Bhp Share Price (BHP)

Share Name Share Symbol Market Type Share ISIN Share Description
Bhp Group Plc LSE:BHP London Ordinary Share GB00BH0P3Z91 ORD $0.50
  Price Change % Change Share Price Shares Traded Last Trade
  -53.00 -4.0% 1,273.60 1,687,041 10:51:54
Bid Price Offer Price High Price Low Price Open Price
1,273.00 1,273.80 1,316.00 1,264.80 1,299.80
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Mining 34,888.92 11,855.21 126.28 9.8 26,899
Last Trade Time Trade Type Trade Size Trade Price Currency
10:51:54 AT 268 1,273.60 GBX
Related Shares
Rio Tinto (RIO), Anglo American (AAL), Mila Resources (MILA), African Battery Metals (ABM)

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Date Time Source Headline
07/4/202012:43ALNCIN THE KNOW: Credit Suisse Sees No Threat To BHP Balance Sheet, Payout
07/4/202006:49ALNCFAlliance News Flash Headline
20/3/202016:46UKREGBHP Group PLC Second Price Monitoring Extn
20/3/202016:35UKREGBHP Group PLC Price Monitoring Extension
20/3/202014:12ALNCIN THE KNOW: Deutsche Bank Upgrades BHP Amid Improved Risk-Reward
13/3/202016:42UKREGBHP Group PLC Second Price Monitoring Extn
13/3/202016:36UKREGBHP Group PLC Price Monitoring Extension
12/3/202016:35UKREGBHP Group PLC Price Monitoring Extension
11/3/202007:00UKREGBHP Group PLC Director/PDMR Shareholding
09/3/202017:04UKREGBHP Group PLC Notice of Dividend Currency Exchange Rates
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08/4/202006:27BHP GROUP PLC EX BHP BILLITON572
04/11/201911:17BHP Billiton65
18/4/201907:29BHP Billiton: Global Resources Giant46
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Bhp (BHP) Top Chat Posts

DateSubject
08/4/2020
09:20		Bhp Daily Update: Bhp Group Plc is listed in the Mining sector of the London Stock Exchange with ticker BHP. The last closing price for Bhp was 1,326.60p.
Bhp Group Plc has a 4 week average price of 939.80p and a 12 week average price of 939.80p.
The 1 year high share price is 2,078.50p while the 1 year low share price is currently 939.80p.
There are currently 2,112,071,796 shares in issue and the average daily traded volume is 8,886,538 shares. The market capitalisation of Bhp Group Plc is £26,899,346,393.86.
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20/1/2020
14:34		loganair: Is the BHP share price a buy as US–China trade tensions ease? The easing trade-tensions between the US and China are likely to assist Australian resources companies that deal with China. So, does this make the resources giant BHP Group Ltd (ASX: BHP) a buy? BHP is definitely my pick of the ASX resource sector shares. It is a diversified natural resources company and is one of the world’s top producers of commodities like iron ore, coal and copper. BHP also has substantial interests in oil and gas. As it is the third largest share listed on the ASX, not only can it leverage economies of scale, it is frequently bought and held by super funds and managed funds providers, and also by default is listed in many of the popular Australian exchange traded funds (ETFs) such as Vanguard Australian Shares Index ETF (ASX: VAS). Growing dividend yield on the back of solid financials: BHP’s strategy is to continue to consolidate its current assets, which involves divesting underperforming assets and reducing debt while also increasing operational efficiency. Its extensive portfolio includes some of the largest mining assets in the world, which continue to generate large and ongoing free cash flows. FY19 was a very successful year for BHP, with strong growth across its various segments. The mining giant produced a profit from operations of US$16.1 billion and an underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of US$23.2 billion at a margin of 53% for continuing operations. Also, there was a record US$17 billion returned to shareholders for the year. Dividend payouts were very attractive during FY2018–19, with BHP offering a fully-franked dividend payment of $4.76 per share. BHP increased its dividends in 2019, boosted by strong iron ore prices. The company currently has a mandate to maintain a dividend payout ratio of at least 50%, which is very favourable for shareholders. Historically, BHP’s dividend payout was well below that of the traditional high dividend paying shares such as the banks, because most of BHP’s profits were re-invested for growth. However, the mining giant has increased its dividend almost every year since 2010 and its dividend yield now sits at a very attractive 4.8%, fully franked. Easing trade tension should boost growth: The easing tensions in the trade war between US and China should assist BHP’s growth in FY20 and FY21, given that China accounts for around half of the world’s consumption of metals. In particular, it could lead to further strong demand for steel from China. Copper is another of BHP’s assets that has been performing strongly and is predicted to continue to do so.
