Question
The mining sector in Australia rewarded many investors in the good times of mining boom. The sector has a high concentration and dominated by large
The mining sector in Australia rewarded many investors in the good times of mining boom. The sector has a high concentration and dominated by large firms such as Rio Tinto. As a mining giant, Rio Tinto (ASX: RIO) delivered a strong performance during the pandemic, the share was traded at $88.45 on 5 March 2020 and closed at $126.56 on 4 March 2022, representing approximately 30 per cent increase in share price. The company is also expected to hand investors the largest dividend in its history. Rio Tintos response to the pandemic has been successful, nonetheless the strong financial performance was overshadowed recent report of toxic culture in Rio Tinto. The data shows that almost half of Rios employees report having experienced bullying in the past five years. Almost a third of its female workers have endured sexual harassment; 21 women reported an actual or attempted sexual assault. Two in five Australian Aboriginals and Torres Strait islanders employed by the company have experienced racism. The company will have a long way to rebuild its reputation. Data Source: yahoo!finance, 19th November 2022. Your task is to undertake a valuation for Rio Tinto share - Apply the various valuation models and relative measures taught in this course to assess whether Rio Tinto share is correctly valued. Your analysis should include relevant data to help a prospective investor to decide whether he should invest in this company. Your analysis should also include the companys overall sustainability and its performance in environmental, social, and governance aspects. Explain all your assumptions used in the valuations and estimations and critical discuss the limitations of your analysis and any other risks that may affect investment decision making.
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