worldwide exploration andtechnology groupsPrice Performance9080706050Aug 10Nov 10Feb 11May 11Aug 11Nov 11Feb 12May 12,SalesEBITDAEBITPre-tax profitNet incomeCash Flow(USDm)Cash flow from operationsNet CapexFree
20、cash flowEquity raised/(bought back)Dividends paidNet inc/(dec)in borrowingsOther investing/financing cash flowsNet cash flowChange in working capitalBalance Sheet(USDm)Cash and cash equivalentsProperty,plant&equipmentGoodwill,41,82512,0488,6216,2954,5428,882-5,3883,49414,877-876-16,4201,9732,775234
21、4,23345,80314,268,56,57623,05119,61419,37814,32318,276-4,59113,68592-1,754-9,3603,0525,816-1859,94856,02415,296,60,53727,60423,78713,0925,82620,030-12,3357,695-5,504-2,2364,208-4,441-6101,7789,67064,9678,187,52,55417,42213,29414,24911,61411,763-16,280-4,517105-3,0171,4041,427-3,4646945,06775,4368,24
22、6,57,18624,01019,20618,97313,59818,487-15,3123,175-3,17201,000991-8186,05884,9448,246,57,66023,70918,71218,52313,48519,516-13,9915,525-3,11401,0003,399-389,45792,9388,246,Rio Tinto LtdMargin Trends5040,ALL ORDINARIES(Rebased),Other assetsTotal assetsDebtOther liabilitiesTotal liabilitiesTotal shareh
23、olders equityNet debt,32,93297,23623,00228,30951,31145,92518,769,31,134112,40214,34132,78747,12865,2744,393,36,721119,54518,47741,78560,26259,2088,807,34,435123,18319,47537,06256,53766,64614,408,35,113134,36019,47537,55157,02677,33413,417,35,381146,02219,47538,88958,36487,65810,018,Key Company Metri
24、cs,20,09,10,11,12E,13E,14E,Sales growth(%)DB EPS growth(%),nmna,35.3110.8,7.014.7,-13.2-28.2,8.824.9,0.8-0.8,EBITDA MarginGrowth&Profitability40302010,EBIT Margin,30252015,Payout ratio(%)EBITDA Margin(%)EBIT Margin(%)ROE(%)Net debt/equity(%)Net interest cover(x),17.528.820.618.540.910.7,14.840.734.7
25、27.46.731.9,47.345.639.328.014.962.3,25.933.225.319.921.675.3,22.642.033.622.017.382.3,24.141.132.518.711.498.9,0-10,105,DuPont Analysis,-20,0,EBIT margin(%),20.6,34.7,39.3,25.3,33.6,32.5,09,10,11,12E,13E,14E,x Asset turnover(x),0.4,0.5,0.5,0.4,0.4,0.4,x Financial cost ratio(x),0.9,1.0,1.0,1.0,1.0,1
26、.0,Solvency5040302010,Sales growth(LHS),ROE(RHS)12010080604020,x Tax and other effects(x)=ROA(post tax)(%)x Financial leverage(x)=ROE(%)annual growth(%)x NTA/share(avg)(x)=Reported EPSannual growth(%),0.64.92.914.1na18.22.57na,0.813.72.128.099.026.07.28183.7,0.25.02.110.5-62.529.13.06-58.0,0.99.62.2
27、21.3102.629.46.25104.5,0.710.62.122.03.433.27.3217.1,0.79.61.918.7-14.938.77.26-0.8,0,0,Source:Company data,Deutsche Bank estimates,09,10,11,12E,13E,14E,Net debt/equity(LHS)Paul Young+61 2 8258-2587Page2,Net interest cover(RHS)paul-,Deutsche Bank AG/Sydney,Min,9%,),8 August 2012M&M-Diversified Resou
28、rcesRio Tinto LtdRIO TINTO OPERATIONAL AND FINANCIAL SUMMARY DATA,FX/COMMODITY ASSUMPTIONS,CY 08A CY 09A CY 10A CY 11A CY 12F CY 13F CY 14F CY 15F CY 16F CY 17F CY 18F CY 19F CY 20F,NPV(HD12),US$mn,US$/sh,AUD/Sh,AUDUSDIron ore-lump(US$/t)-CIFIron ore-fines(US$/t)-CIFAluminium(US$/lb)Copper(US$/lb)En
29、ergy Coal(US$/t),0.85121871.163.15107.6,0.7995750.762.3484.5,0.921371220.993.4391.3,1.031811681.104.04122.0,1.011511390.943.58100.8,0.971521401.003.6394.0,0.941421301.003.40102.0,0.901301181.033.23100.0,0.861171051.073.0698.0,0.82105931.102.8998.0,0.80106921.333.2496.0,0.80109941.363.3298.4,0.801119