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06/1/2020
22:04		loganair: Will BHP’s share price be defined by coal in the 2020s? The BHP Group Ltd (ASX: BHP) share price has performed strongly over the past four years, up 114%. Plus all the dividends. But these days any business that is producing and exporting coal seems to be coming under a lot of public attention. Coal is not BHP’s biggest division by a long shot, it’s iron ore that generates the king’s share of earnings for BHP. But coal generated US$3.4 billion of underlying earnings before interest and tax (EBIT) in FY19, which was more than copper and petroleum, although copper may reclaim its second place position in FY20. The reason why coal could be so influential for BHP’s 2020s share price is due to climate change concerns. Global demand for coal could fall from customers, and investors – which decide the share price – may exclude buying BHP shares because of coal for ESG reasons. Imagine if BHP divested its coal division, there could be a large increase of aggregate demand for BHP shares from investors which would boost the share price. But if I were BHP management I wouldn’t sell the coal division today, I’d want to get a good price for the coal business. Demand from Asia for coal from countries like India is expected to rise considerably over the next 10 years as energy demand rises, which should at least support the coal price. But compared to most other coal companies, BHP is taking more environmental action. The company has said that it accepts its responsibility to take action on global warming and reduce its greenhouse gas emissions. One of the things it’s doing is to do new climate portfolio analysis in 2020 to outline plans to mitigate and adapt to global warming. It has launched a five-year, US$400 million climate investment program to assist delivery of its public targets for its own operational emissions (scope 1 and 2) and to work with others across its supply chain to address scope 3 emissions that come from the transport, processing and use of its products. The scope 3 goals will be presented in 2020 and will be designed to measure BHP’s impact and align with the goals of the Paris Agreement. BHP can’t force customers to reduce emissions, but it can work with them to reduce emissions, such as developing carbon capture utilisation and storage in industrial applications such as steel. BHP is currently trading at 15x FY21’s estimated earnings. Iron ore is currently at a strong point in the cycle, so I wouldn’t want to buy shares right now – cycles normally change.
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07/11/2019
13:37		adrian j boris: Global mining companies are re-examining how they pay their chief executives, aiming to diminish the impact of external factors--like swings in commodity prices--that can mask a leader's true performance. At issue are big bonuses linked to total shareholder returns that can swell or shrink depending on how a company's share price performs. Miners--like companies in other sectors--say pay deals that rely too heavily on these bonuses can encourage risky behavior such as taking on big expansion projects or employing severe cost-cutting initiatives that, in some cases, take years to clean up. Instead, mining companies argue pay should be linked more closely with strategic targets, because that would better reflect what an individual executive can influence. A number of big miners including BHP Group Ltd., Rio Tinto PLC and South32 Ltd. are seeking to make changes to their executive pay plans, some starting from next year. "Mining companies' profitability, and therefore executive remuneration, is highly cyclical and strongly driven by market factors that are outside of their control," said Bill Hartnett, stewardship director at Aberdeen Standard Investments, which holds about 3.2% of BHP's London-listed stock for clients. BHP already has seen the pay for its CEO decrease in recent years. Marius Kloppers, who stepped down as CEO in 2013, earned as much as $16 million a year during a tenure that coincided with a China-led boom in prices for some of BHP's top commodities including coal and iron ore. His successor, Andrew Mackenzie, who took home a total of $3.5 million for fiscal 2019, has operated the company during a period of falling commodity prices as the world digests increasing amounts of supply from natural gas to iron ore. Messrs. Kloppers and Mackenzie declined to comment. Forecasting the cycle of commodity prices is a hazardous business. Bad weather sometimes disrupts supply, while demand for metals and minerals can rise or fall on political edicts, especially in China. Another big weakness in the current system: Building a mine or bringing an oil field into production can take longer than the time horizon for determining bonuses. That is especially the case when permits are needed from regulators or new infrastructure such as pipelines or railroads must be built. BHP's directors say linking more pay to a performance scorecard could be the answer. New stock awards would be held back for five years so that directors can be sure that management took decisions proven to create value. Those proposals were overwhelmingly accepted in final voting