2021 results were in line with expectations. The final dividend was slightly ahead of forecasts and, Credit Suisse believes, signals a strong dividend return ahead, pending no material acquisition. Management has also signalled large-scale acquisitions are unlikely over than short-term.
Credit Suisse lifts its forecast dividend pay-out ratio to 80% for 2022/23. While moderating earnings estimates over 2022-24 because of higher costs in the Pilbara the broker believes a buoyant pricing environment should provide material upside potential to its base case.
Outperform rating retained. Target rises to $130 from $110.
Sector: Materials.
Target price is $130.00.Current Price is $115.35. Difference: $14.65 – (brackets indicate current price is over target). If RIO meets the Credit Suisse target it will return approximately 11% (excluding dividends, fees and charges – negative figures indicate an expected loss).
