BHP (BHP:AUD35.38) loses AUD3 billion in MCap, steepest heavyweight fall in All Ordinaries Index 29 June 2020

NEWS BITES - AUSTRALIA

Dateline: Monday June 29, 2020

BHP Group Limited (ASX:BHP), Australia's largest Materials company by market cap, has decreased 67.0c (1.9%) from its previous trading session to close at AUD35.38. Compared with the All Ordinaries Index which fell 96.2 points (1.6%) in the day, the relative price change was -0.3%. The volume was 0.7 times the average daily trading volume of 7.3 million shares. It posted the steepest fall in MCap (AUD3.4 billion) with the most influence on the All Ordinaries Index. There were 5,092,920 shares worth AUD180.2 million traded today. Today the stock traded between its three-day high of AUD35.52 and four-day low of AUD35.14.

Bullish Turning Points

Price/Earnings of 15.2 close to historical low

The P/E of 15.2 is 0.3 times the highest average P/E of 56.9 in the last five years. This is a value criterion, according to Benjamin Graham who described as a value criterion "A P/E ratio down to less than four-tenth of the highest average P/E ratio the stock attained in the most recent five years".

Dividend Yield increases to 6.0%

Based on dividends of AUD2.12 per share for the trailing twelve months and the last price of AUD35.38 the dividend yield is 6.0%, a significant improvement from 5.9% on the previous day.

Stock Summary (traded in AUD)

Currency1 AUD = 0.69 USD Dividend Yield6%
Jun 29 closeAUD35.38SectorMaterials
Ave Daily Volume7,273,546 sharesShares Outstanding5,070,000,000
52-Week Range24.05 - 40.27Market CapAUD179.4 billion [USD123.4 billion]
% Held by Top 20 Shareholders35.43EPS Growth (FY2019 vs FY2018)130.3%
P/E15.2

ADR Summary (traded in USD)

Home ExchangeAustralia% of shares outstanding4.6%
CodeBHPRatio1 ADR equals 2 ordinary shares
ISINUS0886061086TypeSponsored
CUSIP088606108Jun 26 closeUSD48.54
*No. Held by Institutions67,561,933Ave Daily Volume2,510,488 ADRs
Number of shares equivalent135,123,86652-Week Range29.78 - 57.19

*Total ADRs Held by Institutions 67,561,933; equivalent to 135,123,866 BHP Group shares on issue. This represents 4.6% of total shares on issue.

Primary Exchange and Other Listings: Trading Currency and Volume (Excl ADR)

ExchangeTickerCurrencyLastADVTVol % of TotalToday's VI
ASXBHPAUD35.387,273,54492.90.7
FrankfurtBHP1EUR21.511,3200.21.2
Total100.00

1 AUD [Australian Dollar]= 1.6342 EUR

ADVT= Avg. Daily Volume of Trading; VI= Volume Index (1 is avg)

Financials Summary: EPS up 130.3% to USD1.60 in FY2019

+ Net profit was up 124.2% from USD3.7 billion in FY2018 to USD8.3 billion in FY2019.

+ Earnings Per Share (EPS) was up 130.3% from 69.60c in FY2018 to USD1.60 in FY2019.

Year ended JunFY2019FY2018FY2017
Sales (USD B)44.343.136.1
Pretax (USD B)1514.811.1
Net (USD B)8.33.75.9
EPS (USD)1.6030.6961.107

Click here to export Financials table in xls

INDEX

SECTION 1 News In The Past Two Months

SECTION 2 Corporate Profile and Independent Ratings

SECTION 3 Ongoing Bearish Parameters

SECTION 4 Today's Bullish Signals

SECTION 5 Ongoing Bullish Parameters

Click here to view the following

SECTION 6 Tax & Dividend

SECTION 7 Financials H1/2019, FY 2019

SECTION 8 Peer Group Analysis & Ranking

SECTION 9 News Archives (Jul 2018 - Feb 2020)

Glossary

SECTION 1 News In The Past Two Months

1.1 Financial News

Quarterly Report (Q2/2019):

February 18, 2020

Interim Report (Half Year) Analysis H2 2019: BHP Group half year profits hit by 41.4% fall

BHP Group (ASX:BHP), announced net profit of $US4.9b for the half year-ended 31 December 2019, down 41.4% from the previous corresponding period.

Compared with the previous corresponding period [PCP; H/31 Dec 2018], year-over-year [y.o.y.] Revenue was down 49.7% and Net Profit was down 41.4%.