on the company's revamped policy at a meeting of Australian shareholders Thursday, with about 94% of holders of the U.K. and Australia listed shares agreeing to the changes. Had this policy been in place for Mr. Kloppers, he would have earned $19 million, or about 25%, less during the roughly five years through mid-2013, BHP said. Mr. Mackenzie would have earned only 2%, or $1 million, more than he has in the years since succeeding Mr. Kloppers. It might not be the last changes made by the company. Directors also plan next year to clarify and strengthen the link between performance on climate-change goals and pay, BHP said. "We are at the early stages of engagement with other major miners on their remuneration plans," said Mr. Hartnett, the fund manager, who supports BHP's proposal. Still, finding a balance that satisfies investors in different parts of the world isn't easy. Two years ago, Rio Tinto proposed replacing long-term performance share awards with restricted stock, while at the same time lowering the contribution of those long-run bonuses to the CEO's total pay packet. The proposal "was well-received in London. It was less well-received in Australia," Chairman Simon Thompson said at a shareholder meeting earlier this year. It was set aside. Rio Tinto says it is talking to investors and could try again, noting its remuneration policy must be reviewed every three years under U.K. law. "The board remains of the view that restricted stock has considerable merits in a long-term cyclical industry such as mining," the miner said. South32, which is also reviewing its pay structure, said it is hard to strike a balance that ensures it is still attractive to executives who might otherwise give the base-metals miner a pass. South32 Chief Executive Graham Kerr this year relinquished 4.7 million Australian dollars (US$3.2 million) in long-term bonuses that were part of a deal agreed when BHP spun off the business. The bonus in big part reflected a more than 40% rise in South32's share price since it began trading in 2015. "I don't think any of us expected to see South32 perform as strongly as it did over the first four years of its long-term plan," South32 Chairman Karen Wood said at an investor meeting recently. "We all felt--and by all, I'm including Graham very much in this assessment--that it would deliver an amount of money that we thought was not appropriate." Mr. Kerr was unavailable for comment. Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com and Robb M. Stewart at robb.stewart@wsj.com (END) Dow Jones Newswires November 07, 2019 08:14 ET (13:14 GMT)
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30/7/2019
06:53		waldron: MOTELYFOOL Iron ore miners tumble: Are Fortescue, BHP and Rio Tinto a buy? Lina Lim | July 29, 2019 | More on: BHP FMG RIO Dominoes falling in a row The iron ore spot price has stabilised around the US$120 per tonne mark while the S&P/ASX 200 (INDEXASX: XJO) index has just passed 6,800. This is in stark contrast to the ASX iron ore miners, which have struggled on the news that the world’s largest miner, Vale SA, would resume production at its Vargem Grade complex. This news has resulted in the following price movements in the past week: BHP Group Ltd (ASX: BHP) share price down 1.07% to $40.56 (at time of writing) Fortescue Metals Group Ltd (ASX: FMG) share price down 4.6% to $8.30 (at time of writing) Rio Tinto Limited (ASX: RIO) share price down 4% to $98.26 (at time of writing) Is this a buy opportunity? The iron ore bull run is perhaps at its cross roads as Vale SA slowly returns to form. The Brazilian miner said that the move to Vargem Grade will add approximately 5 million tonnes to annual production. We’ve known for a long time that Vale has been awaiting supreme court approval for the resumption of production at several mine sites. Last month, Vale SA received court approval to enable the full resumption of wet processing operations at its Brucutu mine. Brucutu has an annual production capacity of approximately 30 metric tonnes per annum (Mtpa) of iron ore. This represents 8% of Value’s annual output. Fast forward to today, and the Vargem decision will enable the partial resumption of dry processing operations, which will total approximately 5 Mt of additional production in 2019. If we piece together the initial statistics of the Vale disaster that resulted in a loss of approximately 90 million tonnes of an annualised supply of around 1.7 billion tonnes, it appears as though the market is very slowly coming back to equilibrium. The plateauing bullish fundamentals overshadow Fortescue’s June 2019 quarterly production report, which highlight a 22% rise in total ore shipped while citing sustained strong demand from customers. Foolish takeaway I believe the recent falls in BHP, Rio Tinto and Fortescue share price are, to some degree, a market overreaction. However, I am going to make the bold call that the top is in for ASX iron ore miners. On one hand, demand side fundamentals remain robust and the supply–demand imbalance will continue to persist in the short term. But it is evident that the market is slowly creeping back to an equilibrium and I find it highly unlikely that ASX iron ore miners will break out their old highs.
