Australian stock report - BHP

AUSTR

UPDATE: BHP Billiton rises on high volatility October 20, 2017 16:00 AEST

NEWS BITES - AUSTRALIA

BHP Billiton Limited (ASX:BHP), Australia's largest Materials company by market cap, traded between an intraday low of $A26.36 and a high of $A26.77. The price range has expanded in the last two days (from 35.0c two days ago to 41.50c today) which, accompanied by a price rise, is a bullish signal. The average daily volatility of 1.7% places the stock in the 4th quartile in the market, meaning it is the least volatile. Since the start of trading its volatility (highest price minus lowest price/lowest price) of 1.6% was 0.9 times the average daily volatility of 1.7%, up from 1.2% on Thursday and 1.3% on Wednesday. The stock price has increased 12.0c (0.5%) from its last trading session of October 19 to close at $A26.68. Compared with the All Ordinaries Index which rose 8.8 points (0.1%) in the day, the relative price increase was 0.3%. The volume was 0.8 times the average daily trading volume of 8.3 million shares.

APPOINTMENT OF DIRECTOR

The company appointed Charles Maling as director on Tuesday, October 17.

Highlights in today's Report:

SECTION 1 BULLISH SIGNALS

Fundamentals, Undervaluation [compared with sector average], Technicals, High Performance Indicators

SECTION 2 BEARISH SIGNALS

Fundamentals, Overvaluation [compared with sector average], Low Performance Indicator, Moving Annual Return, Beta, 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

SECTION 6 PROFILE

Activities, Industry & Sector, Top Management, Issued Capital

SECTION 7 STOCK BUZZ

SECTION 1 BHP BILLITON BULLISH SIGNALS

1.1 Fundamentals:

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 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 12.7%.

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

+ As per the Du Pont analysis, Return on Equity of 11.4% is better than sector average of 7.9%. 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

1.2 Undervaluation [compared with sector average]:

+ Price to Book of 2.1 [2.4]. 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 2.1.

+ Return on Equity 11.4% [8.2%].

+ Return on Assets 5.3% [4.0%].

+ Return on Capital Employed 11.3% [9.1%].

+ Dividend yield of 4% [3.6%].

1.3 Technicals:

+ The price increased 1.2% in the last week and 1.9% in the last month.

+ The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 26.64 minus the 26-day EMA of 26.46 is positive 0.18 suggesting a bullish signal. Both EMA prices are rising, another bullish signal.

+ The 3.4% discount to 12-month high of $A27.62 against the 27.2% premium to 12-month low of $A20.98 suggests the stock continues to push for new highs.

+ In the last three months the stock has hit a new 52-week high seven times, pointing to a significant uptrend.

+ The present value of $A1,000 (PV1000) invested one year ago in BHP Billiton is $A1,268, comprising a capital gain of $A216 and dividend reinvested of $A52.

PV$10001-week1-month1-year
BHP.ASX1,0121,0191,268
All Ordinaries Index1,0141,0391,080

+ The present value of AUD1,000 (PV1000) invested thirty years ago in BHP Billiton is $A16,275, including a capital gain of $A9,410 and dividend reinvested of $A5,865.

+ 30 years Multiplier in AUD = 16.275x

+ Compound Annual Growth Rate (CAGR) in AUD = 9.6%

Present Value of USD1,000 invested 30 years ago:

+ The present value of USD1,000 (PV1000) invested thirty years ago in BHP Billiton is $US17,686, including a capital gain of $US10,312 and dividend reinvested of $US6,374.

+ 30 years ago AUD 1 equalled USD 0.7241

+ 30 years Multiplier in USD = 17.686x

+ Compound Annual Growth Rate (CAGR) in USD = 9.9%

Oct 20, 2017: AUD 1 equals USD 0.79

1.4 High Performance Indicators:

DescriptionValueRank In Market
Today's Turnover$A174.4 millionIn Top 1%
Total Debt to Equity0.02In Top Quartile
Volatility %1.6In Top Quartile
Price/MAP501.02In Top Quartile
Price/MAP2001.08In Top Quartile

SECTION 2 BHP BILLITON BEARISH SIGNALS

2.1 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 94.8%. 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.

2.2 Overvaluation [compared with sector average]:

+ Price/Sales of 2.9 [2.2].

2.3 Low Performance Indicator:

DescriptionValueRank In Market
% Prem to Vol Wtd Price1.5In Bottom Quartile

2.4 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 26.5%.