30、71.393.41100.8,AluminiumCopperDiamonds&Ind MinEnergyIron OreInvestments,19,21522,7008,46212,69696,9362,000,10.3712.264.576.8652.341.08,13.1814.925.448.6663.891.37,Coking Coal(US$/t),249.0,171.8,194.8,288.8,225.0,263.8,230.0,210.0,190.0,170.0,187.3,192.0,196.8,Corporate and other ops(8,460),(4.57),(5
31、.49),Uranium(US$/lb)Rutile(US$/t),65.5523,60.5532,60.8589,63.11,045,65.02,450,65.02,400,70.02,000,70.01,600,60.01,400,60.01,200,71.31,171,73.11,200,74.91,230,Net DebtTOTAL,(14,408)139,141,(7.78)75.13,(8.03)93.94,K EY FINANCIAL METRICS,WACC(nominal),9.0%Shares,1,852M,Underlying Earnings(US$M),10,303,
32、5,968,13,986,15,549,10,977,13,598,13,485,12,986,12,535,11,380,14,228,15,102,16,468,Free Cash Flow(US$M)-before debt a 6,769,4,646,14,811,-1,021,-5,106,991,3,399,4,140,3,039,1,234,2,444,6,815,9,784,Gearing(ND/E-%)ROE(%)ROA(%),172%45%15%,41%19%10%,7%27%21%,15%28%22%,22%20%12%,17%22%16%,11%19%14%,6%16%
33、13%,3%14%12%,1%11%10%,-1%13%12%,-5%12%12%,-12%12%13%,Valuation(HD12),Iron Ore,PRODUCTION,61%,Copper-refined(kt)Copper-mined(kt),322681,412711,393674,334520,305571,332628,336682,334676,327695,296708,296750,296750,296750,Iron ore(mt)-attributableIron ore(mt)-100%,148191,166216,179239,192245,195251,204
34、268,225288,268337,322397,355437,387471,391481,395491,Energy8%,Coal-Hard&semi soft coking(Mt)Coal-Thermal(Mt)Alumina(Mt)Aluminium(Mt)Uranium(kt)Diamonds(Mcts)Gold(koz)Titanium dioxide feedstock(kt),10.5150.18.24.16.420.85271,524,10.4129.78.33.86.414.01,1671,146,12.060.79.13.85.213.87141,392,11.719.78
35、.93.83.211.75761,442,12.919.59.73.44.015.02911,719,15.421.810.92.84.126.75522,150,16.422.311.62.83.526.65412,200,17.724.311.82.94.626.75372,200,19.127.012.13.14.626.75302,200,23.728.312.83.14.626.85302,200,27.229.814.03.14.626.85302,200,28.931.414.13.14.626.95302,200,33.833.514.23.14.626.95302,200,D
36、iamonds&Ind Copper14%5%,Aluminium12%,REVENUE(US$M),Rev enue split(2012F),Aluminium,22,228,12,013,15,206,9,959,15,527,14,355,14,681,13,384,14,265,15,220,17,980,18,454,18,941,CopperDiamonds&MineralsEnergyIron OreOthers(includes associates and JVs)Total,5,7483,8208,01816,527-2,07754,264,6,2062,6186,709
37、12,5981,68141,825,7,7823,0355,65224,02487756,576,7,6343,2207,32729,9092,48860,537,6,4533,8055,52826,294-5,05352,554,8,5355,2935,89428,803-5,69457,186,8,5315,1315,66629,528-5,87757,660,7,9674,5675,82530,917-5,34857,313,7,4744,3215,87331,671-5,37458,231,6,7534,0496,02030,574-5,53857,077,8,1754,0927,27
38、232,711-6,83963,391,8,8454,2158,12733,794-6,96766,467,10,3094,3429,30034,914-7,85269,955,EnergyDiamonds&Minerals7%Copper11%,Iron Ore46%,CAPEX(US$M)Growth,AluminiumCopperDiamonds&MineralsEnergyIron OreTotal Growth CapexTotal Sustaining CapexTotal Capex,1,5495971,0056372,6196,4062,4228,828,79629333046
39、01,7813,6602,1635,823,4019661514961,7883,8012,0535,854,6982,6183851,0252,9357,1534,63112,011,2,1521,8316981,3693,6659,7166,35716,073,1,4001,3133007606,0229,7955,51715,312,9008733001,1005,7198,8925,09913,991,082301,0404,6596,5225,31311,835,01,25001,5404,1486,9385,83712,775,01,59402,5403,1107,2436,321