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19/6/2019
20:56		the grumpy old men: Opinion Iron ore price is defying gravity, and nothing is bringing it down to earth Elizabeth Knight Business columnist June 20, 2019 — 12.00am The price of iron ore continues to defy both gravity and the warnings from a plethora of technical financial analysis that the metal price is in bubble territory. But tell that to the thousands of investors with shares in BHP, Rio Tinto and Fortescue. For them, watching the iron ore price hit new highs is a bonanza. BHP shareholders haven’t seen the stock at these levels since 2011, Rio’s share price hasn’t closed this high since 2008. At Wednesday's close BHP was up 2 per cent to $40.98 and Rio was up 1.94 per cent $105.71. The iron ore price is in bubble territory. The iron ore price is in bubble territory.Credit:Bloomberg And the pick of the bunch from a share price performance perspective, Fortescue was up more than 3 per cent on Wednesday to $8.78 and is at a near 11-year high. While riding the iron ore rise has been wonderful for shareholders, buying into this run seems like a pretty gutsy play requiring (let’s say) nerves of steel. The iron ore price can be volatile. Having said that it has been trending higher for most of this calendar year and on Wednesday rocketed up 3.7 per cent to $US112.28 - sending iron ore stocks off on a tear again. Related Article Water and mud from the failed tailings dam at Brumadinho in Brazil. The collapse of another Vale tailings dam and the impact of Cyclone Veronica on the Pilbara miners have removed 100 million tonnes of iron ore from the market this year. Iron ore Iron ore's darkish clouds create silver lining for Pilbara miners And here's why. If the current spot prices for iron ore remain at these levels Rio and BHP would produce a 50 per cent improvement in earnings per share in fiscal year 2020, while Fortescue’s earnings could be up by 170 per cent according to Macquarie’s calculations. Such an outcome would deliver a deluge of dividends. In recent years these major iron ore companies have demonstrated a more conservative approach to capital expenditure and a way more generous approach to rewarding shareholders with dividends and buybacks. The robust share price performances are also being fed by a positive broader sentiment on the sharemarket. There are two factors at play here. The first is increasing hope that the US central bank will take a more aggressive position on lowering interest rates. The second - and much less reliable - reason for market optimism is being generated by the slightly toned-down rhetoric in Donald Trump’s latest trade war tweets. Both these positives could prove fragile. However, the forces that are specific to iron ore are based on supply and demand fundamentals which are proving tenacious. Many had forecast that the disruption in iron ore supply that began with the Vale tailings dam disaster in Brazil in January would be on its way towards a resolution. It isn’t. Courts and regulators have taken control and the timing of the restoration of supply seems no closer - or at least no clearer. At the same time pressure on all mining companies to reassess the safety of their tailings dams is intensifying. Related Article Autonomous trucks at Rio Tinto's West Angelas mine. Mining Falling iron ore stockpiles in China latest fuel for local mining boom Major investors, led by the Church of England have banded together to form what they have called the Mining and Tailings Safety Initiative. This week it released a name and shame list of companies that had not responded to its request to provide details of their tailings facilities. This investor group accounts for assets under management of $US12 trillion ($17 trillion). BHP and Rio have produced audits of their tailings dams over the past couple of weeks. Meanwhile, heavy rainfall during the current quarter in parts of Vale’s operations has only added to the supply disruptions. Citi Research's New York-based analysts said this week’s iron ore rally came on the back of an increasing likelihood that Rio may not make some contract deliveries of higher grade ore for July and August. But while supply is constrained, the demand side of the equation is not easing which is leading to continued depletion of stockpiles in China. In a note to investors Macquarie said, "Chinese port stocks, one of the most watched indicators in the iron ore market, have fallen further to under 110 million tonnes, indicating a 25 million tonnes drawdown since the end of April 2019. It further noted that, "the falling inventories at ports suggest consumption continues to outpace seaborne arrivals". The size and frequency of Chinese government stimulus packages is playing a big part in the continuing high demand for steel - whose major ingredient is iron ore. And just how the latest round of China-US trade talks play out will also be a major factor determining China stimulus. Few, if anyone, is predicting that iron ore prices will remain at these elevated levels for another year but right now the forces that are pushing the price higher appear stronger than those that could bring it back to earth. Elizabeth Knight comments on companies, markets and the economy.