Read more in SECTION 7 on Financials

1.2 Changes in Board (TTM)

June 17: BHP will appoint Chief Financial Officer

BHP will appoint David Lamont as Chief Financial Officer. The effective date is Tuesday, December 01.

May 07: BHP Group will appoint Independent Non-Executive Director

BHP Group will appoint Dion Weisler as Independent Non-Executive Director. The effective date is Monday, June 01.

May 07: BHP Group will appoint Independent Non-Executive Director

BHP Group will appoint Xiaqun Clever as Independent Non-Executive Director. The effective date is Thursday, October 01.

1.3 People's News

Wed Jun 17, 2020

BHP will appoint David Lamont as CFO. The appointment takes effect from Dec 01, 2020.

Thu May 07, 2020

BHP Group will appoint Dion Weisler as Independent Non-Executive Director. The appointment takes effect from Jun 01, 2020.

Thu May 07, 2020

BHP Group will appoint Xiaqun Clever as Independent Non-Executive Director. The appointment takes effect from Oct 01, 2020.

Wed Apr 01, 2020

Ian Cockerill was appointed Independent Non-Executive Director of BHP Group (ASX:BHP) one year ago on April 01, 2019. The shares were down from $A36.7 to $A30.2 and the total annualized return to shareholders (TRS) since appointment is -12.7%. The present value of AUD1,000 (PV1000) invested on the appointment date is now worth $A873, a loss of $A177 and dividend reinvested of $A50.

Wed Apr 01, 2020

Susan Kilsby was appointed Independent Non-Executive Director of BHP Group (ASX:BHP) one year ago on April 01, 2019. The shares were down from $A36.7 to $A30.2 and the total annualized return to shareholders (TRS) since appointment is -12.7%. The present value of AUD1,000 (PV1000) invested on the appointment date is now worth $A873, a loss of $A177 and dividend reinvested of $A50.

1.4 Stock Buzz

News DateHeadlinePublisher
Jun 22, 2020BHP mine accused of breaching human rightsSafe To Work
Jun 15, 2020BHP hires finance chief Lamont from CSLThe bull

SECTION 2 Corporate Profile and Independent Ratings

2.1 Activities

BHP Group Limited (BHP, formerly BHP Billiton Limited) is a diversified natural resources company producing commodities along with substantial interests in oil and gas. BHP's principal business lines are mineral exploration and production as well as petroleum exploration, production and refining. BHP's assets, operations and interests are separated into Petroleum and Potash, Copper, Iron ore, Coal and Nickel.

In FY 2019, the top earner of Revenue was Oil and gas 1 [100%] . In FY 2019, the top regional earner of Revenue was Australia [50.9%] followed by the US [40%] at Rank 2 and Other [9.1%] at Rank 3. In FY 2019, revenue growth was highest in Other [44.9%] followed by Australia [5.4%] at Rank 2 .

2.2 Segment Information

$US$US
Description2019-06-30% of Total2018-06-30% of TotalGrowth(%)
Oil and gas 16.7 B1007.4 B100-9.6
Total6.7 B1007.4 B100-9.6

1 Includes sales to affiliated companies of USD75 million (2018: USD75 million; 2017: USD83 million).

Top Segments by Revenue and rank

In FY 2019, the top earner of Revenue was Oil and gas 1 [100%] .

Regional Information

$US$US
Description2019-06-30% of Total2018-06-30% of TotalGrowth(%)
Australia3.4 B50.93.2 B43.75.4
US2.7 B403.7 B50.7-28.6
Other610 M9.1421 M5.744.9
Total6.7 B1007.4 B100-9.6

Top Revenue Segments by Region and rank

In FY 2019, the top regional earner of Revenue was Australia [50.9%] followed by the US [40%] at Rank 2 and Other [9.1%] at Rank 3.

Top Regional Segments by Revenue growth and rank

In FY 2019, revenue growth was highest in Other [44.9%] followed by Australia [5.4%] at Rank 2 .

2.3 Contact Details

Websitehttp://www.bhpbilliton.com/
Physical AddressLevel 18, 171 Collins Street, MELBOURNE, VIC, AUSTRALIA, 3000
Phone(61) 1300 55 47 57
Fax(61 3) 9609 3015
EmailJames.Agar@bhpbilliton.com

2.4 Industry & Sector

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

2.5 Independent Ratings

+ Top 100 Polluters:

According to environmental non-profit Carbon Disclosure Project (CDP) just 100 companies have been the source of more than 70% of the world's greenhouse gas emissions from 1988 to 2015. The CDP ranked BHP Group Limited 20 [rank 1 is worst] in the top 100 polluters. BHP Group Limited contributed .91% of global industrial greenhouse gas emissions in that period.

