Australian stock report - BHP

AUSTR

UPDATE: BHP Billiton decreases after hitting resistance April 20, 2018 16:00 AEST

NEWS BITES - AUSTRALIA

BHP Billiton Limited (ASX:BHP), Australia's largest Materials company by market cap, has decreased 0.2% after hitting the upper Bollinger Band six times in the last ten days. The upper Bollinger Band marks the trajectory of resistance on a stock price. This is a bearish signal. The stock price has decreased 6.0c (0.2%) from its last trading session of April 19 to close at $A30.86. Compared with the All Ordinaries Index which fell 11.9 points (0.2%) in the day, the relative price increase was 0.01%. The volume was 0.6 times the average daily trading volume of 7.6 million shares.

THE PAST TWO YEARS

BHP Billiton climbs 69% in 2 years

BHP Billiton Limited (ASX:BHP), has climbed $A12.59 (or 68.9%) in the past two years to close at $A30.86. Compared with the All Ordinaries Index which has risen 13.5% over the same period, this is a relative price increase of 55.4%.

Highlights in today's Report:

SECTION 1 BEARISH SIGNALS

Fundamentals, Overvaluation [compared with sector average], Technicals, Overbought/Bearish/Resistance Signals, Short Selling

SECTION 2 BULLISH SIGNALS

Fundamentals, Undervaluation [compared with sector average], Technicals, High Performance Indicators, Moving Annual Return, Aggregate Volumes, Prices and Turnover Period

SECTION 3 RANKING

Global, Independent Ratings

SECTION 4 FINANCIALS

Financials Summary, Trailing 12 Months Dividends

SECTION 5 CORPORATE BONDS

Key Statistics, Yield Curve - BHP Billiton Bond vs US Treasury

SECTION 6 PROFILE

Activities, Industry & Sector, Top Management, Issued Capital

SECTION 7 STOCK BUZZ

SECTION 1 BHP BILLITON BEARISH SIGNALS

1.1 Fundamentals:

+ The relative yield of the stock, defined by its yield of 4%, divided by average yield of dividend yielding stocks in the All Ordinaries Index of 4.2% is 96.2%. This suggests the stock is overvalued in dividend yield terms.

+ Net profit margin has averaged 0.2% in the last 3 years. This suggests the company is less profitable with a low margin of safety.

1.2 Overvaluation [compared with sector average]:

+ Price/Sales of 3.4 [2.4].

1.3 Technicals:

Downtrend: The stock dropped on high volatility today.

+ The 1.7% discount to 12-month high of $A31.39 against the 46.2% premium to 12-month low of $A21.11 suggests the climb might be peaking.

1.4 Overbought/Bearish/Resistance Signals:

+ At $A30.86 the price has risen above the upper Bollinger band resistance of $A30.86, indicating a downside risk for it to fall back within the band.

+ The Relative Strength Index (RSI) of 90.5 has penetrated the overbought line of 70, suggesting the price gain of 7.5% in the last 14 days is unusually high.

+ The stock is overbought according to the Williams % R indicator of -7.8, suggesting the price is close to its 14-day high of $A31.08.

1.5 Short Selling:

+ In the Australian Short Selling market of 1109 stocks, short selling (on ASX and CHI-X) as a % of issued shares ranked 177th and within the top quartile of stocks, a bearish indicator.

SECTION 2 BHP BILLITON BULLISH SIGNALS

2.1 Fundamentals:

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 1.1. Compared with the rest of the market the stock is undervalued.

+ Total Liabilities/EBITDA of 4.6 is less than the Joseph Piotroski benchmark of 5.

+ The company is cash rich with Cash to Market Capitalisation at 11.0%.

+ Interest cover defined by EBIT/I is 7.6 times. This indicates it is less leveraged.

+ Over the last 3 years average annual compound growth rate of earnings per share was 16.8%. This is considered moderate.

+ As per the Du Pont analysis, Return on Equity of 11.4% is better than sector average of 10.9%. This is computed as net profit margin of 16.3% times asset turnover [sales/assets] of 0.33 times leverage factor [total assets/shareholders' equity] of 2.0.

+ Revenue growth rate has shown signs of recovery in recent years. [Year ended, all figures in %]

YearRevenue Growth
Jun 1723.9
Jun 16-31.6

2.2 Undervaluation [compared with sector average]:

+ Price to Book of 2.4 [2.8]. We estimate BHP Billiton stock is trading at a current year Price to Book of 2.4 and a forward year Price to Book of 1.9.

+ Dividend yield of 4% [3.6%].

2.3 Technicals:

+ The present value of $A1,000 (PV1000) invested one year ago in BHP Billiton is $A1,425, comprising a capital gain of $A364 and dividend reinvested of $A62.

