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1、Kaan Peker90Rio Tinto Ltd12Deutsche BankMarkets ResearchRatingBuyAustralasiaAustraliaCompanyRio Tinto LtdDate15 January 2013Company UpdateM&M - DiversifiedResourcesReutersBloombergExchange TickerPrice at 15 Jan 2012Price target - 12mth52 week range (AUD)65.9082.8072.30 - 48.63RIO.AXRIO AUASXRIOALL O
2、RDINARIES4,7534Q12 - Production set to increase 8%after a flat yearBig assets and cost out to drive earnings growthRio Tinto increased its Cu Eq production 2.3% to 1.86Mt in the December Q.The result was slightly below our forecast 1.90Mt due to maintenance in metcoal and lower TiO2. However the Pil
3、bara system operated above 250Mtpa(nameplate is 237Mtpa), iron ore sales (and lump) were slightly better and theStage 1 expansion is tracking nicely (and ahead of schedule in our view). Noproduction guidance was given but we forecast an 8% lift in Cu Eq productionin 2013 (after zero growth in 2012)
4、with contributions from big assets such asOyu Tolgoi, Escondida, RBM, Alma and the Pilbara. We still see value in Rio atcurrent levels with cost out and stronger production to drive earnings growth.Iron ore production beats guidance againGlobal iron ore production totaled 254Mt for 2012 beating guid
5、ance (250Mt)again. Sales from the Pilbara were a record and the lump to fines ratio of 29%was a bit better than our forecast 27% when including Yandi fines. We mightPaul YoungResearch Analyst(+61) 2 8258-2587paul-Rob CliffordResearch Analyst(+44) 20 754-Research Analyst(+61) 2 8258-Key changessound
6、like a broken record but we continue to believe the Stage 1 Pilbaraexpansion to 290Mtpa is 3 months early. The 100Mtpa expansion of CapeLambert is well advanced with only the installation of the conveyor,shiploaders and instrumentation outstanding. We expect the 2nd jetty and the6th car dumper to be
7、 completed in 2Q13, which are the big infrastructurecomponents for the expansion. The rail system upgrade to 290Mtpa iscomplete and all the mines are on schedule. We continue to believe our CY13Price targetSales (FYE)EBIT margin(FYE)Net profit(FYE)84.20 to 82.80 49,890 to 50,566 19.4 to 19.6 8,801.5
8、 to 8,804.3-1.7%1.4%1.2%0.0%and CY14 production forecasts of 249Mt and 273Mt might be at least 10Mt toconservative, but we will wait until the March Q construction update before wepossibly upgrade our numbers.Price/price relativeBig copper contributing, TiO2 misses guidanceWith higher grades being p
9、rocessed at both Escondida and Bingham and firstproduction from Oyu Tolgoi on track for 1Q13 we forecast a 10% YoY lift inmined copper production to 607kt. A 20% miss in TiO2 feedstock production(vs. capacity) was disappointing with no explanation given, however we can80706050401/117/111/127/12only
10、assume it might be a combination of maintenance and weaker demandfor rutile and chloride slag. As such we have reduced our production forecasts.ALL ORDINARIES (Rebased)Valuation and risksOur valuation is set in-line with our A$82.8/sh NPV (assumes a 9.0% WACC).Key risks include weaker commodity pric
11、es and higher capex.Performance (%)AbsoluteALL ORDINARIES1m4.73.43m17.05.412m1.211.7Stock dataForecasts And RatiosMarket cap (AUDm)122,050Year End Dec 31Net Profit (USDm)EPS (USD)EPS Growth (%)PER (x)2010A13,9017.0798.69.82011A15,5498.0614.19.82012E8,8044.74-41.214.72013E9,5045.127.913.62014E10,7525
