Citi upgrades iron ore miners Rio Tinto, Fortescue on China stimulus prospects

Deterra Royalties

08/06/2023 04:11

** Analysts at Citigroup see "clear upside risks" to iron ore stocks from
potential stimulus by China to prop up its property sector
    ** Upgrades top Australian iron ore miners like Rio Tinto  RIO.AX  to buy
from neutral and Fortescue Metals Group  FMG.AX  to neutral from sell
    ** Brokerage believes a "modest" stimulus package with a focus on property
is "plausible and possible" - potentially proving a positive catalyst for iron
ore equities
    ** "Hopes for stimulus from China and news headlines about potential
measures to support the property sector have catalysed an upward move in steel
and iron ore over the past week" - Citi
    ** However, brokerage does not expect recent strength in iron ore prices to
sustain; downgrades 6-12 month price forecast to $90/tonne from $105/tonne
    ** Cuts BHP price target, and FY23/24 EBITDA view by 1%/11% on iron ore
price adjustments
    
             Company                 Price Target          Rating
                                    New       Old       New      Old
       BHP Group  BHP.AX          A$43.50   A$45.50   Neutral  Neutral
       Rio Tinto  RIO.AX          A$123.00  A$120.00    Buy    Neutral
 Fortescue Metals Group  FMG.AX   A$19.00   A$18.20   Neutral   Sell
     Champion Iron  CIA.AX         A$8.30    A$8.40     Buy      Buy
   Deterra Royalties  DRR.AX       A$4.70    A$4.80   Neutral  Neutral
 
 (Reporting by Sameer Manekar in Bengaluru)
 ((Sameer.Manekar@thomsonreuters.com; Twitter: https://twitter.com/sameer_manekar))