BHP Billiton Limited (BHP) – Stock Review


BHP Billiton Limited (BHP)

Recommendations – Buy

BHP is a well managed global resource leader with a balanced portfolio of world class, long life assets, and a full suite of conventional energy products. The world?s largest diversified resources company has many prime assets well located to service Asia. Low cost operations and a strong balance sheet are key. Most revenue comes from the relative safe havens of Australia/NZ, North America and Europe. Production covers major commodities including petroleum, alumina, copper, gold, iron ore, coking coal, energy coal, nickel, and diamonds. Diversification lends comfort from a sovereign and commodity risk perspective. BHP is a foundation resource investment for conservative portfolios.

Recent Analysis

It came as no surprise that 3Q09 sales volumes declined for most product categories, but the quantum was higher than anticipated for aluminium, coking and thermal coal. BHP tried to put a positive spin on the numbers but in reality the backdrop is weak demand and the company admitted conditions remain uncertain in the medium term. Compared to 2Q09 alumina output fell 13% and aluminium 21%. A calciner outage at Worsley and scheduled maintenance at Paranam refineries crimped alumina output while lower sales from Hillside and Mozal smelters limited aluminium volumes. Coking coal dropped 9% with higher than anticipated curtailments due to weaker demand. Energy coal fell 14% due to wet weather in the Hunter Valley and at Douglas, Middelburg, in addition to a planned longwall move at San Juan and port maintenance for Cerrejon.

Previous close – $32.05
52 week high – $50.00
52 week low -  $20.00

Sector – Materials

Market cap -  $107,562 Million

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