us ratio compared with bhp, page-3

DJ MARKET TALK: Rio Tinto Cheaper Than BHP - Morgan Stanley

0224 GMT [Dow Jones] Rio Tinto (RIO.AU) is "substantially cheaper" than BHP
Billiton (BHP.AU), Morgan Stanley says. Maintains overweight rating for Rio with A$48.93
target price, says asset sales and debt are the two key issues for the stock in 2009.
Says Rio could make US$6.4 billion worth of asset sales without having to resort to
selling stakes in core assets like Escondida and Pilbara iron ore. "Assets that are
likely to be sold, in our view, are energy products like coal and uranium, and iron ore
in Canada and Brazil, plus diamonds," MS says. Maintains underweight rating for BHP
with A$21.15 target price. Says BHP may need to trim its capex spend and a reduction of
the FY10 program by US$5 billion would avoid a funding shortfall that could require a
draw down on debt facilities. "We think that in 2009 the company will seek to use
its strong balance sheet for asset-based acquisitions, most likely in petroleum, where
exploration success has started to decline in recent years," MS says. Rio up 2.2% at
A$40.07, BHP up 0.7% at A$30.84. (APW)