12、.7913.112.0Market cap (USDm)Shares outstanding (m)Daily volume (USDm)Free float128,9401,852.1106.93100.00Source: Deutsche Bank estimates, company dataPre-exceptionals/extraordinariesMultiples and yields calculations use average historical prices for past years and spot prices for current and future
13、years, except P/B_Deutsche Bank AG/SydneyDeutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors shouldbe aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors shouldconsider this report as
14、only a single factor in making their investment decision. DISCLOSURES AND ANALYSTCERTIFICATIONS ARE LOCATED IN APPENDIX 1. MICA(P) 072/04/2012.00602015 January 2013M&M - Diversified ResourcesRio Tinto LtdModel updated:15 January 2013Fiscal year end 31-Dec2009201020112012E2013E2014ERunning the number
15、sFinancial SummaryAustralasiaAustraliaM&M - Diversified ResourcesRio Tinto LtdDB EPS (USD)Reported EPS (USD)DPS (USD)BVPS (USD)Valuation MetricsPrice/Sales (x)3.562.750.4522.371.87.077.241.0829.732.58.063.021.4528.012.54.745.131.5329.242.55.125.121.6132.672.35.795.791.7336.722.1Reuters: RIO.AXBuyPri
16、ce (15 Jan 12)Target Price52 Week rangeMarket Cap (m)Bloomberg: RIO AUAUD 65.90AUD 82.80AUD 48.63 - 72.30AUDm 122,050P/E (DB) (x)P/E (Reported) (x)P/BV (x)FCF yield (%)Dividend yield (%)EV/SalesEV/EBITDAEV/EBIT11.715.12.75.21.12.58.411.69.89.52.610.11.62.76.67.79.826.02.25.11.82.76.06.914.713.62.4nm
17、2.23.010.515.113.613.62.10.72.32.78.211.412.012.01.93.42.52.67.39.9USDm 128,940Income Statement (USDm)Company ProfileRio Tinto is a global diversified mining company withinterests in aluminum, borax, coal, copper, diamonds,gold, iron ore, titanium dioxide feedstock, uranium andzinc. Rio Tintos key m
18、ining 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 Aluminium, Diamonds,Copper, Energy (coal and uranium), Industrial Minerals,and Iron O
19、re supported by worldwide exploration andtechnology groupsPrice Performance908070SalesEBITDAEBITPre-tax profitNet incomeCash Flow (USDm)Cash flow from operationsNet CapexFree cash flowEquity raised/(bought back)Dividends paidNet inc/(dec) in borrowingsOther investing/financing cash flowsNet cash flo
20、wChange in working capital41,82512,3788,9516,6254,8729,212-5,3883,82414,877-876-16,4201,6433,10523455,17122,96619,52919,29314,23818,191-4,59113,60092-1,754-9,3603,1375,731-18560,53727,60423,78713,0925,82620,030-12,3357,695-5,504-2,2364,208-4,441-6101,77850,56614,2309,92511,3769,5359,579-14,164-4,585
21、105-3,0173,904327-2,1321,63856,96118,97513,59813,3369,50415,552-14,602950-2,894-3,0001,000-3,944-36560,22821,32615,63715,33610,75218,089-13,6814,408-3,067-3,0001,000-659-610Balance Sheet (USDm)5040Jan 11Apr 11 Jul 11 Oct 11Jan 12Apr 12 Jul 12 Oct 12Cash and cash equivalentsProperty, plant & equipmen
22、tGoodwill4,23345,80314,2689,94856,02415,2969,67064,9678,1876,39974,2438,2462,45482,4688,2461,79589,4608,246Rio Tinto LtdMargin Trends504030ALL ORDINARIES (Rebased)Other assetsTotal assetsDebtOther liabilitiesTotal liabilitiesTotal shareholders equityNet debt32,93297,23623,00228,30951,31145,92518,769
23、31,134112,40214,34132,78747,12865,2744,39336,721119,54518,47741,78560,26259,2088,80733,529122,41621,97536,30758,28264,13415,57634,519127,68718,97537,90156,87670,81116,52134,873134,37415,97539,74455,71978,65514,180Key Company Metrics1009101112E13E14ESales growth (%)DB EPS growth (%)nmna31.998.69.714.