BHPClose (AUD)Dividends (AUD)Capital Gain / (Loss) %% YieldAnnual Return %
Oct 2026.681.0621.64.926.5
1 Yr ago21.940.41(5.5)1.7(3.8)
2 Yrs ago23.221.67(21.4)5.6(15.8)
3 Yrs ago29.561.32(3.2)4.31.1
4 Yrs ago30.531.24.14.18.2

Close 5 years ago $A29.33

2.5 Beta:

+ Beta: the Beta of BHP Billiton stock is 1.5. A Beta greater than 1 suggests this is a high risk, high return stock with volatility greater than that of the market.

2.6 Aggregate Volumes, Prices and Turnover Period:

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

+ ASX: BHP.ASX 6,535,616 [VI of 0.8] volume 92.42% of aggregate. Price: $A26.68.

+ OTCBB: BHPLF.OTCBB 531,888 [VI of 1.3] volume 7.52% of aggregate. Price: $US20.75. Using the current exchange rate of USD1 equals 1.2693AUD, The shares are at a 1.3% discount to the close price on ASX.

+ Frankfurt: BHP1.FRA 4,500 [VI of 0.3] volume 0.06% of aggregate. Price: EUR17.46. Using the current exchange rate of EUR1 equals 1.5043AUD, The shares are at a 1.5% discount to the close price on ASX.

+ Aggregate volume: there were 7.1 million shares of BHP Billiton worth $A188.5 million traded today. The aggregate volume was 0.8 times average trading of 8.7 million shares.

The turnover rate in the 12 months to date was 36.6% (or a turnover period of 2 years 8 months). This average length of ownership of the stock at 1.6 times the average holding period of 1 year 8 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 47,820 stocks] and Rank in the Asia Pacific Region [out of 2,051 stocks]

DescriptionValueGlobal RankIn APAC Region
MCap (US$)111.8B821
Total Assets (US$)117B4566
Revenue (US$)38.3B3263
Net Profit (US$)5.9B1502
Return on Equity %11.411,028365
Net Profit Margin %16.37,144273
Price to Book2.119,329835
Yield %4.06,003324
PV$1000 (1Year) US$*1,30212,281453
US$* Change (1Year) %26.013,218466

* 1 year ago AUD 1 = USD 0.77

Oct 20, 2017: AUD 1 equals USD 0.79

3.2 Independent Ratings

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

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.

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.

It was ranked 55 in the Industry Week list of the world's largest 1000 manufacturers by Revenues in 2015; an improvement over a year from rank 60 in 2014.

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

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

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.

It is placed 381/1307 in BSS News Bites' ranking of Australian performers in the past year, a percentile ranking of 71.

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)--0.36

Sales was down 15.3% from US$45.2 billion in 2015 to US$38.3 billion in 2017. Net profit was up 208.4% from US$1.9 billion in 2015 to US$5.9 billion in 2017 in the 2-year period.

4.2 Trailing 12 Months Dividends

Trailing 12 Months ToValue (c)
20 Oct 2017106.45
20 Oct 201640.51
20 Oct 2015166.53
20 Oct 2014131.6
20 Oct 2013119.95

SECTION 5 BHP BILLITON CORPORATE BONDS

Key Statistics

MaturityYield to maturity %Yrs to Maturity% Rise/Fall 3-mo
Apr 20191.731.45-
Nov 20212.034.09-0.3
Feb 20222.334.35-0.32
May to Sep 20232.335.58 to 5.951.05
Mar 20263.398.37-

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
Business SectorMineral Resources
Industry GroupMetals & Mining
IndustrySpecialty Mining & Metals
Economic SectorBasic Materials

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 $A142 billion.

SECTION 7 STOCK BUZZ

Corporate Wire

To view Recent Company Headlines, click here

October 18: BHP Billiton: Operational Review for the Quarter Ended 30 September 2017

October 17: BHP Billiton appoints Director

BHP Billiton has appointed Charles Maling as a Director. The effective date is Tuesday, October 17.

September 29: BHP Billiton announces AGM

BHP Billiton has announced its Annual General Meeting will take place on Thursday, November 16.

September 29: BHP Billiton Plc Notification of Major Interest in Shares

September 29: BHP Billiton: 2017 US Annual Report (Form 20-F)

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

Bhp Billiton Limited, Bhp Billiton Ltd

Source: www.BuySellSignals.com