2009 capex target up 25%. Rio Tinto's management said they have revised their capex target upwards for 2009. The new target for 2009 capital expenditure is US$5b (up 25% from US$4b previously). US$2.7b of this amount is allocated for development projects.
Reviewing 2010 target. Management is also reviewing its 2010 target in light of improved market conditions. The previous target was for US$2.5b, allocated for sustaining capex only. It will release the new guidance in October.
Focus on "high definable near-term value".Rio Tinto said for the moment, it is focused on brownfield step-ups (increasing capacity, for instance). It said this was the most efficient allocation of capital (a small investment for a big uptick) in the current environment. Rio Tinto also said that down the road, "of course" it would invest in greenfields.
Confirms our view on AusGroup. This latest development supports our investment thesis that blue-chips in the minerals resources sector are "un-freezing" capital expenditure plans. We believe order wins over the next few months from both the mining and the oil & gas industries will underpin AusGroup's earnings performance in FY10 and FY11.
Maintain BUY with S$0.70 fair value (14x FY10F earnings or 10x FY11F earnings). Refer to our report dated 19 Aug 2009 for more details.
Click here for more Commodity Stocks Technical Analysis
Sponsored Links
Comments
No response to “AusGroup Ltd: Rio Tinto increases capex target for 2009 by 25%”
Post Comments (Atom)
Post a Comment |
Post a Comment