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RIO - Rio Tinto News Story

6101p -185.0  -2.9%

Last Trade - 30/07/21

Sector
Basic Materials
Size
Large Cap
Market Cap £101.77bn
Enterprise Value £103.03bn
Revenue £41.78bn
Position in Universe 13th / 1800

BUZZ-UBS downgrades Rio Tinto to 'sell', says returns attractive but macro backdrop worsen

Tue 22nd June, 2021 1:26am
** UBS says miner Rio Tinto  RIO.AX  has reached the top of
the cycle, downgrades rating to "sell" from "neutral"; target
price unchanged at A$104 per share
    ** UBS says current free cash flow and dividends are not
sustainable as it expects iron ore price to fall by more than
50% over 12-18 months, from over $200/T to about $90/T
    ** Do not believe RIO's valuation is compelling at a
'normalised' iron ore price - UBS
    ** Near-term risks for the commodity complex are increasing
with the Fed turning more hawkish and China taking action to
deflate commodities, including steel; we expect this to
accelerate the unwinding of the 'reflation trade' - UBS
    ** Exceptionally high steel price is the key reason why iron
ore price is close to all-time highs; steel demand is also set
to  moderate in 2H with China tightening credit - UBS
    ** Next catalysts for RIO are 2Q production on July 16,
where iron ore shipments are expected on a soft note, and 1H21
results on July 28, which should be strong with cash returns
elevated due to high iron ore prices
    ** UBS adds that RIO may delay the Oyu Tolgoi start-up,
expected by October 2022, as it still awaits approvals from the
Mongolian govt
    ** Rio's stock up 8.4% YTD, and up 13% last year
    

 (Reporting by Rashmi Ashok in Bengaluru)
 ((Rashmi.Ashok@thomsonreuters.com; +918061822604;))
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