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27/5/2019
08:02		grupo: BHP, Fortescue, & Rio Tinto higher as iron ore prices surge again James Mickleboro | May 27, 2019 | More on: BHP FMG MGX RIO ASX iron ore miners Although the market has had a subdued start to the week, that hasn’t stopped Australia’s leading iron ore producers from storming higher this morning. In morning trade the iron ore industry has been one of the best performing areas of the market thanks to yet another rise in the price of the base metal. Here’s the state of play at the time of writing: The BHP Group Ltd (ASX: BHP) share price is up 1.5% to $38.00. The Fortescue Metals Group Limited (ASX: FMG) share price has pushed 1.6% higher to $8.35. The Mount Gibson Iron Limited (ASX: MGX) share price has climbed 2.5% to $1.28. The Rio Tinto Limited (ASX: RIO) share price is 1.5% higher to $102.76. What happened with iron ore prices? Iron ore prices continued their rise on Friday and closed in on five-year highs. According to Metal Bulletin, the price of the benchmark 62% fines rose 1.5% to US$105.32 a tonne, leaving it trading within a whisker of its five-year high of US$105.78 a tonne. Gains were also made by both lower and higher grade ore. The price of the lower grade 58% fines rose 0.3% to finish the week at US$87.02 a tonne, whereas the higher grade 65% fines closed the week with a 0.7% gain to US$119.30 a tonne. What’s next for iron ore prices? The good news for shareholders of these miners is that all signs are pointing to further gains today after Chinese iron ore futures finished the week on a very strong note. In fact, futures contracts closed the week at a record high thanks to increasing demand from Chinese steel producers after a production ramp up and declines in stockpiles at Chinese ports. If this leads to further increases in iron ore prices this week, it wouldn’t be at all surprising to see the likes of BHP, Fortescue, and Rio Tinto continue their charge higher.
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14/4/2019
13:05		loganair: Goldman Sachs reaffirms its neutral investment rating on BHP Billiton PLC (LON:BLT) and raised its price target to 1900p (from 1750p). With Iron Ore prices at mutli year highs and likley to go higher and with the oil price holding up very well it seems to me that Goldman Sachs are underestimating BHP share price going forward over the short term, over the next 6 to 12 months. BHP all time high was in December 2010 at £25. I can see of no reason why the BHP share price will not breach the £20 level and with the price of its commodities holding up or even rising I can see £21 on the cards.
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11/2/2019
23:16		loganair: Is the BHP Group share price set for another rally as iron ore heads towards US$100/tonne? The iron ore price could be poised to surge over US$100 a tonne as Chinese traders return from the Chinese New Year break to play catch-up with the rest of the commodities market. In effect this would be a return to ‘boom time’ prices last hit in the midst of China’s once-in-a-generation construction super-cycle that caused demand for the core steel-making ingredient of iron ore to rocket. The price of the steel making ingredient surged 24% since the collapse of Vale SA’s Brumadinho dam in Brazil on January 25 and has rallied over 6% since the start of the Lunar New Year week-long celebrations in China to around US$92 a tonne. The tragic event sent the Fortescue Metals Group (ASX: FMG) share price surging 44% since the start of the year while the Rio Tinto (ASX: RIO) share price added 15% and BHP Group (ASX: BHP) share price added 3%. Iron ore heading to over US$100/tonne? However, the stock probably won’t be lagging for much longer with some analysts predicting that the iron ore price could jump over US$100 a tonne as commodity markets have a tendency to overshoot and undershoot to the up or downside. What will add to the volatility is the fact that no one knows how much production Vale will be taking off the market as the embattled miner had to stop operations in a number of its mines. Some of the closures have been ordered by Brazilian authorities who are inspecting the safety of Vale’s other tailings dams while some of the production stoppages were voluntary. Vale intends to ramp up production at its mines in other countries, but there’s speculation that other governments will also be issuing a stop-work order to Vale to check on its dams and that could leave the iron ore market in a supply deficit for weeks, if not longer. But the iron ore price isn’t the only thing to watch for this reporting season. There’s speculation (or rather hope) that BHP will unveil another capital return when it reports its result next Tuesday. This could be the trigger for the BHP share price to close the gap with its peers.
