Rio Tinto Ltd. (RIO.AX): 3Q26 result: In-line result supported by strong performance at Oyu Tolgoi; Buy

RIO reported an in-line SepQ, with a resilient Pilbara performance and group CuEq production (+1% YoY) supported by the stronger than expected recoveries and ramp-up at Oyu Tolgoi. Group copper production of 205kt came in-line with our estimates, with the Oyu Tolgoi beat (+14%/+17% vs. GSe/VA consensus) offsetting a weak quarter at both Kennecott (70 day furnace rebuild) and Escondida (weather). Global iron ore sales of 90.8Mt were up +3% YoY with Pilbara shipments of 85.7Mt, in-line with GSe, and Simandou achieving a ~10Mtpa (100%) annualised production run-rate in the quarter. All 2026 production, sales and unit cost guidance went unchanged, with lithium flagged at the lower end of the 61-64kt LCE range on a slower Sal de Vida ramp-up. We adjust our 2026-28 EBITDA by -1% after incorporating the result and our latest lithium price forecasts. Our NAV is down ~2% to ~A$196/sh with these changes and on the higher net debt, and our 12-month price target has decreased by ~1% to A$176.3/sh