+ 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.

+ Top 40 Miners:

It is the largest by MCap among the PwC Top 40 Miners.

+ 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.

+ 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.

+ 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.

+ Forbes 2000:

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

+ FT 500:

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

+ 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.

SECTION 3 Ongoing Bearish Parameters

3.1 Annualised Period-based Total Shareholder Returns [TSR %]: The Worst Period with TSR < -4.6%

TSR %1 yr
BHP.ASX-4.7

3.2 Present Value of AUD1000 Invested in the Past Year; The Worst Period with PVAUD1000 < 954

PVAUD1,0001 yr ago
BHP.ASXAUD953
Materials sectorAUD1,222
All Ordinaries IndexAUD883

3.3 Moving Annual Return of -4.9% in the past year:

Moving Annual Return was -4.9% in the past year. Based on a dynamic start date of 5 years ago, the real rate of return has averaged 22.9%

BHPClose (AUD)Dividends (AUD)Capital Gain / (Loss) %% YieldAnnual Return %
Jun 2935.382.12(10.3)5.4(4.9)
1 Yr ago39.453.0540.610.951.5
2 Yrs ago28.051.2551.96.858.7
3 Yrs ago18.460.731.9536.9
4 Yrs ago141.08(33.1)5.2(27.9)

Close 5 years ago AUD20.93

3.4 Declining Volume, down 31% in 5 years

In the past five years, Average Daily Volume of Trading (ADVT) has decreased 31.3% to 7.3 million shares.

Avg. Daily Volume Traded 12 months ended Jun 29, million shares

YearADVT
20207.3
20197.3
20187.1
20178.5
201610.6

SECTION 4 Today's Bullish Signals

4.1 Momentum Up 2.7% Past Month

In the past quarter the week beginning Monday May 18 saw the highest weekly rise of 8.4% for a relative price increase of 6.3%.

The Best 3 weeks in the past quarter:

Mon-FriChange %All Ordinaries index Change %RPC %Vol Ind [1 is avg]
May 18-228.42.16.31.1
May 04-085.23.12.20.7
Jun 01-054.94.20.70.7

4.2 Rank in the top 5% by Relative Valuation in the Australian market

DescriptionValueRank
Price/Earnings/Growth0.12In Top 5%

4.3 Uptrend

Positive MACD:

- The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 35.64 minus the 26-day EMA of 35.21 is positive, suggesting a bullish signal.

4.4 Undervaluation

Price/Earnings of 15.2 < sector avg of 17.0:

- Price/Earnings of 15.2 versus sector average of 17.0 and market average of 19.7.

Earnings Yield of 6.6% > Australian ave of 5.1% > Bond Yield of 0.9%:

- Earnings yield of 6.6% is greater than the Australian average earning yield of 5.1%.

- The earnings yield of 6.6% is 7.7 times the 10-year bond yield of 0.9%.

(All figures in %)

Earnings Yield6.6
Australian avg5.1
Dividend Yield6.0
Bond Yield0.9

Dividend Yield > Bond Yield of 0.86%:

The dividend yield of 6.0% is 6.98 times the triple-A bond yield of 0.86%. The times factor of 6.98 is above the benchmark factor of 0.67 times set by Benjamin Graham.

(All figures in %)

Dividend Yield6.0
Bond Yield0.86
Spread5.14

Dividend Yield of 6% > Index avg of 4.5%:

- The relative yield of the stock, defined by its yield of 6%, divided by average yield of dividend yielding stocks in the All Ordinaries Index of 4.5% is 132.2%. This suggests the stock is undervalued in dividend yield terms.

MCap/Total Assets:

- Tobin's Q Ratio, defined as MCap divided by Total Assets, is 1.2. Compared with the rest of the market the stock is undervalued.

4.5 Other Bullish Signals

- Return on Equity of 18.4% versus sector average of 12.2% and market average of 9.5%.

- Total Liabilities/EBITDA of 3 is less than 5, this compares favourably with the Joseph Piotroski benchmark of 5.

- Return on Assets of 9.4% versus sector average of 6.6% and market average of 1.9%.