PV$10001-week1-month1-year
BHP.ASX1,0381,0761,425
All Ordinaries Index1,0071,0161,019

+ The present value of AUD1,000 (PV1000) invested thirty years ago in BHP Billiton is $A24,655, including a capital gain of $A14,228 and dividend reinvested of $A9,427.

+ 30 years Multiplier in AUD = 24.655x

+ Compound Annual Growth Rate (CAGR) in AUD = 11.2%

Present Value of USD1,000 invested 30 years ago:

+ The present value of USD1,000 (PV1000) invested thirty years ago in BHP Billiton is $US25,361, including a capital gain of $US14,664 and dividend reinvested of $US9,697.

+ 30 years ago AUD 1 equalled USD 0.7502

+ 30 years Multiplier in USD = 25.361x

+ Compound Annual Growth Rate (CAGR) in USD = 11.3%

Apr 20, 2018: AUD 1 equals USD 0.77

2.4 High Performance Indicators:

DescriptionValueRank In Market
Today's Turnover$A144.9 millionIn Top 1%
Price/MAP501.05In Top 7%
Volatility %1.0In Top Quartile
Price/MAP2001.13In Top Quartile
Total Debt to Equity0.02In Top Quartile

2.5 Moving Annual Return

Based on a dynamic start date of 5 years ago, the Moving Annual Return has been positive in 3 of the last 5 years. An investment a year ago in BHP would have produced a return of 41.9%.

BHPClose (AUD)Dividends (AUD)Capital Gain / (Loss) %% YieldAnnual Return %
Apr 2030.861.2536.45.541.9
1 Yr ago22.630.723.93.927.7
2 Yrs ago18.271.08(31.1)4.1(27.0)
3 Yrs ago26.511.47(17.9)4.6(13.3)
4 Yrs ago32.291.325.4530.5

Close 5 years ago $A25.74

2.6 Aggregate Volumes, Prices and Turnover Period:

[Volume Index or VI in brackets; 1 is average]

+ ASX: BHP.ASX 4,696,887 [VI of 0.6] volume 86.03% of aggregate. Price: $A30.86.

+ OTCBB: BHPLF.OTCBB 756,054 [VI of 1.6] volume 13.85% of aggregate. Price: $US24.13. Using the current exchange rate of USD1 equals 1.2959AUD, The shares are at a 1.3% premium to the close price on ASX.

+ Frankfurt: BHP1.FRA 6,689 [VI of 0.7] volume 0.12% of aggregate. Price: EUR19.60. Using the current exchange rate of EUR1 equals 1.599AUD, The shares are at a 1.6% premium to the close price on ASX.

+ Aggregate volume: there were 5.5 million shares of BHP Billiton worth $A168.8 million traded today. The aggregate volume was 0.7 times average trading of 8.1 million shares.

The turnover rate in the 12 months to date was 31.0% (or a turnover period of 3 years 2 months). This average length of ownership of the stock at 1.8 times the average holding period of 1 year 9 months for stocks in the All Ordinaries Index suggests a larger number of core investors, making a long-term investment safer.

SECTION 3 RANKING

3.1 Global Rank [out of 47,666 stocks] and Rank in the Asia Pacific Region [out of 2,084 stocks]

DescriptionValueGlobal RankIn APAC Region
MCap (US$)126.8B691
Total Assets (US$)117B4786
Revenue (US$)38.3B3343
Net Profit (US$)5.9B1594
Return on Equity %11.411,418372
Net Profit Margin %16.37,276301
Price to Book2.221,173810
Yield %4.45,783289
PV$1000 (1Year) US$*1,4567,726419
US$* Change (1Year) %26.611,453513

* 1 year ago AUD 1 = USD 0.75

Apr 20, 2018: AUD 1 equals USD 0.77

3.2 Independent Ratings

+ Top 40 Miners:

BHP Billiton Limited is the largest by MCap among the PwC Top 40 Miners.

+ IHS Energy 50:

It was ranked 44 in IHS Energy's list of Top 50 Energy Companies 2013; a deterioration over a year from rank 23 in 2012.

+ PwC 100:

It was ranked 54 by MCap as at March 31, 2015 by PwC in the Top 100 Global companies; a deterioration over 6 years from rank 19 as at March 31, 2009.

+ FT 500:

It is the 76th largest by revenue in the FT Global 500.

+ Fortune 500:

It was ranked 350 by total revenues in the Fortune 500 annual list for 2017; a deterioration over a year from rank 168 in 2016.

+ Newsweek 500:

It was ranked 226 by Newsweek and Corporate Knights Capital in the World's 500 Greenest Companies 2016. It had outstanding scores of 7.5% in Waste productivity, 7.3% in Water productivity and 5.2% in Carbon productivity.

+ Industryweek 1000:

It is a new entrant in the Industry Week list of the world's largest 1000 manufacturers by Revenues in 2016, ranked 77.

