production report out tommorow/macquarie

Macquarie: RIO - Production Report Out Tomorrow
20/07/05

Rio Tinto (RIO) is due to release their June quarter production report at 3pm tomorrow. This report is expected to give insight into the company's interim profit result, which is released on 3 August 2005. Traders have positioned themselves for tomorrows report through opening positions in Instalment warrants RIOIMS Sep05 $42.00 IW. Macquarie hold an Outperform recommendation on Rio and a 12-month share price target of $50.00.




June Production Report Summary

In comparison to the March quarter, key areas in which production may have increased include iron ore, copper and aluminium. Flat coal sales are expected due to infrastructure constraints.
In the short-term Rio Tinto favourable production profile over nearest rivals given that iron ore sales continue to increase at a time when prices are at record highs this translates into even better EPS growth prospects. Rio is also expected to benefit from operating leverage in 2005 against 2004, which was a poor operating year by Rio's standards
Tomorrow's production report is also likely to focus the market on what is expected to be an exceptional interim result.
Interim Profit Result - Expected 3 August 2005

Macquarie are expecting NPAT US$1891.7m (A$2522.3m) and a dividend of US$0.385 (A$0.507).
Update on Hope Downs deal: following the strategic JV with Hope Downs Rio management are likely to update the market on production expectations - this may generate positive sentiment and revisions
Macquarie retain their positive view on iron ore prices into next year and continue to highlight Rio Tinto's exceptional earnings growth, improving quality of earnings and historically low forward multiples as positive drivers for the share price. Macquarie maintain an Outperform recommendation and a 12-month share price target of $50.00.
Traders looking for maximum exposure to short-term movements in the RIO share price should consider the following equity warrants for a high-risk, high-return strategy.

Investors and traders looking for short to medium-term leveraged exposure to the RIO share price should consider Macquarie Instalments for a higher risk, higher return alternative to direct share investment.

Long term, more conservative investors looking for a simple, "set and forget" investment should consider Self Funding Instalments over RIO. SFI's are moderately geared, have no annual resets and a maturity date in up to five years.

http://www.egoli.com.au/egoli/egoliWarrantsPage.asp?PageID={E7DC3228-2464-4581-94A5-8038D86622CD}