- Return on Capital Employed of 18.7% versus sector average of 13.3% and market average of 5.7%.

- Interest cover defined by EBIT/I is 11 times. This indicates it is less leveraged.

- Net profit margin has averaged 19.3% in the last 3 years. This is considered superior and suggests a high margin of safety.

- Economic Value Added defined by Net Operating Profit After Tax of USD7.4 billion less Cost of Capital of USD1.4 billion was AUD5.9 billion. The multiple EVA/Cost of Capital was exemplary at 4.2 times.

- As per the Du Pont analysis, Return on Equity of 18.4% is better than sector average of 12.2%. This is computed as net profit margin of 21.5% times asset turnover [sales/assets] of 0.44 times leverage factor [total assets/shareholders' equity] of 1.9.

SECTION 5 Ongoing Bullish Parameters

5.1 Rank in the top 1% by Size in the Australian market

DescriptionValueRank
MCapUSD123.4 billionIn Top 1%
Annual RevenueUSD44.3 billionIn Top 1%
Ave daily TurnoverAUD180.2 millionIn Top 1%

5.2 Rank in the top 9% by Growth in the Australian market

DescriptionValueRank
EPS Growth %130.3In Top 9%

5.3 Rank in the top 21% by Productivity in the Australian market

DescriptionValueRank
Return on Capital Employed [ROCE] %18.7In Top 20%
Return on Equity [ROE] %18.4In Top 21%

5.4 Annualised Period-based Total Shareholder Returns [TSR %]: The Best Periods with TSR > 8.6%

TSR %3 yrs5 yrs10 yrs20 yrs30 yrs
BHP.ASX32.818.18.714.112.1

5.5 Present Value of AUD1000 Invested in the Past [3 Mo, 3 Yrs]; The Best Periods with PVAUD1000 > 1,218

PVAUD1,0003 mo ago3 yrs ago
BHP.ASXAUD1,219AUD2,364
Materials sectorAUD1,612AUD1,420
All Ordinaries IndexAUD1,217AUD1,010

5.6 The Best Periods [3 Mo, 3 Yrs] with Price Change % > 21.8

3-Year price change of 91.6% for BHP outperformed the change of 2.1% in the All Ordinaries index for a relative price change of 89.6%.

Price Change %Quarter3 Years
BHP21.991.6
Materials sector55.445.3
All Ordinaries index21.42.1

5.7 Buybacks and 5-Years Decrease of 2.6% in Total Shares on Issue

In the past 5 years total shares on issue have decreased by 141 million (2.6%) from 5.3 billion to 5.2 billion. Buybacks have averaged 23.8 million shares [0.4%] per financial year. Based on a dynamic start date of 5 years ago, there have been declines in issued capital in 2 out of 5 years. A reduction in total shares on issue is a favourable indicator in Joseph Piotroski's 9 indicators.

Year End (Jun 30)Total Shares on IssueFYBuybacksBuyback %
20195,180,000,0002019143,000,0002.7%
20185,323,000,0002018--
20175,323,000,0002017--
20165,322,000,0002016--
20155,318,000,0002015--
20145,321,000,0002014--
Total143,000,000
Average per FY23,833,333

5.8 Created Market Value [CMV] past 14 yrs of AUD45 billion

- Market Capitalization has increased by AUD86.8 billion from AUD92.6 billion to AUD179.4 billion in the last 14 years. This increase comprises cumulative retained earnings (RETE) of AUD41.8 billion and Created Market Value of AUD45 billion. The Created Market Value multiple, defined by the change in MCap for every AUD1 of retained earnings is exemplary at AUD2.08.

5.9 P/E/G < 1

The price earnings ratio of 15.2 divided by trailing twelve months eps growth of 130.3% corresponds to an attractive P/E/G of 0.1 times; being less than the value benchmark of 1.0.

EPS Growth (%)130.32
P/E/G0.12
P/E15.19

5.10 Safe Interest Cover and Improving

Interest cover of 11.0 is above a safe benchmark figure of 3. Moreover, it has improved from 10.4 a year ago.

YearsInterest cover
201910.97
201810.41

5.11 Low Debt to Equity (%)

The debt to equity ratio of 48.2% is under a safe benchmark figure of 50%. However, it has deteriorated from 44.4% a year ago.

