看到一个不错的对bhp 和rio的评价

新澳之旅

Once great Rio now second best Nathan Bell
May 31, 2011
Comments 5

Australian investors today have a choice of two diversified mining giants - BHP Billiton and Rio Tinto. But which business is the better bet?

Ten years ago, the answer was simple enough. Having made disastrous acquisitions in copper and suffered substantial losses in steel and elsewhere, BHP was a mess. Rio was more accomplished and much larger - nobility among commodity stocks.

But ten years on and the commodities kingdom has a new monarch. A quality gap has emerged and BHP Billiton has become a clearly superior business.

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BHP's marvellous petroleum division is its second largest, generating about a quarter of profits. It provides BHP with direct exposure to oil and gas with high quality assets, mostly in Australia and the Gulf of Mexico.

Conventional wisdom says that the petroleum division offers something Rio, or any other mining company, lacks - exposure to energy. That's almost true, but not quite.

The takeover of Alcan made Rio the world's largest aluminium producer. Aluminium is effectively manufactured energy. Few activities consume as much electricity.

Rio's aluminium division owns some of the lowest cost electricity in the world. As energy prices rise, so does the aluminium price and with it, Rio's margins.

So both BHP and Rio are exposed to energy. The big difference is the amount of capital tied up in each business and the rate of return each company achieves. This is where you'll find a stark divergence.

Rio Alcan earns between 3-6 per cent on US$35bn of aluminium assets. BHP Petroleum earns between 50-70% on a far smaller sum. Its profits tower over Rio Alcan's as a result.

Many analysts believe that aluminium is in a cyclical funk and that prices will eventually rise. But even if they do, it's highly unlikely that aluminium will ever achieve the sort of high returns that were once synonymous with Rio.

The near US$40bn that Rio paid for Alcan (not to mention the extensive dilution and interest payments that followed) have indeed transformed Rio - for the worse.

Mind the margin

Examining Rio's EBIT margins emphasises this point.

During the largest commodity bull market in a century one might reasonably expect Rio's margins to be higher today than a decade ago. And yet they're not. Rio was a high margin business even before the boom and, until 2007, margins rode the wave of higher commodity prices.

But by 2009, they were back to pre-boom levels. Look at Rio's margins now and it's hard to know the boom ever happened.

The fact is, Rio has changed. Gone is the conservative contrarian, replaced by another voice in the China choir, saddled with a capital intensive, low margin aluminium business that has all but eradicated the benefits of the greatest commodities boom in history.

This is a transformation of the very worst kind.

Iron ore may fall

The second concern relates to iron ore. Should iron ore prices fall to reflect marginal costs and new supply as we suspect they will, profits from both BHP and Rio's coveted iron ore divisions will be savaged.

Vulnerability to iron ore prices is made worse by the move to spot pricing, abolishing the 40-year old annual contract system.

A fall in prices will be bad news for both stocks, but worse for Rio. BHP retains a high level of diversification, with oil, iron ore, coal, base metals and other materials occupying greater prominence than they do at Rio, where just three commodities—iron ore, aluminium and copper—account for three quarters of profits.

And because Rio's capital expenditure program is focused on those metals, that concentration will grow.

Rio's iron ore division remains world class. We estimate its value at around $100bn at current prices, meaning it accounts for almost two thirds of the value of the group.

High quality, however, will not be adequate defence against a slump in prices. With so much of Rio's value tied up with iron ore, Rio remains vulnerable to lower prices.

Off the table

Something is rotten in the kingdom of Rio, and though it is a difficult decision to make, the risks of holding on outweigh the benefits.

It's quite possible that the iron ore boom continues and Rio's share price rises with it but long term, this is no longer the sort of business one should aim to own, unless purchased very cheaply.

ToughBubble

good point thx for sharing

daomeidan1234

Thanks for sharing.

leslie1207

Thanks for sharing.

yixuan

他们是最好的公司,但是增长性呢?