24、1-16.5-41.212.67.95.713.1EBITDA MarginGrowth & Profitability40302010EBIT Margin30252015Payout ratio (%)EBITDA Margin (%)EBIT Margin (%)ROE (%)Net debt/equity (%)Net interest cover (x)16.329.621.419.540.911.114.941.635.427.26.731.847.945.639.328.014.962.329.628.119.616.524.356.231.433.323.916.623.351
25、.929.735.426.016.718.052.00-10105DuPont Analysis-200EBIT margin (%)21.435.439.319.623.926.009101112E13E14Ex Asset turnover (x)0.40.50.50.40.50.5x Financial cost ratio (x)0.91.01.01.01.01.0Solvency5040302010Sales growth (LHS)ROE (RHS)70605040302010x Tax and other effects (x)= ROA (post tax) (%)x Fina
26、ncial leverage (x)= ROE (%)annual growth (%)x NTA/share (avg) (x)= Reported EPSannual growth (%)0.65.22.915.1na18.22.75na0.813.62.127.984.426.07.24162.90.25.02.110.5-62.328.73.02-58.31.07.92.317.970.128.75.1369.90.77.62.216.6-7.330.95.12-0.30.78.22.016.70.934.65.7913.100Source: Company data, Deutsch
27、e Bank estimates09101112E13E14ENet debt/equity (LHS)Paul Young+61 2 8258-2587Page 2Net interest cover (RHS)paul-Deutsche Bank AG/Sydney-)15 January 2013M&M - Diversified ResourcesRio Tinto LtdRIO TINTO OPERATIONAL AND FINANCIAL SUMMARY DATAFX/COMMODITY ASSUMPTIONSCY 10A CY 11A CY 12F CY 13F CY 14F C
28、Y 15F CY 16F CY 17F CY 18FCY 19FCY 20FNPV (HD12)US$MUS$/shAUD/ShAUDUSDIron ore - lump (US$/t) - CIFIron ore - fines (US$/t) - CIFAluminium (US$/lb)Copper (US$/lb)Energy Coal (US$/t)Coking Coal (US$/t)Uranium (US$/lb)Rutile (US$/t)0.921371220.993.4391195615891.031811681.094.00122289631,0451.041361240
29、.933.61101208532,2931.041371250.963.6994178651,3001.011271151.003.40102185701,7500.971221101.003.29100180681,9000.921151031.033.1598173651,7500.87107951.073.0198165631,3000.82100881.102.8698158731,3000.80106921.173.1799176751,5220.80109941.203.24101180761,560Aluminium (excl. Pac Al)CopperDiamondsMin
30、eralsEnergyIron OrePacific AluminiumInvestmentsCorporate and other operations14,03520,4372,55817,4968,86286,5314,1264,000(14,957)7.5811.031.389.454.7946.722.232.16(8.08)9.1313.741.6611.385.7756.292.682.60(9.73)Net Debt(16,521)(8.92)(10.75)K EY FINANCIAL METRICS940310921112111207211593112221373314704
31、 TOTAL127,62068.9182.79Underlying Earnings (US$M)13,901 15,5498,8049,504 10,752 10,815 11,755 11,512 11,23413,86815,389Operating Cash Flow (US$M)18,191 20,0309,57915,552 18,089 18,674 19,858 20,040 20,20922,84324,291 WACC (nominal)9.0% Shar es1,852MCapex (incl. exploration) and divestments (US$M)Div
32、idend (US$M)(804) (12,682) (11,346)(1,754) (2,236) (3,017)(13,602) (12,681) (13,049) (12,496) (11,965) (12,973)(2,894) (3,067) (3,279) (3,446) (3,618) (3,799)(10,407)(3,989)(9,993)(4,188)Acquisitions (US$M)(907) (6,133) (1,491)Free Cash Flow (US$M) - before debt & equity14,726(1,021) (6,274)(944)2,3
33、412,3463,9164,4563,4378,44710,109Net Debt (US$M)4,3938,807 15,57616,521 14,180 11,8347,9183,46124(8,423) (18,532)Gearing (ND/E - %ROE (%)ROA (%7%27%21%15%28%22%24%17%9%23%17%11%18%17%12%14%15%12%8%14%12%3%12%12%0%11%11%-7%13%13%-13% Valuation (HD12)13%14%EPS (USc)EPS Change (%)707157%80614%474-41%51
34、28%57913%5821%6339%620-2%605-2%74623%82811%Iron Ore56%EPS CAGR (% - off CY 12 earnings8%11%7%7%6%4%7%7%DPS (USc)Payout ratio (%)10815%14518%15332%16131%17328%18131%19030%20032%21035%22029%23128%PRODUCTIONEnergyCopper - refined (kt)3933342793033032952952952952952956%Copper - mined (kt)Iron ore (Mt) -
35、 attributableIron ore (Mt) - Pilbara (100%)Coal - Hard & semi soft coking (Mt)Coal - T hermal (Mt)67417922412.060.752019223111.719.754819923911.420.660720624914.922.860523127316.422.362026831317.724.363731336419.127.072934039423.728.381036541927.229.881036841928.931.481037841933.833.5Minerals11%Diam
36、onds2%Copper13%PacificAluminium3%Aluminium(excl. Pac Al)9%Alumina (Mt)Aluminium (Mt)Uranium (kt)Diamonds (Mcts)Gold (koz)Titanium dioxide feedstock (kt)Copper Eq Pr oduction (Mt)Copper Eq CAGR (%9.13.85.213.87141,3927.48.93.83.211.75761,4427.07.32.34.413.32301,5957.08.02.55.124.12402,0907.68.0%8.32.
