In early October 2011, our friends at First NZ Capital Securities Limited released research from their associates at Credit Suisse on two of the major Australian resource stocks, BHP Billiton and Rio Tinto, rating both as "outperform".

If you would like further information on either of these stocks please call Andrew or Jonathan on 07 578 3863.

BHP Billiton (BHP)

Upgrade to Outperform on attractive valuation, recent underperformance and defensive characteristics. Credit Suisse view the shares as undervalued, trading at around 45% discount to DCF valuation and a 2013 P/E of 6.5.

They feel BHP should begin to trade on fundamentals as a relatively defensive mining stock with Tier 1 assets. BHP has the greatest earnings diversification and highest margins of the large cap miners, and, therefore the most secure earnings/ cashflow stream should commodity prices weaken further.

At the time of the report, 4 October 2011 BHP were trading at AUD$ 34.14.

Rio Tinto (RIO)

RIO remains Credit Suisse's top mining pick for its best in class balance sheet, exposure to strong iron ore prices and its willingness to return capital to shareholder (PLC buyback). World's second largest supplier of seaborne iron ore, with production costs some 25%of the current spot price, Credit Suisse expects RIO to continue to ship very profitable tones of iron ore irrespective of spot prices.

At the time of the report, 4 October 2011 RIO were trading at AUD$ 59.00.