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06/1/2019
07:53		p0pper: Not having had a special dividend before, will the BHP share price drop after this dividend as per usual divi's or as this is a one off will the share price remain the same? thanks to anyone in advance who knows the answer.
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02/1/2019
00:03		loganair: BHP - Growth, long-term horizon, Deep Value an Australian Commodity Company with a Secure 5.5% Yield: BHP is an enormous commodities company with an enormous portfolio of assets. The company's asset portfolio is spread across materials essential to modern society. BHP has incredibly strong cash flow and has worked to maintain low debt levels and a respectable dividend yield throughout the downcycle. BHP's cash flow potential going forward makes the company a great investment, one that I highly recommend. BHP Group is an enormous commodity company with a market cap of more than $100 billion. The company operates in the copper, iron, coal, potash, oil, and gas industries. The company's operation in a variety of commodities means it is subject to cycles. Through this article, we'll see that the company's focused improvements of its financial position combined with its impressive asset portfolio make it a company I recommend investing in at this time. BHP Growing Asset Portfolio: BHP has a growing asset portfolio that'll provide the company with more secure earnings going forward. BHP's four segments have continued to reach record production, showing their incredible potential. The company has been focused on cutting cost as possible and has continued to earn incredibly strong EBITDA. The company's total EBITDA from its four assets is anticipated to reach $23.1 billion annually. That's incredibly strong for a company with a market cap of more than $100 billion and shows the company's earning potential. More so, the company's costs for all of its major earners are well below the current prices of the commodities. For example, the company's $10.06/barrel petroleum cost is less than 25% of the current crude oil prices. That shows the company's impressive cash flow potential from its assets and how profitable they are, even in a commodity downcycle. BHP Capital Spending: To grow its investment assets, the company plans to invest close to $10 billion annually. The company's impressive capital expenditure is well above its 2017 capital production and almost equivalent to the company's 2016 capital expenditure. That impressive capital expenditure is incredibly affordable and is equivalent to almost 10% of the company's market cap. That means that these impressive investments should help the company's cash flow to grow. BHP Project Cost Cutting: Looking at the company's Australia operations, the company managed to have record production at 7 mines while decreasing costs by 2%. The company's Queensland costs are well below current coal prices, allowing the company to earn cash flow. However, the company does anticipate near term 2019 Queensland coal prices as higher, due to higher strip ratios. The Olympic Dam mine, which focuses primarily on copper and uranium, has seen its ore increase. The company anticipates Olympic Dam production to increase going forward. The company's South Flank asset is also targeting first ore in 2021, which will help to increase the grade and lump proportion. These things should help the company's cash flow to increase. BHP Major Project Delivery: In the Americas, the company's Escondida mine, one of the largest copper mines in the world, has seen copper costs down 15% with record throughput. The company's volumes are expected to average 1.2 Mtpa to 2025, with unit costs at <$1.15 per pound. The company has maintained incredibly strong costs despite a decreasing grade. Going forward, the company anticipates production to continue at the current levels, which should mean continued revenue and earnings. That's incredible production in spite of the fact that the grade of the ore has declined some. The company also has desalination water secured, which will help to maintain stability and support costs. Overall, this asset will continue to provide billions of long-term cash flow BHP. BHP Oil Portfolio: The company's petroleum assets are another important aspect of its earnings. The company has 1 billion barrels in reserves replaced over the last decade, with finding & development costs well below its peers. The company's low finding and development costs of just over $20 will mean significant cash flow potential for the company. The company's current investments are profitable at less than $50/barrel. The company's pipeline of 8 projects has achieved average returns of >25%, which is an amazing return for shareholders. The company has continued to increase performance and improving its exploration and success rates. Low cost of lifting, with impressive assets, means strong earnings going forward. As we will see going forward, BHP's portfolio of assets and growth potential make it a strong investment. BHP Financial Position: BHP has an incredibly strong financial position, a financial position that it has been focused on improving. As a company at the bottom of a cyclical operation, in the immediate term, its finances are everything. BHP Financial Portfolio: BHP has an incredibly strong balance sheet that provides it with continued