37、23.926.62512,4007.96.2%9.12.45.026.72512,4008.67.2%9.12.55.026.72452,4009.37.4%9.22.55.026.82452,4009.87.0%9.22.55.026.82452,40010.46.8%9.32.55.026.92452,40010.55.9%9.32.55.026.9245 Rev enue split (2012F)2,40010.7Energy5.4%10%REVENUE (US$M)AluminiumCopperDiamondsMineralsEnergyIron OreOthers (include
38、s associates and JVs)Total15,2067,7826822,3535,65224,0241,06956,76815,5827,6347272,4937,32729,909-2,54361,12910,1616,1387292,8115,31423,6761,73950,56610,8758,3059313,7655,28625,0642,47156,69810,8297,9521,1114,7535,31627,1643,10360,22811,0178,4131,1244,9215,58227,9422,64161,64111,4407,9541,1674,7925,
39、81630,2732,68664,12911,7669,2121,1794,3966,08330,1912,83965,66612,0779,9431,2074,4076,95529,8582,99267,44012,75511,1221,2434,9757,97831,6172,69172,38013,07411,8591,2805,1099,10533,1012,63476,162Minerals7%Diamonds2%Copper15%AluminiumIron Ore46%CAPEX (US$M)Growth20%AluminiumCopperDiamonds4019261516982
40、,3723859061,9766981,2001,5543009001,339300061700335002040040100408001,8670 EBITDA split (2012F)MineralsEnergyIron OreTotal Growth CapexSustaining CapexTotal Capex04961,7883,7612,0935,85401,0252,9356,9084,87612,01101,3553,5248,4595,98814,44707605,4619,2755,32714,83301,0004,8958,4345,24713,41301,0406,
41、4238,0804,96913,04901,5405,2297,1045,39212,49602,5403,3686,1115,85411,96503,0413,3906,8326,14112,97302,0431,6624,1146,29410,40701,0456393,5516,4429,993Iron Ore74%EBITDA (US$M)AluminiumCopper2,4184,5031,7633,3949181,9341,0603,6451,3053,6241,1614,2281,8263,7722,1914,4392,5354,4853,0695,3113,2165,916Di
42、amondsMineralsEnergyIron OreOthers (includes associates and JVs)Total1584482,29916,605-45325,9781805232,23220,930-50128,5212449321,01114,427-98318,4844351,42061214,473-76620,8806152,0911,17815,076-75723,1326152,2961,55215,006-1,01923,8396592,1841,81216,130-1,01325,3706721,8481,92315,608-1,05625,6257
43、101,9012,24814,675-1,07625,4787402,4062,81515,931-1,10929,1637582,4723,18416,738-1,13631,149EnergyMinerals5%4.8%DiamondsCopper1% 10%Aluminium5%EBITDA mar gins (%AluminiumCopperDiamonds16%58%20%11%44%22%9%32%33%10%44%40%12%46%46%11%50%48%16%47%48%19%48%45%21%45%47%24%48%51%25%50%51%MineralsEnergyIron
44、 OreTotal41%69%46%30%70%47%19%61%37%12%58%37%22%55%38%28%54%39%31%53%40%32%52%39%32%49%38%35%50%40%35%51%41%Source: Company data, DB estimatesDeutsche Bank AG/SydneyPage 315 January 2013M&M - Diversified ResourcesRio Tinto Ltd4Q12 ProductionFigure 1: Rio Tinto Production dataAttributable production
45、unless states otherwiseQuarterly comp.1Q12A2Q12A3Q12A4Q12F4Q12A2012QoQYoYvs DBMINED PRODUCTIONIron Ore Prodn (Mt, Rio share)-Pilbara-CanadaIron Ore Prodn (Mt, 100% basis)-Pilbara-CanadaIron Ore Sales (Mt, Rio share)-Pilbara-CanadaIron Ore Sales (Mt, 100% basis)-Pilbara-CanadaRTCA Prodn-Total (Mt,Rio
46、 share)-RTCA - HCC-RTCA - Semi-soft-RTCA - ThermalUS Coal Prodn - TotalRTCA Sales - Total (Mt, Rio share)-RTCA - HCC-RTCA - Semi-soft & thermalUS Coal Sales - TotalCopper - KtGold - KozUranium - MlbDiamonds - MctsBauxite - MtBorates - KtTiO2 Feedstock - KtMolybdenum - Kt45.644.01.758.655.82.841.540.
