BHP.ASX announced FY16 EBITDA $12b and underlying EBIT $3.5b. There was over $7b in impairments and management’s cost out performance in Copper, Coal and Petroleum will help to improve BHP’s earnings and cash flow into FY17 and FY18.
On forward basis we have BHP in FY17 paying out $0.35 DPS, placing the stock on a 2.2% yield.
No signal present: We currently hold BHP in the model and have sold Nov $22.50 calls to enhance the return.
Rally in Resources
As discussed in the July video market update report, I forecast that money was in the early stages of rotating back towards the banks and resources. We’re now seeing this reflected in strong momentum within BHP and RIO. It’s likely that this trend will help lift the energy names as well.
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