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.

Event-Driven

<ul>
<li>Rio Tinto and Glencore are in merger talks which if completed could create the largest global mining company by market cap, ahead of BHP </li>
<li>The combined entity would likely have significantly lower margins and ROE and a higher debt/equity than Rio, and more than double the number of divisions</li>
<li>We remain bearish on concerns over the prices of iron ore (consensus) and copper (non-consensus), while valuations remain full and a Glencore bid could be a further overhang</li>
</ul>


Rio Tinto and Glencore are in merger talks which if completed could create the largest global mining company by market cap, ahead of BHP 
The combined entity would likely have significantly lower margins and ROE and a higher debt/equity than Rio, and more than double the number of divisions
We remain bearish on concerns over the prices of iron ore (consensus) and copper (non-consensus), while valuations remain full and a Glencore bid could be a further overhang


Rio Tinto: Glencore Bid – From Simplified to Sprawling?

European Event-Driven Analyst

Jesus Rodriguez Aguilar

<ul>
<li>Rio–Glencore talks revived: Confirmed 9 January, reopening strategic pressure on Rio’s dual-listed structure amid record copper prices and renewed sector consolidation.</li>
<li>Spread reacts to structure, not sentiment: Ltd–plc premium tightened from ~23% to ~19%, signalling rising market sensitivity to DLC inefficiency under M&amp;A stress.</li>
<li>Optionality improves, timing uncertain: No unification signal yet, but M&amp;A introduces a forcing mechanism activism failed to deliver.</li>
</ul>


Rio–Glencore talks revived: Confirmed 9 January, reopening strategic pressure on Rio’s dual-listed structure amid record copper prices and renewed sector consolidation.
Spread reacts to structure, not sentiment: Ltd–plc premium tightened from ~23% to ~19%, signalling rising market sensitivity to DLC inefficiency under M&amp;A stress.
Optionality improves, timing uncertain: No unification signal yet, but M&amp;A introduces a forcing mechanism activism failed to deliver.


Rio Tinto / Glencore: M&A as a Stress Test for the Dual-Listed Structure

<ul>
<li>Discounts diverged in 2025: Nordic holdcos re-rated to cycle-tight levels, while event-driven structures like Vivendi reset sharply, restoring asymmetric upside for patient investors.</li>
<li>Simplification mattered where credible: GBL’s asset sales and balance-sheet progress contrast with structurally static vehicles, highlighting that governance change—not asset quality—drives sustained discount compression.</li>
<li>Best opportunities remain selective: Structural discounts (Heineken, Investor, Industrivärden) persist, post-normalisation trades (Porsche SE) are largely done, and DLC spreads (Rio) stay catalyst-dependent rather than mean-reverting.</li>
</ul>


Discounts diverged in 2025: Nordic holdcos re-rated to cycle-tight levels, while event-driven structures like Vivendi reset sharply, restoring asymmetric upside for patient investors.
Simplification mattered where credible: GBL’s asset sales and balance-sheet progress contrast with structurally static vehicles, highlighting that governance change—not asset quality—drives sustained discount compression.
Best opportunities remain selective: Structural discounts (Heineken, Investor, Industrivärden) persist, post-normalisation trades (Porsche SE) are largely done, and DLC spreads (Rio) stay catalyst-dependent rather than mean-reverting.


2025 in Review: Selected European Holding Companies & DLCs

Iron Ore, Copper, Equities, Mint Finance

Umang Agrawal

Iron Ore, Copper, Equities

Deep Fundamental Analysis

Mint Finance

Mint Finance's investment research blends deep fundamental analysis with technical & quant insights. Investment strategies straddle across multiple asset classes with risk management embedded into every trade to deliver an outsized reward-to-risk ratio.

Mint Finance's research is centered around three key themes. First, energy transition and climate change. Second, artificial intelligence. Third, shifting world order with its impact across politics and monetary economics.

Commodities

<ul>
<li>Chinese steel mill margins are deteriorating, raising the risk of August maintenance, lower hot-metal output and weaker iron ore demand.</li>
<li>CMRG is tightening control over China’s iron ore procurement, with restrictions hitting Australian miners and contributing to weaker shipments.</li>
<li>Across SLX’s top 10 holdings, 7/10 beat EPS estimates, while 8/10 carry positive average analyst price target upside.</li>
</ul>


Chinese steel mill margins are deteriorating, raising the risk of August maintenance, lower hot-metal output and weaker iron ore demand.
CMRG is tightening control over China’s iron ore procurement, with restrictions hitting Australian miners and contributing to weaker shipments.
Across SLX’s top 10 holdings, 7/10 beat EPS estimates, while 8/10 carry positive average analyst price target upside.


Iron Ore: Weak Steel Margins, CMRG Pressure and SLX Set Up a Tug-Of-War

Equity Bottom-Up

<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 


Australia

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.

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Rio Tinto Ltd (RIO AU)

Rio Tinto: Glencore Bid – From Simplified to Sprawling?

Rio's Glencore merger talks suggest a shift from a simplified to a sprawling structure, and could be a further overhang to our bearish view based...

Graeme Cunningham

Rio Tinto / Glencore: M&A as a Stress Test for the Dual-Listed Structure

Rio–Glencore merger talks have tightened the Rio DLC spread, highlighting how M&A pressure can expose structural inefficiencies. Not a unification...

Jesus Rodriguez Aguilar

2025 in Review: Selected European Holding Companies & DLCs

2025 showed holdco discounts are not one trade: Nordics priced to perfection, GBL simplifying but ignored, Vivendi reset by legal timing. Discount...

Jesus Rodriguez Aguilar

Iron Ore: Weak Steel Margins, CMRG Pressure and SLX Set Up a Tug-Of-War

CMRG is squeezing Australian iron ore miners, but without deeper Chinese steel production cuts or stronger stimulus, a sustained iron ore rebound...

Mint Finance

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...

Graeme Cunningham

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