47、11.453.751.32.46.41.70.64.11.96.52.04.50.0121.1782.03.58.81203743.148.646.71.961.758.43.347.945.92.060.957.43.47.82.01.04.80.07.82.05.80.0133.5751.82.89.41323702.652.650.32.467.062.94.051.248.52.665.561.04.58.42.30.75.40.08.42.36.10.0132.0683.13.710.31114012.551.949.52.466.162.04.152.550.12.466.762.
48、64.18.62.31.25.10.08.62.36.30.0162.2902.83.79.51255673.052.049.72.366.262.33.952.450.22.366.862.93.89.11.91.06.10.08.61.87.10.0163.9732.93.210.71004501.1198.9190.68.3253.5239.414.1192.9184.68.3246.8232.714.131.57.93.420.30.031.78.223.50.0550.52959.813.339.44631,5959.3-1%-1%-3%-1%-1%-3%3%3%-15%2%3%-1
49、5%8%-17%45%14%NA2%-21%16%NA24%7%-8%-12%4%-10%12%-56%1%1%13%2%1%13%2%2%-2%2%2%-2%17%-27%39%39%-100%3%-37%32%-100%20%-53%29%9%13%-12%18%-52%0%0%-5%0%0%-5%0%0%-6%0%0%-7%6%-16%-14%21%NA0%-20%14%NA1%-19%2%-12%13%-20%-21%-64%REFINED PRODUCTIONAlumina - KtAluminium - KtCopper - KtGold - Koz2,39185474.11002
50、,35884149.3552,67585569.7462,59186391.7592,61790686.27810,0413,456279.2279-2%6%24%70%11%-6%7%-10%1%5%-6%33%Source: Deutsche Bank, Company dataPage 4Deutsche Bank AG/Sydney15 January 2013M&M - Diversified ResourcesRio Tinto LtdDivisional HighlightsIron oreThe Pilbara ran above nameplate once again op
51、erating at 249Mtpa across the minesand 252Mtpa across the rail and port (sales) proving that the revised nameplate of237Mtpa remains conservative, although this does take into consideration lost shippingsays during the wet season and there were 3 days lost in January (11 days of lostshipping are ass
52、umed in the base case). Sales of 62.9Mt from the Pilbara were a recordand the lump to fines ratio of 29% was a bit better than our forecast 27% whenincluding Yandi fines.Global iron ore production totaled 254Mt, in-line with our forecast and again aboveguidance of 250Mt, which we always viewed as co
53、nservative. Reviewing theconstruction milestones of the Stage 1 expansion to 290Mtpa, we continue to believethe expansion is 3 months early. The 100Mtpa expansion of Cape Lambert is welladvanced with the jetty piling and topside completed meaning only the installation ofthe conveyor, shiploaders and
54、 instrumentation remains outstanding. We expect the2nd jetty and the 6th car dumper to both be completed in 2Q13, which are the biginfrastructure components for the expansion. The rail system upgrade to 290Mtpa iscomplete and all the mines are on schedule. In addition, Rio Tinto already has a c. 15-
55、20Mt stockpile at the mine sites in preparation for commissioning in mid CY13. Wecontinue to believe our CY13 and CY14 production forecasts of 249Mt and 273Mtmight be at least 10Mt too conservative.Figure 2: Iron ore productionFigure 3: Hamersley production60MtMt25050MtM t 20045180502004035160140403
56、0150302520120100802010002Q4 03Q4 04Q4 05Q4 06Q4 07Q4 08Q4 09Q4 10Q4 11Q4 12Q410050015105002Q4 03Q4 04Q4 05Q4 06Q4 07Q4 08Q4 09Q4 10Q4 11Q4 12Q4Quarterly Production (LHS)12 m th total (RHS)6040200Source: Company DataQly Production (LHS)12 m onth total (RHS)Source: Company DataCopperDespite a strong 4
57、Q from the big mines, Rios again missed its copper productionguidance, producing 549kt for 2012 vs. guidance of 560kt, although 4Q production of164kt was in-line with our forecast. Higher grades and throughput at both Escondidaand Bingham drove the result.With the further recovery in production acro
58、ss all mines and first production from OyuTolgoi we forecast an increase in mined copper production to 607kt in 2013. First oreDeutsche Bank AG/SydneyPage 515 January 2013M&M - Diversified ResourcesRio Tinto Ltdwas processed through the 96ktpd concentrator at Oyu Tolgoi on 2 January withcommercial p
59、roduction expected by June 2013. In our experience and based on the orestockpile and preparation prior to hot commissioning, we expect commercialproduction in March 2013.Figure 4: Mined copper productionFigure 5: Refined copper production250KtKt900120KtKt45020015010050002Q4 03Q4 04Q4 05Q4 06Q4 07Q4
