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Kalkine Daily 10/07/2015 + should you buy Rio - Tinto ?

Jul 15, 2015

| Read Time :10 Mins

In today’s daily we have covered stock research on should you buy Rio - Tinto ?, Reasonable return on stocks held long-term and What you need to know about Asciano ?

The S&P 500 index was up by 4.63 points or 0.23% to 2051.31. U.S. stocks closed higher on Thursday after Wall Street found relief in Beijing's efforts to halt a rout in Chinese stocks, which lifted markets around the world. Shares of Apple bucked the market and logged their first five-day losing streak since January as investors worried that consumers in China might have less money to spend on iPhones. China's securities regulator, in its most drastic step yet to arrest a selloff on Chinese stock markets, banned shareholders with large stakes in listed firms from selling for the next six months.

The Greek government submitted its highly-anticipated plan for the country's economic overhaul to bailout authorities Thursday night amid signs Alexis Tsipras, prime minister, was facing resistance to the plans by some of the more radical elements in his own party. Esther George, president of the Kansas City Fed, has reiterated her stance that US interest rates must rise sooner rather than later. Puerto Rico will on Monday hold its first formal meeting with creditors since announcing it planned to restructure $72bn worth of debts, as money managers gird themselves for tough, drawn-out battles for years to come.

APPLE Daily Chart (Source - Thomson Reuters)

S&P ASX 200 was up by 1.50 points or 0.03% on Thursday and closed at 5471.00 points. BHPadded 1.7 per cent to $25.88 and Rio Tinto put on 1.6 per cent to $50.89. Fortescue, after being 3.2 per cent down earlier in the day, added 6.6 per cent to finish at $1.78. Among other mining stocks, Western Areas jumped 6.6 per cent to $3.04, Alumina climbed 4.2 per cent to $1.48 andSirius Resources firmed 4.2 per cent to $3.22.

Among the banks, ANZ lost 0.2 per cent to $32.21, Commonwealth Bank gave up 0.2 per cent to $85.60, National Australia Bank shed 0.6 per cent to $33.13 and Westpac weakened 0.8 per cent to $32.88. Fellow blue-chip Telstra firmed 0.3 per cent to $6.18 after announcing plans to ramp up the amount it spends on phone and internet networks, dishing out $5 billion in the three years to June 2017 to fend off competition from key rivals like Singtel-Optus.

Telstra Daily Chart (Source - Thomson Reuters)

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Should you buy Rio - Tinto ?

The company has turned in a strong production performance for the first quarter and Chief Executive Sam Walsh said that efficiency is being emphasised on all aspects of the business. By optimising the use of high-quality assets and the low cost base, the company is trying to protect its margins despite declining prices and to maximise returns for its shareholders throughout the commodity cycle. Global iron ore shipments on a 100% basis rose by 9% to 72.5 Mt over the previous year while global iron ore production on a similar basis rose by 12% to 74.7 Mt. Bauxite grew by 4% to 10,484 kt, hard coking coal by 10% to 2002kt, semisoft and thermal coal by 4% to 5060kt while mined copper declined by 9% to 144.1kt and titanium dioxide slag by 17% to 322kt.

The record bauxite production was driven by robust performance at Weipa and aluminium was about the same as the previous year in spite of the partial shut down at Kitimat is online to produce the first hot metal by the middle of 2015. Mined copper production was higher at Kennecott and Escondida though lower grades at Kennecott were responsible for the decline. The company and the government of Mongolia formally announced the first milestone with Oyu Tolgoi shipping 1 million t of concentrate. The higher coal production was due to the improved production rates at Mount Thorley and Warkworth and the increased thermal production at Hail Creek. Click Here To Read The Full Report

Iron Ore Production Share (Source - company Reports)

What you need to know about Asciano ?

Asciano lately revealed that Toronto-based Brookfield Infrastructure pitched a cash-and-scrip offer on Friday that valued the company at $9.05 a share. Investors are cautious about this offer as they belive that it undervalues the company. Share price is still trading below the offer price, because a formal offer is yet to be made. Brookfield made a statement that there is no gurantee that the transaction will happen, which acted as a dampener on the stock price.

In a recent presentation made to the investors the company highlighted how its five-year plan is broadly on track. The five-year plan of the company consisted of business improvement and general cost cuts, reduction in capital expenditure, improvement in cash flows and opportunities to create value across all divisions including joint ventures, partnerships, acquisitions and divestments. The business improvement program has delivered cumulative savings of $115 million over the last three years. The five year FY16 target for business improvement has now been doubled from $150 million to $300 million. Click Here To Read The Full Report

Port Botany (Source: Company Reports)

Reasonable return on stocks held long-term

It can be difficult timing returns to markets on a yearly basis but research shows that over extended periods of time, even asset classes considered risky such as equities can be positive in terms of risk factors for the investor who is discerning and patient. A sound long-term investment plan acts as a road map to help investors to set long-term objectives but, in order to achieve these objectives, it is imperative for the investor to require reasonable estimates of what long-term returns on equities could look like.

For instance, over optimistic estimates will almost certainly result in not achieving your objectives such as security after you retire or the ability to pay for the education of your children. On the other hand, estimates that are unduly pessimistic, you may be needlessly sacrificing some of your current comforts and cutting down on your current lifestyle in order to generate the resources for your long-term investment plans. In other words, you are unlikely to achieve your realistic objectives however achievable by using unrealistic assumptions while developing your plan. Click Here To Read The Full Report

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