Bayon Financial

Graeme Cunningham

Independent Insight Provider

Bayon Financial provides industry and company analysis focusing on mid and small cap equity research coverage across a range of sectors including mining, financials and telecoms.

Equity Bottom-Up

Rio Tinto Limited is an international mining company.  The Company has interests in mining for aluminum, borax, coal, copper, gold, iron ore, lead, silver, tin, uranium, zinc, titanium dioxide feedstock, diamonds, talc and zircon. Dually-listed company with RIO LN.

<ul>
<li>The reorg will see H1/25 Minerals revenue decline to zero as items are reclassified to Iron Ore and Aluminum/Lithium and Iron/Titanium and Borates are under review      </li>
<li>Guidance for 2026 indicates a 4.3% and 2.6% yoy increase in iron ore and alumina output, respectively, but a -2.5% and -3.7% decline in bauxite and copper production</li>
<li>Rio appears near fully valued, with -3.9% downside to our DCF and 4.5% upside to the consensus target, and we still see downside risk for iron ore and copper prices </li>
</ul>


The reorg will see H1/25 Minerals revenue decline to zero as items are reclassified to Iron Ore and Aluminum/Lithium and Iron/Titanium and Borates are under review      
Guidance for 2026 indicates a 4.3% and 2.6% yoy increase in iron ore and alumina output, respectively, but a -2.5% and -3.7% decline in bauxite and copper production
Rio appears near fully valued, with -3.9% downside to our DCF and 4.5% upside to the consensus target, and we still see downside risk for iron ore and copper prices 


NAC Kazatomprom JSC produces and markets minerals. The Company specializes in natural uranium production. NAC Kazatomprom also imports and exports uranium compounds, nuclear power plant fuel, and uranium components. NAC Kazatomprom serves customers worldwide.

<ul>
<li>U.S. political moves last month backing nuclear power are part of a long-term secular trend of increasing global support for the industry which could drive a uranium rebound </li>
<li>A nearly 40% uranium slump from early 2024 to March 2025 has priced in a significant degree of the industry’s challenges, and a price recovery has started </li>
<li>As the world’s largest producer, Kazatomprom is well positioned for a rise in uranium, it has lagged the recent sector rebound, and trades at a moderate 1.4x P/B ratio  </li>
</ul>


U.S. political moves last month backing nuclear power are part of a long-term secular trend of increasing global support for the industry which could drive a uranium rebound 
A nearly 40% uranium slump from early 2024 to March 2025 has priced in a significant degree of the industry’s challenges, and a price recovery has started 
As the world’s largest producer, Kazatomprom is well positioned for a rise in uranium, it has lagged the recent sector rebound, and trades at a moderate 1.4x P/B ratio  


Kazatomprom: Largest Global Producer Well Positioned for Uranium Rebound

<ul>
<li>Operations remain strong with volume rising and revenue up on the continued rise in uranium prices in Q3/25, although the metal has cooled in Q4/25 </li>
<li>Domestic macro remains a drag on the valuation, with the NBK hiking its base rate 1.5% in October 2025 to combat rising inflation, boosting our discount rate significantly   </li>
<li>After over a 40% rise since June 2025 our valuation is now about -20% below the current price, although the P/B still looks low, especially versus Cameco's surging multiple</li>
</ul>


Operations remain strong with volume rising and revenue up on the continued rise in uranium prices in Q3/25, although the metal has cooled in Q4/25 
Domestic macro remains a drag on the valuation, with the NBK hiking its base rate 1.5% in October 2025 to combat rising inflation, boosting our discount rate significantly   
After over a 40% rise since June 2025 our valuation is now about -20% below the current price, although the P/B still looks low, especially versus Cameco's surging multiple


Kazatomprom: Major Rate Hike Hits Valuation of Uranium Market Leader

BHP Group Ltd operates as an international resources company. The Company offers mineral exploration and production, including coal, iron ore, gold, titanium, ferroalloys, nickel, and copper concentrate, as well as petroleum exploration, production, and refining. BHP Group serves customers worldwide.

<ul>
<li>BHP has abandoned a last minute bid for Anglo American, which will likely see the latter's planned merger with Teck with proceed </li>
<li>We consider other potential targets for BHP, all copper, concluding that most seem unlikely for now, especially with the company stating a focus on organic growth</li>
<li>BHP faces the risks of a decline in iron ore (consensus) and copper (non-consensus) prices in our view, while it trades at premium to the sector and above our DCF </li>
</ul>


BHP has abandoned a last minute bid for Anglo American, which will likely see the latter's planned merger with Teck with proceed 
We consider other potential targets for BHP, all copper, concluding that most seem unlikely for now, especially with the company stating a focus on organic growth
BHP faces the risks of a decline in iron ore (consensus) and copper (non-consensus) prices in our view, while it trades at premium to the sector and above our DCF 


BHP: Few Viable Targets After Anglo Bid Abandoned

<ul>
<li>The Q3/25 production update was taken well by the market, with iron ore output near flat yoy, copper jumping 10%, and moderate growth for aluminum, alumina and bauxite</li>
<li>Some reorganization has started under new CEO Simon Trott, with IOC reported with the core iron ore segment, and two divisions, Borates and Iron and Titanium, placed under review </li>
<li>We see risks from major iron ore market shifts and a potential cyclical downturn hitting copper and aluminum, and it could be fully valued on our below-consensus metal price estimates </li>
</ul>


The Q3/25 production update was taken well by the market, with iron ore output near flat yoy, copper jumping 10%, and moderate growth for aluminum, alumina and bauxite
Some reorganization has started under new CEO Simon Trott, with IOC reported with the core iron ore segment, and two divisions, Borates and Iron and Titanium, placed under review 
We see risks from major iron ore market shifts and a potential cyclical downturn hitting copper and aluminum, and it could be fully valued on our below-consensus metal price estimates 


Rio Tinto: Production in Q3/25 Robust, Metal Price Risks Remain

Independent Insight Provider, Bayon Financial

Mr. Cunningham is a CFA Charterholder with over 15 years of experience as an equity research analyst, mostly on the sell side at investment banks, including Goldman and Jefferies, and with some time on the buy side. He has covered the consumer, telecoms, financials, energy and mining sectors, with a focus mainly on Southeast Asia, including Thailand and Vietnam.

Graeme Cunningham
Independent Insight Provider
• Bayon Financial

Rio Tinto: Reorg Detail, New Guidance

Rio Tinto reported detail on its reorg and 2026 guidance which look achievable but we see risks to iron ore and copper prices, while the price...

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Kazatomprom: Largest Global Producer Well Positioned for Uranium Rebound

This provides broader background on the secular uptrend in the nuclear industry which supported our June 2025 bullish outlook on KZAP and was key...

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Kazatomprom: Major Rate Hike Hits Valuation of Uranium Market Leader

With KZAP's price up over 40% since our bullish June 2025 outlook and the discount rate boosted by Kazakhstan's central bank rate hikes, there is...

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BHP: Few Viable Targets After Anglo Bid Abandoned

With the Anglo American bid abandoned, we find few other viable targets for BHP, while risks to iron ore and copper prices remain and the valuation...

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Rio Tinto: Production in Q3/25 Robust, Metal Price Risks Remain

While Rio Tinto's robust Q3/25 production was taken well by the market, it is nearing the consensus target and may be fully valued under our...

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