60、08Q4 09Q4 10Q4 11Q4 12Q4800700600500400300200100010080604020002Q4 03Q4 04Q4 05Q4 06Q4 07Q4 08Q4 09Q4 10Q4 11Q4 12Q4400350300250200150100500Qly Production (LHS)12 m onth total (RHS)Qly Production (LHS)12 m onth total (RHS)Source: Company Data kFigure 6: Escondida mined productionSource: Company DataF
61、igure 7: Escondida refined production350KtKt1,400100KtKt3503001,20090300802502001,00080070602502005015010060040040301501002050002Q4 03Q4 04Q4 05Q4 06Q4 07Q4 08Q4 09Q4 10Q4 11Q4 12Q4200010002Q4 03Q4 04Q4 05Q4 06Q4 07Q4 08Q4 09Q4 10Q4 11Q4 12Q4500Source: Company DataQly Production (LHS)12 m th total (
62、RHS)Source: Company DataQly Production (LHS)12 m th total (RHS)Aluminium, Alumina and BauxiteAluminium production increased 6% QoQ to 906kt due to the continued ramp-up of thec. 400ktpa Alma smelter in Canada which we expect to be back at full capacity by mid2013.Alumina production declined a modest
63、 2% QoQ due to a small decline at Alumar inBrazil. The Yarwun 2 refinery operated at 90% output and should be at full capacity(3.4Mtpa) by mid 2013. The review of the loss making 2.8mtpa Gove refinery isongoing with a decision expected to be made on the closure of this asset by the end ofJanuary.Wei
64、pa had a great quarter producing 6.5Mt of bauxite which lifted group bauxiteproduction 4% to 10.7Mt . Increased demand from China due to the Indonesian exportban and also the ramp-up of Yarwun 2 drove the increase.Page 6Deutsche Bank AG/Sydney0015 January 2013M&M - Diversified ResourcesRio Tinto Ltd
65、Figure 8: Alumina productionFigure 9: Aluminium production3000KtKt120001250KtKt450027504000250022502000175015001250100010000800060004000100075050035003000250020001500750500250002Q4 03Q4 04Q4 05Q4 06Q4 07Q4 08Q4 09Q4 10Q4 11Q4 12Q42000250002Q4 03Q4 04Q4 05Q4 06Q4 07Q4 08Q4 09Q4 10Q4 11Q4 12Q4Qly Prod
66、uction (LHS)12 m onth total (RHS)1000500Source: Company DataQly Production (LHS)12 m th total (RHS)Source: Company DataCoal maintenance lowers met coal productionProduction of met coal was 20% down QoQ to 1.9Mt and 15% below our forecast dueto ongoing dragline maintenance at Hail Creek and wash plan
67、t maintenance at Kestrel,which we expect to impact production into 1H 2013. Partly offsetting the weaker metcoal production was stronger thermal coal production of 6.2Mt which was 23% aboveour forecast due to strong performances from Clermont, Bengalla and Hunter ValleyOperations. In Mozambique, pro
68、duction from Benga equated to a run-rate of 1.6Mtpawhich is in-line with guidance of 1-2Mtpa however we expect this operation to be lossmaking at current coal prices.Figure 10: RTCA total coal productionFigure 11: Uranium production12MtMt454.5KtKt16108642002Q4 03Q4 04Q4 05Q4 06Q4 07Q4 08Q4 09Q4 10Q4
69、 11Q4 12Q4Qly Production (LHS)12-m onth total (RHS)40353025201510504.03.53.02.52.01.51.00.50.002Q4 03Q4 04Q4 05Q4 06Q4 07Q4 08Q4 09Q4 10Q4 11Q4 12Q4Qly Production (LHS)12 m onth total (RHS)14121086420Source: Company DataDeutsche Bank AG/SydneySource: Company DataPage 715 January 2013M&M - Diversifie
70、d ResourcesRio Tinto LtdDiamonds & Minerals TiO2 impacted by weaker demandThe key focus for us was TiO2 feedstock production seeing that the Dec Q incorporatedthe additional 37% of RBM purchased from BHPB in September 2012. Production of450kt fell well short of our forecast 567kt. The nameplate for
71、a full quarter is c. 560ktAnnual design rate is 1.2Mtpa of feedstock from Canada (100% Rio) and 1.1Mtpa fromRBM split 0.1Mtpa of rutile and 1Mtpa of slag (74% Rio). No reason was provided forthe difference such as maintenance, however we can only assume that production wasscaled back due to the curr
72、ent weak demand for TiO2. As such, we have reduced ourproduction and sales by 0.2Mt to 2.1Mtpa.Borates production also suffered due to weak demand, down 10% QoQ. Diamondproduction was lower due to a slower start-up of the Argyle underground which willnow be in full production by 2015 compared to the
