Analyst Note| Mathew Hodge, CFA |
No-moat Rio Tinto’s first-quarter 2021 production was mixed with disruptions from weather, COVID-19-led restrictions and maintenance. Importantly, quarterly iron ore shipments, which represent the bulk of Rio Tinto’s earnings, were 7% higher than last year. Rio Tinto remains on track to meet full-year production and unit cost guidance for all commodities. We make no change to our fiscal 2021 forecasts and retain our AUD 88 per share fair value estimate. With Rio Tinto’s most profitable commodities, iron ore and copper, at decade-high prices and levels not seen since the peak of the China boom, the shares look substantially overvalued.