YearsDebt to Equity (%)
Jun 201948.15
Jun 201844.41
Jun 201747.23
Jun 20168.59
Jun 201548.13

5.12 Increased VWAP, up 118% in 5 years

In the past five years Volume Weighted Average Price (VWAP) has increased by 117.6% to AUD33.94. Based on a dynamic start date of five years ago, there has been no decline in VWAP over the last 5 years.

Past five years, 12 months ended Jun 29 (AUD)

YearHigh PriceVWAPLow Price
202040.2733.9424.05
201939.531.3326.76
201829.7624.1418.97
201722.5118.8614.69
201620.915.611.08

5.13 Increased share turnover, up 45% in 5 years

In the past five years, average daily share turnover has increased 45.1% to AUD243.5 million. This suggests increased liquidity.

Past five years, 12 months ended Jun 29 (AUD million)

YearAverage Daily Turnover
2020243.5
2019228.4
2018172.8
2017163.0
2016167.8

5.14 Increase in Institutional Ownership up from 3.8% to 4.6% (ADRs)

As at March 31, 2020 Institutions held 4.6% of total ADRs on issue; an increase from 4.2% as at December 31, 2019 and 3.8% as at March 31, 2019.

Quarter-endMarch 31, 2019December 31, 2019March 31, 2020
Holdings (%)3.84.24.6

5.15 Satisfies four criteria of Benjamin Graham

- "An earnings-to-price yield of at least twice the triple-A bond"; the stock's earning yield of 6.6% is 7.7 times the triple-A bond yield of 0.9%.

- The P/E of 15.2 is 0.3 times the highest average P/E of 56.9 in the last five years. This is a value criterion, according to Benjamin Graham who described as a value criterion "A P/E ratio down to less than four-tenth of the highest average P/E ratio the stock attained in the most recent five years".

- "A dividend yield of at least two-thirds the triple-A bond yield"; the stock's dividend yield is 7 times the triple-A bond yield of 0.9%.

-"Total debt less than tangible book value"; total debt of USD25 billion is less than tangible book value of USD51.1 billion.-"Earnings growth over the most recent ten years of 7% compounded - that is a doubling of earnings in a five-year period"; the earnings per share have more than doubled in the last 5 years.

5.16 Satisfies 5 out of 9 criteria of Joseph Piotroski [pass mark 5]:

- Positive net income.

- Positive operating cashflow.

- Return on Assets improvement [from 6.9% to 9.4%].

- Good quality of earnings [operating cashflow exceeds net income].

- Reduction in total shares on issue.

Glossary

ADVT: Average Daily Volume of shares Traded

Annual Return: Dividends Paid In a 12-Month Period/Price at the Beginning of the Period + Capital Gain or Loss over 1 Year/Price 1 Year Ago (%)

Capital Gain/Loss from n Years Ago to n-1 Years Ago: Capital Gain or Loss over 1 Year/Price 1 Year Ago (%)

Current Ratio: Current Assets/Current Liabiliites (times)

Debt/Equity: Net Debt/Net Assets %

Dividend Yield: Dividend Per Share/Share Price (%)

EBIT Margin : Earnings Before Interest and Tax/Revenue (%)

Earnings Yield: Earnings Per Share/Share Price (%)

Income during the n years (3/2/1): Dividends received during the Period

Interest Cover: Earnings Before Interest and Tax/Interest (times)

PCP: Previous Corresponding Period

PV1000: Present value of 1000 invested 1 year/'n' years ago

Price/Earnings: Share Price/Earnings Per Share (times)

Price/NTA: Closing Share Price/Net Tangible Assets Per Share (times)

Price/Sales: Share Price/Sales Per Share (times)

Relative Price Change [RPC]: Relative price change is price change of stock with respect to Benchmark Index

Relative Strength (6 Months): Price close today/Price close 6 months ago, then ranked by percentile within the entire market.

Return on Assets: Net Profit/Total Assets (%)

Return on Equity (Shareholders' Funds): Net Profit/Net Assets (%)

TSR: Total Shareholder Returns is expressed as an annualized rate of return for shareholders after allowing for capital appreciation and dividend

TTM: Trailing 12 Months

Total Liabilities/Total Assets: Total Liabilities/Total Assets

Turnover Rate: value of annual trading volume as a percentage of market capitalisation

Volume Index (VI): Number of shares traded in the period/Average number of shares traded for the period

Volume Weighted Average Price (VWAP): The Volume Weighted Average Price (VWAP) is the summation of turnover divided by total volume in the same period.

Created by www.buysellsignals.com