40、13,564,02,35603,0423,1658,5636,71115,273,073102,0441,6624,4376,90711,345,051201,0466392,1977,0809,277,Aluminium27%,EBIT split(2012F)EBITDA(US$M),AluminiumCopperDiamonds&MineralsEnergyIron OreOthers(includes associates and JVs)Total,3,9132,8601,2924,37010,212-79921,848,5933,4741,2092,7227,112-79914,3
41、11,2,4184,5036062,29916,605-45325,978,1,7633,3947032,23220,930-50128,521,7282,1901,1201,11216,913-1,51220,550,1,2904,4901,8731,46418,161-99326,285,1,4914,1792,0311,68017,585-96026,006,1,5773,4421,5251,96118,177-96025,722,1,8712,8791,4962,06917,713-96025,067,2,4042,3831,4322,09116,498-96023,848,4,724
42、3,3241,4202,57317,323-96428,399,4,7913,6491,4732,96317,711-96829,620,4,9204,4771,5173,41818,106-97231,466,Iron Ore77%,EBITDA margins(%AluminiumCopperDiamonds&MineralsEnergyIron OreTotal,18%50%34%55%62%40%,5%56%46%41%56%34%,16%58%20%41%69%46%,18%44%22%30%70%47%,5%34%29%20%64%39%,9%53%35%25%63%46%,10%
43、49%40%30%60%45%,12%43%33%34%59%45%,13%39%35%35%56%43%,16%35%35%35%54%42%,26%41%35%35%53%45%,26%41%35%36%52%45%,26%43%35%37%52%45%,Energy5.0%DiamonCopperds&10%Minerals5%,Aluminium3%,Source:Company data,DB estimates,Deutsche Bank AG/Sydney,Page3,8 August 2012MCash returns the interim dividend of US72.
44、5c was in-line with guidance.TheUS$7bn share buyback was completed early in the half.Balance sheet net debt increased by US$4.7bn from US$8.5bn to US$13.2bn,which is lower than our forecast US$14.2bn.Gearing is a healthy 20%(ND/E)butwill increase slightly in the 2H.Cash flow from operations(pre-tax)
45、of US$7.8bnwas ahead of our forecast US$6.8bn mostly due to a stronger performance in ironore and TiO2,however tax paid of US$3.8bn was higher and working capitalincreased by US$1.5bn,but this should partly reverse in the 2H.Potentialdivestments(diamonds)might also assist cash flow.Now that Ivanhoe
46、Mines(nowcalled Turquoise Hill)is fully consolidated by Rio,the associated debt(over US$3bn)is now included in net debt and is one of the reasons for the sharp increase in Riosconsolidated net debt.Capex guidance for 2012 is now US$16bn down from“In excess of US$16bn”.1H capex of US$7.6bn was below
47、our forecast of US$7.9bn,and implies that 2Hcapex of US$8.4bn might be peak capex over the medium term.Rio has approvedcapex of c.US$14bn in 2013.We model US$15.5bn as we expect an additional c.US$5bn of mine capex to be approved for Pilbara expansion 353,and further capexon the Oyu Tolgoi UG.Only U
48、S$12bn of capex has been approved for 2014.Costs The company stated that while cost pressures do remain in place and are afocus for the company,it is seeing the increases abating somewhat.While theAustralian dollar continues to remain strong,it does not appear to be getting anystronger,so the upward
49、 pressure has abated.Lower oil prices and consumables(steel)are also starting to flow through.Other cash cost impacts on the earningsrepresented around only 2%of the company costs in the half.One-off costs inaluminum should abate in 2H also.The Pilbara is the major cause of concern withcost increase
50、s running at around 6.5%per annum.Outlook similar to previous commentary,Rios has stated that its order books arefull,and more importantly,“they expect to see signs of improvements in Chineseeconomic activity by the end of the year”,mainly due to government stimulusmeasures.This is in-line with our