73、 previous target of 2014.Figure 12: Diamond outputFigure 13: Titanium dioxide feedstock output12M ctM ct40180ktkt700108642002Q4 03Q4 04Q4 05Q4 06Q4 07Q4 08Q4 09Q4 10Q4 11Q4 12Q43530252015105016014012010080604020002Q4 03Q4 04Q4 05Q4 06Q4 07Q4 08Q4 09Q4 10Q4 11Q4 12Q4Qly Production (LHS)12 m onth tota
74、l (RHS)6005004003002001000Source: Company DataPage 8Qly Production (LHS)12 m onth tota (RHS)Source: Company DataDeutsche Bank AG/Sydney15 January 2013M&M - Diversified ResourcesRio Tinto LtdInvestment ThesisOutlookRio Tinto has a very high-quality suite of assets that are generally: low operating co
75、st,long life, expandable, located in low-risk countries (Australia, North America, Europe)and considered premium quality relative to the sector, offering above-average returnsand operating margins. Rio has very effectively strengthened its balance sheet, withgrowth firmly back on the agenda, with th
76、e key growth projects being the expansion ofthe Pilbara iron ore assets from 230Mtpa to 360Mtpa and then potentially to 420Mtpaand beyond. Rio Tintos proposed transformation program to double the aluminiumdivision EBITDA margins to 40% by 2016/17 will continue to be a challenge, but webelieve will b
77、e a success over the long run. Rios is currently embarking on a costcutting program aiming to reduce costs by around US$5bn by the end 2014, comparedto the 2012 cost base (of around US$34bn). This includes US$3.5bn in unit costreductions from operations and the remaining from centralised divisions.
78、We believeRio Tinto looks undervalued on most metrics (P/E multiples, DCF valuation), and we ratethe stock a Buy, trading at a discount to our NPV.ValuationWe value Rio Tinto using discounted cash flow analysis of each of its assets. Our targetis in line with our valuation using life of mine cashflo
79、ws (9.0% WACC, CoE 11.2%, CoD5.5%, RFR 4.0%, ERP 6%, beta 1.2), as the rapidly improving balance sheet re-openssignificant growth opportunities.RisksKey risks to our view include movements in iron ore, copper, coal and aluminium pricesaway from those that we currently forecast and a significantly di
80、fferent A$ than wecurrently assume. With earnings for the group strongly biased to iron ore and copper(c. 90% of operating earnings) production levels, prices for those commodities are animportant consideration: a 10% change in iron ore price could lead to a c. 15% changein earnings for Rio Tinto sp
81、ecifically, on our estimates. Specifically, for the aluminiumdivision risks include reduced Chinese demand for bauxite, alumina and aluminium,delays to expansion projects and continued weakness in prices.Deutsche Bank AG/SydneyPage 91.7.1.7.15 January 2013M&M - Diversified ResourcesRio Tinto LtdAppe
82、ndix 1Important DisclosuresAdditional information available upon requestDisclosure checklistCompanyRio Tinto LtdTickerRIO.AXRecent price*65.99 (AUD) 14 Jan 13Disclosure1,7*Prices are sourced from local exchanges via Reuters, Bloomberg and other vendors. Data is sourced from Deutsche Bank and subject
83、 companiesImportant Disclosures Required by U.S. RegulatorsDisclosures marked with an asterisk may also be required by at least one jurisdiction in addition to the United States.See Important Disclosures Required by Non-US Regulators and Explanatory Notes.Within the past year, Deutsche Bank and/or i
84、ts affiliate(s) has managed or co-managed a public or private offeringfor this company, for which it received fees.Deutsche Bank and/or its affiliate(s) has received compensation from this company for the provision of investmentbanking or financial advisory services within the past year.Important Di
85、sclosures Required by Non-U.S. RegulatorsPlease also refer to disclosures in the Important Disclosures Required by US Regulators and the Explanatory Notes.Within the past year, Deutsche Bank and/or its affiliate(s) has managed or co-managed a public or private offeringfor this company, for which it