flexibility throughout the cycle. The company's balance sheet has been tested under a wide variety of price scenarios, and this shows that the company has a buffer for price movements. The company is targeting a net debt in the range of $10-15 billion. During a downcycle, the company expects net debt increasing to the upper end of the region, before it drops back down. This shows the company's financial strength; the company is keeping its debt in a downcycle low. The company has strong liquidity, with an undrawn $6 billion revolving credit facility, which shows the company's financial ability. BHP Shareholder Rewards: Going forward, the company plans to reward shareholders while maintaining flexibility. The company has focused on a minimum 50% payout ratio dividend, while providing additional rewards to shareholders. That dividend is currently almost 6%, which shows the company's strength. The company has paid out $9 billion over the minimum dividend since early-2016. The company was forced to cut its dividend in 2016 due to a tough commodity environment. The company's 50% payout ratio has been still below the progressive dividend, but the company's special dividend has grown to above the dividend while maintaining the company's strength. BHP Debt Balances: Looking at BHP's debt balances, the company has a very balanced debt maturity portfolio. The company has roughly $2 billion in annual debt due from now until 2026. Given the company's annual earnings of roughly $10 billion per year, that means that the company can comfortably afford the debt going forward. This helps to show the company's incredibly impressive financial strength. BHP Maximizing Returns: Overall, these strong financials, combined with the company's new dividend policy, will allow the company to have strong shareholder returns. The company has reduced its debt by $15 billion in two years, reducing net debt to a $10-15 billion range. The company has a new minimum 50% payout ratio dividend we discussed above which'll reward shareholders well. More so, the company plans to limit capital spending, with less than $8 billion in capital and exploration expenditure per annum until FY 2020. The company anticipates ROCE back to ~20% by FY 2022. That shows the company's improving financial profile, which will allow the company to continue to maximize in its investment while having strong returns. BHP's Challenges: Like all other major companies, BHP faces challenges. BHP's single greatest challenge is that the company is in a cyclical sector. Coal, copper, potash, and iron are all commodities that often deal with a cyclical pricing setup. As a result, the company's cash flow can vary heavily from year to year. Despite investors knowing the business is cyclical, the company's stock price varies with these cycles too. That means that I don't recommend this stock for investors with 1,2, or even 5-year timelines. Rather I recommend it for investors who have closer to a 10-year timeline. Still, in the event of a drawn-out commodity crisis, the company's stock price, cash flow, and even dividends could be punished heavily. As a result, as an investor, this is a risk you need to be open too. No one will know when the next commodity crash will happen, but there almost certainly will be one. BHP Valuation: Trying to put a direct price valuation on BHP is difficult, due to the fluctuation in commodity prices. However, I'll try and provide some guidance. BHP's net operating cash flow, which the company uses to retire debt and pay its dividend, is the single most important metric I recommend paying attention too. In 2016, the company's net operating cash flow dropped to a mere $14.6 billion in the commodities crash. However, it has since rebounded. Still, these levels are 20% below 2014 when the crash started. However, BHP dividend payment is paying similar to what it was before the crash. As the company's cash flow recovers, which I anticipate to be over the next few years, as commodity prices stabilize and costs are cut, its share price should recover further. BHP is currently trading at 30% below its mid-2014 highs, while cash flow has dropped 14%. As a result, I think the company is roughly 16% undervalued at this time. As its cash flow increases, I expect the company's share price to increase in turn. This also means as a catalyst for investors to pay attention to, pay attention to the company's cash flow as it reports it in 2019. Should the company miss cash flow numbers drastically, if it's commodity price related, that's a risk, but if it's due to poor management, I'd recommend selling your shares. However, even right now, when you invest, you're getting a growing commodities company, with strong cash flow, and a dividend yield of more than 5%. That company is trading at 16% below what it should be based off of its cash flow. Conclusion: BHP has low cost assets, which means continued cash flow during the downcycle. As commodity prices recover, the company's stock price should return to mid-2014 highs, which will provide investors with strong returns. At the same time, the company's financials are set up for a market crash, and the company continues to pay investors a 5.5% dividend. These things together make the company a rewarding and strong investment decision. I recommend investing in BHP at this time.
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