quality stock

Did anyone know Rio Tinto shares were selling at under $10 in the early 90's? Since then they've paid out more in dividends alone. I accessed a couple of articles today through my library, in case anyone's interested. It's obvious to me RIO guys are absolute masters at value creation - look at the relatively low profits back then, how at $12 it was trading at a PE of >20, and still managed to put on a tonne of value on the stock. I'm confident no matter what happens in the short term, 10 or 20 years from now the stock will be higher than $66 rather than lower.

(Yes I've been burnt with the recent price falls and yes I'm desperately seeking out any kind of encouragement to ease the pain. )

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Business
CRA'S SHARE PRICE SOARS
By EMILIYA MYCHASUK
424 words
8 January 1990
Sydney Morning Herald
26
English
Copyright of John Fairfax Group Pty Ltd

CRA has shrugged off the uncertainity clouding the future of its associate Bougainville Copper to emerge as one of the most successful market performers over the past month.

The CRA share price has marched up by more than 15 per cent in that time, almost three times the rise in the All Ordinaries index of 5.2 per cent over the month.

While the market has become generally wary of pure base metal stocks which are experiencing commodity price declines, CRA's expanding operations in iron ore and coal - expected to achieve price rises of about 15 per cent and 8 per cent respectively - are turning the spotlight on the resource house.

Analysts suggest that even with the Bougainville mines out of operation for the next 12 months, and low aluminium prices taking the shine off its earnings from subsidiary Comalco, CRA should still show superior earnings growth over the next year.

The company boasts a robust balance sheet, with low gearing, and impressive management who have embarked on a strong push to increase sales volumes and major asset growth through several projects, such as the large Kaltim Prima steam coal joint venture in Indonesia and the Hidden Valley gold project in Papua New Guinea.

"CRA is basically among the bluest of the blue chips," one analyst commented.

"It is second only to BHP because of its excellent balance sheet health, low gearing of around 15 to 20 per cent and proven management and exploration expertise. It's a safe stock with a good earnings outlook and a good balance sheet. People like that in this sort of environment. In fact, at the moment it is possibly less risky than BHP because it is not as exposed to domestic steel industry and has more stable earnings."

Several analysts said the market's disregard of the impact of the Bougainville problems on CRA suggested that it was already anticipated, and, in fact, that the mothballing of the mine meant CRA would not bear the costs of keeping the mine open.

"There is not a lot of downside unless the you believe that the mine will never re-open. Bougainville will be on a prospective dividend yield of 15 per cent and a price earnings ratio of around three times if it were to start again," one added.

CRA is trading on a price multiple of 10.5, which is around the sector average, based on prospective net earnings of around $650 million for the 1990 year.

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News
CRA Worth Considering As Price Dips
Nick Way
437 words
27 September 1992
Sunday Age
17
English
Copyright of John Fairfax Group Pty Ltd

Company: CRA Limited ASX code: CRA Share price: $12.52 THE iron ore fields of the Pilbara in the remote north-west of Western Australia have always been an industrial relations minefield. So it speaks volumes for CRA's management that its Hamersley Iron operations have been largely free of industrial trouble in recent years.

This willingness to tackle thorny industrial issues is just one reason why CRA has found investment favor. This is reflected in a share price that continues to trade at multiples above the industry average _ despite lower prices for some of its commodity exports. Aside from iron ore, its operations include aluminium, base metals, salt, coal, gold and copper.

In the half year to 30 June 1992 it had an after-tax operating profit of $128.1million, down 6.8 per cent from $137.4million in the corresponding half in 1991. But the result was adversely affected by a $31.6million adjustment to reflect a fall in the surplus of the CRA group staff superannuation fund.

Sales revenue in the half rose nine per cent to $2496million, largely the result of the good performances by its operations in diamonds and coal. But iron ore is still the mainstay of earnings, although softer prices, as well as the June strike at Tom Price and Paraburdoo in the Pilbara, saw the profit from this division fall 16.3 per cent to $159.1million in the June half.

The outlook for CRA's commodity exports in the second half of 1992 remains patchy. The Perth broking firm D.J. Carmichael expects lower diamond sales, as well as weaker iron ore prices, with the Japanese mills already indicating negotiations will be tough in face of weaker demand for steel.

The firm predicts full year earnings to 31 December 1992 of $307million, to be achieved on the back of sales revenue of slightly less than $5billion. This would translate into earnings per share of 56.8 cents for an expensive price-earnings ratio of 22 times.

The company gave shareholders a fully franked 15-cent dividend at 30 June (10 cents to 30 June 1991), and for the full year Carmichael predicts a 35-cent payout (34 cents in 1991) for a yield of 2.8 per cent.

CRA's share price, which nearly reached $15 this year, has fallen because of overall weaker market sentiment, as well as the expected fall in prices for iron ore and other commodities. This gives investors the opportunity to buy at lower levels, although even at this price CRA still looks expensive.