86、received fees.Deutsche Bank and/or its affiliate(s) has received compensation from this company for the provision of investmentbanking or financial advisory services within the past year.For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of t
87、hisresearch, please see the most recently published company report or visit our global disclosure look-up page on ourwebsite at http:/ CertificationThe views expressed in this report accurately reflect the personal views of the undersigned lead analyst(s) about thesubject issuer and the securities o
88、f the issuer. In addition, the undersigned lead analyst(s) has not and will not receiveany compensation for providing a specific recommendation or view in this report. Paul YoungPage 10Deutsche Bank AG/SydneySecurityPrice21821261.2.3.4.5.6.7.8.9.15 January 2013M&M - Diversified ResourcesRio Tinto Lt
89、dHistorical recommendations and target price: Rio Tinto Ltd (RIO.AX)(as of 1/14/2013)100.00Previous Recommendations90.00 180.0070.0060.0034567891011 1312 141517161920222324 252728Strong BuyBuyMarket PerformUnderperformNot RatedSuspended RatingCurrent Recommendations50.00Buy40.0030.0020.0010.000.00Ho
90、ldSellNot RatedSuspended Rating*New Recommendation Structureas of September 9,2002Jan 11Apr 11Jul 11Oct 11Jan 12DateApr 12Jul 12Oct 1218/01/2011:07/02/2011:10/02/2011:30/03/2011:13/04/2011:27/04/2011:18/05/2011:15/06/2011:05/07/2011:10. 04/08/2011:11. 18/09/2011:12. 28/09/2011:13. 13/10/2011:14. 20/
91、10/2011:Buy, Target Price Change AUD106.50Buy, Target Price Change AUD106.80Buy, Target Price Change AUD107.30Buy, Target Price Change AUD106.70Buy, Target Price Change AUD106.10Buy, Target Price Change AUD101.80Buy, Target Price Change AUD100.90Buy, Target Price Change AUD107.20Buy, Target Price Ch
92、ange AUD106.00Buy, Target Price Change AUD103.50Buy, Target Price Change AUD109.50Buy, Target Price Change AUD100.90Buy, Target Price Change AUD100.70Buy, Target Price Change AUD100.3015. 28/11/2011:16. 10/01/2012:17. 17/01/2012:18. 06/02/2012:19. 09/02/2012:20. 03/04/2012:21. 17/04/2012:22. 23/04/2
93、012:23. 03/07/2012:24. 17/07/2012:25. 08/08/2012:26. 02/10/2012:27. 16/10/2012:28. 08/01/2013:Buy, Target Price Change AUD98.10Buy, Target Price Change AUD104.90Buy, Target Price Change AUD102.90Buy, Target Price Change AUD101.40Buy, Target Price Change AUD101.20Buy, Target Price Change AUD102.40Buy
94、, Target Price Change AUD101.20Buy, Target Price Change AUD104.30Buy, Target Price Change AUD95.50Buy, Target Price Change AUD95.20Buy, Target Price Change AUD94.00Buy, Target Price Change AUD85.95Buy, Target Price Change AUD86.10Buy, Target Price Change AUD84.20Deutsche Bank AG/SydneyPage 1115 Janu
95、ary 2013M&M - Diversified ResourcesRio Tinto LtdEquity rating keyEquity rating dispersion and banking relationshipsBuy: Based on a current 12- month view of totalshare-holder return (TSR = percentage change inshare price from current price to projected target priceplus pro-jected dividend yield ) ,
96、we recommend thatinvestors buy the stock.Sell: Based on a current 12-month view of total share-holder return, we recommend that investors sell thestock14012010080604020039 %22 %56 %15 %5%17 %Hold: We take a neutral view on the stock 12-monthsBuyHoldSellout and, based on this time horizon, do notreco
97、mmend either a Buy or Sell.Notes:Companies CoveredCos. w/ Banking Relationship1. Newly issued research recommendations andtarget prices always supersede previously publishedresearch.2. Ratings definitions prior to 27 January, 2007 were:Buy: Expected total return (including dividends)of 10% or more o
98、ver a 12-month periodAustralia UniverseHold:Expectedtotalreturn(includingdividends) between -10% and 10% over a 12-month periodSell: Expected total return (including dividends)of -10% or worse over a 12-month periodPage 12Deutsche Bank AG/Sydney15 January 2013M&M - Diversified ResourcesRio Tinto Ltd
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