+ Forbes 2000:

It is the 130th largest by revenue in the Forbes Global 2000.

+ BSS/News Bites:

It is placed 377/1342 in BSS News Bites' ranking of Australian performers in the past year, a percentile ranking of 72.

+ Vanguard Total World Stock ETF 7517:

The stock was one of 7517 global stocks selected by Vanguard Total World Stock ETF (VT) who bought 44,049 shares in the period Nov 30, 2017 to Jan 31, 2018 worth $US1,357,379 at an estimated Volume Weighted Average Price (VWAP) of $US30.8152. As at Jan 31, 2018, the Vanguard Total World Stock ETF held 924,374 shares worth $US22,979,632 or 0.14% by value of the ETF's portfolio [Ranked 109 out of 7517 by value and 3 out of 247 for Australia].

SECTION 4 BHP BILLITON FINANCIALS

4.1 Financials Summary

Year endedJun 2017Jun 2016Jun 2015
Sales (USD B)38.330.945.2
Pretax (USD B)10.3(7.3)8.1
Net (USD B)5.9(6.4)1.9
EPS (USD)1.1(1.2)0.36

Net profit was up 208.4% from US$1.9 billion in 2015 to US$5.9 billion in 2017. Earnings Per Share (EPS) was up 205.6% from 36.0c to $US1.10 in the 2-year period.

4.2 Trailing 12 Months Dividends

Trailing 12 Months ToValue (c)
20 Apr 2018124.88
20 Apr 201770.35
20 Apr 2016108.03
20 Apr 2015147.22
20 Apr 2014129.58

SECTION 5 BHP BILLITON CORPORATE BONDS

5.1 Key Statistics

MaturityYield to maturity %Yrs to Maturity% Rise/Fall 3-mo
Apr 20192.420.95-1.11
Nov 20213.093.59-1.56
Feb 20223.193.85-1.62
May to Sep 20233.235.07 to 5.45-2.37
Mar 20263.857.87-3.21

5.2 Yield Curve - BHP Billiton Bond vs US Treasury

Years to MaturityBHP Bond Yield (%)Treasury Yield (%)Spread to Treasury(Basis Points)
12.422.1824
53.232.7647

The yield curve is upward sloping which is typical. The term premium between the yield of a 5-year BHP Billiton Limited bond of 3.23% and the yield of a 1 year bond of 2.42% is 0.81%. Further, the yield curve is steepening from a term premium of 0.64% a month ago to a current level of 0.81%. This indicates investor expectations of rising inflation and/or increasing demand for longer-term bonds. In comparison, the term premium of Treasury is 0.58%, down from 0.63% a month ago.

SECTION 6 BHP BILLITON PROFILE

6.1 Activities

BHP Billiton is a global leader in the resources industry. It is the world's sixth largest producer of primary aluminum and world's third largest copper producer and a leading producer of lead and zinc. It is also one of the world's premier suppliers of iron ore and one of the world's largest producers and marketers of thermal coal. It's manganese operations produce a combination of ores, alloys and metal. In rough diamonds, its annual production represents nearly three per cent of current world supply by weight and six per cent by value.

6.2 Industry & Sector

Classification LevelName of Sector
Industry GroupMetals & Mining
IndustrySpecialty Mining & Metals
Economic SectorBasic Materials
Business SectorMineral Resources

6.3 Top Management

The chairman is Ken Mackenzie, the chief executive officer is Andrew Mackenzie and the chief financial officer is Peter Beaven.

6.4 Issued Capital

Based on 5,323,812,903 issued shares the market capitalisation is $A164.3 billion.

SECTION 7 STOCK BUZZ

Corporate Wire

To view Recent Company Headlines, click here

April 19: BHP Operational Review for Nine Months Ended 31 March 2018

March 12: BHP Billiton: Notice of Dividend Currency Exchange Rates

March 08: BHP Billiton announces dividend

BHP Billiton today announced an interim dividend of 70.59c per share, franked to 100%. The ex dividend date is Thursday, March 08, 2018 and the record date is Friday, March 09, 2018 and it is payable on Tuesday, March 27.

February 06: BHP Billiton Plc Notification of Major Interest in Shares

January 18: BHP Billiton: Operational Review for the Half Year Ended 31 December 2017

Contact: (03) 9609 3333

Physical Address: Level 27, 180 Lonsdale Street, Melbourne, VIC, Australia, 3000

State/Province/Country: Australia

Exchange: Australian Securities Exchange

ISIN: AU000000BHP4

AU:BHP; ASX:BHP; AX:BHP; BHP.AX

PermID: 4295856983

RIC: BHP.AX

Bhp Billiton Limited, Bhp Billiton Ltd

Source: www.BuySellSignals.com