UBS: Rio Tinto 2023 results: What are the key takeaways? We have...

UBS: Rio Tinto 2023 results: What are the key takeaways? We have a Neutral rating on RIO, and see the risk/reward as balanced with spot FCF attractive though set to moderate in 2025 when iron ore moves into a growing surplus; this should result in lower cash returns with capex to lift. 2023 results (which are in-line) reinforce this view with RIO still guiding for capex to increase; Simandou has also now been approved by RIO. We estimate RIO’s 2025 spot FCF of ~9% falls to ~5% at US$100/t iron ore (interactive model). We revise EPS down by 11%-14% over FY24-26E due to sticky Pilbara costs and higher sustaining capex, and lower our price target to A $125/sh (Plc line to £56/sh from £59/sh) but remain Neutral rated after the 2023 results. Link to note.