Tag: ASX:BHP

Our ALGO engine triggered a buy signal for BHP into the ASX close at $28.35.

The “higher low” price structure is referenced to the $26.90 low posted on December 8th.

BHP’s share price has dropped 10% over the last 8 trading sessions as concerns about the company’s proposed sale of shale assets has somewhat clouded their future earnings outlook.

During a webcast on Friday, CFO Peter Beaven reminded investors that BHP has a policy of paying out at least 50% of profits in dividends and increased that to 72% in the December half.

With respect to the shale assets, one analyst report suggested that for every $1 billion of proceeds from the sale, BHP can return 24 cents per share.

Technically, we see good price support at the $27.85 level and an area of initial resistance at $30.15.

BHP

BHP’s 1H FY18 earnings result was below market expectations.

Despite the cost pressures, BHP has stepped up cash returns to shareholders, with the US$0.55 interim dividend a positive surprise in the 1H FY18 result.

FY19 revenue and underlying profit is forecast to remain flat, placing the stock on a forward yield of 4.2%.

We own BHP at lower levels and sold the $29.50 March calls for a $0.60 credit to enhance the cash flow. We continue to remain exposed to the March dividend.

BHP

We consider BHP  a preferred holding within the ASX 50 model portfolio.

The Algo Engine generated a buy signal on May 5th at $22.60.

With both oil and iron ore prices remaining well supported, BHP should continue to find buying interest.

Consider a stop-loss below $25.00 and sell $29.50 March call options to enhance the yield.

BHP

BHP’s  medium-term cost guidance for iron-ore and coal is better than expected and will help to underpin EPS targets into FY18 and FY19.

FY18 revenue will be up slightly to $40b, EBIT $13b with reported profit in FY18 forecast to increase 10% to $6.4b.

Assuming dividends per share of $0.80,  BHP is placed on a forward yield of 4%.

We see upside in BHP’s share price to $30 and suggest selling a March $29.50 call option to enhance the yield.

The Q1  production numbers for BHP were on the soft side with weaker production and shipments of Iron ore  and coal offsetting slightly better output in Copper and Crude Oil.

The company has left its full year guidance unchanged for FY18, despite recent reports that they could miss those production levels by up to 10%.

We expect the recent price volatility in Iron Ore and Coal to impact shares price trajectory well into FY18.

The newly appointed Chairman, Ken MacKenzie, addressed shareholders for the first time yesterday as the share price was pressured back below $26.50.

On balance, we believe that Iron Ore prices are at the upper end of the price range and a pullback into the $25.00 range is a reasonable buy level for BHP. 

BHP