BHP – 5% plus dividend yield

Posted on | by Leon Hinde

In FY18,  BHP will produce US$46 billion  in revenue and generate EBIT of US$16 billion, which will support a dividend yield of 5%+

If we look out into FY19 and assume moderate growth achieved through higher energy prices and disciplined cost control, it’s likely BHP will increase the dividend to US$1.40.  This will then place the stock on a forward yield of 5.4%.

BHP goes ex-div US$0.60 on the 7th of September. Adding a $34.01 (Euro) call option into October,  boosts the cash flow by a further $1.25 per share.

 

Woodside Petroleum – 1Q18 production

Posted on | by Leon Hinde | Leave a Comment on Woodside Petroleum – 1Q18 production

1Q18 revenue for WPL was slightly softer than expected at US$1.169 billion.

Expansion of the WA-based LNG operations will provide longer-term growth, especially given the strength of fundamentals supporting LNG.

Post the acquisition of Exxon’s interest in Scarborough, WPL now holds a 75% stake with partner BHP holding 25%.  We expect BHP to be a natural seller of its remaining interest.

Woodside Petroleum

ALGO Buy Signal For BHP

Posted on | by Todd | Leave a Comment on ALGO Buy Signal For 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 Bumps Dividend As Earnings Slip

Posted on | by Leon Hinde | Leave a Comment on BHP Bumps Dividend As Earnings Slip

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

 

 

Energy Names – Best Buy-Side Opportunities

Posted on | by Leon Hinde | Leave a Comment on Energy Names – Best Buy-Side Opportunities

Within the ASX 50,  OSH, STO, WPL, ORG & BHP are the names investors consider when looking for exposure to Oil and LNG.

Currently WPL, ORG and BHP remain in our ASX50 model following a series of structural “higher low” formations.

OSH is not currently in our model portfolio.

The negative we see in the stock relates to market concerns surrounding their stretched balance sheet.

Oil Search has committed to substantial projects in PNG and Alaska and should oil prices fail to hold $60 – $80 per barrel, Oil Search may need to raise capital.

This week, Oil Search reported solid 4Q17 production at the upper end of their guidance range, with revenue of US$389mn.

Our preference remains adding long exposure on any pullback in BHP, WPL & ORG.

We are also watching for the next Algo Engine buy signal in the oil ETF OOO.AXW.

 

 

XJO Update: Miners Lead The Index Lower

Posted on | by Todd | Leave a Comment on XJO Update: Miners Lead The Index Lower

The ASX XJO Index fell 1.1% for the week and traded below the 6000 level for the first time this year.

Mining stocks and the major banks led the downside following weakness in commodity prices.

The ASX Gold index dropped four sessions in a row and lost 1.3% on Friday to close at 4874.60.

Iron Ore prices posted their first weekly loss in over a month, which pressured shares of mining giants BHP and RIO Tinto lower for the week.

Shares of RIO fell 4.6% to $78.00 while  BHP slipped 3.7% to end the week at $30.70

Internal momentum indicators are looking fairly neutral on the daily charts, which suggest the index could see range trading next week between 6070 and 5985.

XJO Index

 

BHP – Valuation Review

Posted on | by Leon Hinde | Leave a Comment on BHP – Valuation Review

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.

 

 

BHP Weaker On Production Miss

Posted on | by Todd | Leave a Comment on BHP Weaker On Production Miss

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