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18 September, 2020 (16:00:00 AEST)

Friday September 18, 2020
BHP (BHP:$A37.80) adds $A2 billion in MCap, top heavyweight rise in All Ordinaries Index


BHP Group Limited (ASX:BHP), Australia's largest Materials company by market cap, has increased 49.0c (1.3%) from its previous trading session to close at $A37.80. Compared with the All Ordinaries Index which fell 11.6 points (0.2%) in the day, the relative price increase was 1.5%.

It posted the highest rise in MCap $A2.5 billion with the most influence on the All Ordinaries Index. Its MCap is $A191.6 billion.

There were 14,218,128 shares worth $A537.4 million traded today. Friday's price rise was propped up by a high volume of 2 times the average daily volume of 7.2 million shares.

Financial News
Annual Report (FY 2020):
September 16, 2020
FY2020 Annual Report: BHP Net Profit down 4.2%
BHP (ASX:BHP) reported net profit for the year-ended 30 June 2020 [FY2020] of $8.0b, down 4.2% from $8.3b in the previous year [FY2019]. Earnings per share (EPS) were down 1.9% from $1.6 in FY2019 to $1.57 in FY2020.
Annual growth in Revenue, Net Profit and EPS
Year-ended30 June [FY/2020]30 June [FY/2019]
Revenue, $ Billion42.944.3
Growth in Revenue %-3.12.7
Net Profit, $ Billion8.08.3
Growth in Net Profit %-4.2124.2
EPS, $1.571.6
Growth in EPS %-1.9130.3


Bullish Turning Point

Price/Earnings of 17.6 close to historical low
The P/E of 17.6 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".

BHP Stock Summary (traded in AUD)
Currency1 AUD = 0.73 $ Dividend Yield4.6%
Sep 18 close$A37.80SectorMaterials
Ave Daily Volume7,242,963 sharesShares Outstanding5,070,000,000
52-Week Range23.57 - 39.71Market Cap$A191.6 billion [$139.4 billion]
P/E17.6EPS Growth (FY2020 vs FY2019)-1.9%

BHP ADR Summary (traded in $)
Home ExchangeAustralia% of shares outstanding4.4%
CodeBHPRatio1 ADR equals 2 ordinary shares
ISINUS0886061086TypeSponsored
CUSIP088606108Sep 17 close$55.49
*No. Held by Institutions64,215,258Ave Daily Volume2,407,354 ADRs
Number of shares equivalent128,430,51652-Week Range29.20 - 57.21
*Total ADRs Held by Institutions 64,215,258; equivalent to 128,430,516 BHP Group shares on issue. This represents 4.4% of total shares on issue.


Primary Exchange and Other Listings: Trading Currency and Volume (Excl ADR)
ExchangeTickerCurrencyLastADVTVol % of TotalToday's VI
ASXBHPAUD37.87,242,95797.52
OTCBBBHPLFUSD27.72308,0162.51.2
FrankfurtBHP1EUR23.2912,1930.10.9
Total100.00
1 AUD [Australian Dollar]= 1.3671 USD; 1 AUD [Australian Dollar]= 1.6197 EUR
ADVT= Avg. Daily Volume of Trading; VI= Volume Index (1 is avg)


BHP Financials Summary: EPS down 1.9% to $1.57 in FY2020
+ Net profit was down 4.2% from $8.3 billion in FY2019 to $8 billion in FY2020.
+ Earnings Per Share (EPS) was down 1.9% from $1.60 in FY2019 to $1.57 in FY2020.
Year ended JunFY2020FY2019FY2018
Sales ($ B)42.944.343.1
Pretax ($ B)13.51514.8
Net ($ B)88.33.7
EPS ($)1.5731.6030.696


INDEX

SECTION 1 Recent News
SECTION 2 Corporate Profile and Independent Ratings
SECTION 3 Top shareholders
SECTION 4 Today's Bullish Signals
SECTION 5 Ongoing Bullish Parameters
SECTION 6 Today's Bearish Signals
SECTION 7 Ongoing Bearish Parameters
Glossary


LINKS TO FURTHER INFORMATION ON BHP:

EXCEL TABLES ARE AVAILABLE TO EXPORT AS FOLLOWS:

+ LATEST FINANCIALS [FY 2020]:
http://www.buysellsignals.net/BuySellSignals/report/Australia/Stock/PDF/quarterly/xls/BHP_Financials.xls
+ NEWS ARCHIVES PAST 4 YEARS IN HTML
http://www.buysellsignals.net/BuySellSignals/report/Australia/Stock/Daily/Html/BHP_Corporate_Wire.html


EXTENSIVE DATA ON THE SUBJECTS BELOW ARE AVAILABLE TO DOWNLOAD OR VIEW AT THE LINK FOLLOWING:

+ Tax & Dividend
+ Financials FY 2020, H1/2019
+ Peer Group Analysis & Ranking
+ News Archives (Sep 2016 - Jun 2020)

http://www.buysellsignals.net/BuySellSignals/report/Australia/Stock/Daily/short/Html/322_DDR2_SR.html


SECTION 1 Recent News
1.1 Dividends
August 19: BHP announces dividend
BHP today announced a final dividend of 76.57c per share, franked to 100%. The ex-dividend date is Thursday, September 03, 2020 and the record date is Friday, September 04, 2020 and it is payable on Tuesday, September 22.

1.2 People's News
Tue Sep 01, 2020
Ken MacKenzie was appointed Chairman of BHP (ASX:BHP) three years ago on September 01, 2017. The present value of AUD1,000 (PV1000) invested on the appointment date is AUD2,052, for a capital gain of AUD663 and dividend reinvested of AUD389. In the same period the shares were up 66.3% from AUD22.6 to AUD37.5.

Thu Aug 13, 2020
Lindsay Maxsted's performance as Director of BHP (ASX:BHP) is ranked in the top quartile of BuySellSignals performers for the past one year; a percentile ranking of 76.2. In the last 1 year the average annualized return to shareholders was 29.4%. The 1-year average return is ranked 10,235 out of 43,024 public companies traded globally. The present value of US$1,000 (PV1000) invested 1 year ago is now worth USD1,294; a capital gain of USD217 and dividend reinvested of USD76.

1.3 Stock Buzz
News DateHeadlinePublisher
Sep 15, 2020BHP factors safety risks into emission reduction targetSafe To Work
Sep 02, 2020BHP to tap green energy to mine coal in Australian stateReuters on MSN.com
Sep 02, 2020BHP signs wind and solar deal to help power Queensland coal minesRenewEconomy
Aug 18, 2020BHP FY profit down 4% on virus struggleAustralian Associated Press


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.

2.2 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

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

2.4 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 Top shareholders
Top 20 shareholders
Name of the Share Holder% of Capital
HSBC Custody Nominees (Australia) Limited13.4
J P Morgan Nominees Australia Pty Limited9.8
Citicorp Nominees Pty Ltd2.9
Citicorp Nominees Pty Limited2.9
National Nominees Limited2.0
BNP Paribas Nominees Pty Ltd1.4
Bnp Paribas Noms Pty Ltd0.5
Citicorp Nominees Pty Limited0.5
HSBC Custody Nominees (Australia) Limited0.4
Computershare Nominees Ci Ltd0.3
Australian Foundation Investment Company Limited0.3
Amp Life Limited0.2
HSBC Custody Nominees (Australia) Limited0.2
Argo Investments Limited0.1
HSBC Custody Nominees (Australia) Limited i0.1
HSBC Custody Nominees (Australia) LimitedGsco Eca0.1
Netwealth Investments Limited0.1
Solium Nominees (Australia) Pty Ltd0.1
Milton Corporation Limited0.1
HSBC Custody Nominees (Australia) Limited ¿¿¿ A/C 20.1
% held by Top 20 Shareholders 35.5%


SECTION 4 Today's Bullish Signals
4.1 Uptrend
Price/Moving Average Price of 1.09:
- The price to 200-day MAP ratio is 1.09, a bullish indicator. In the past 200 days this ratio has exceeded 1.09, 16 times suggesting further upside. The stock is trading above both its MAPs and the 50-day MAP of $A37.46 is higher than the 200-day MAP of $A34.77, a bullish indicator. The 200-day MAP has increased to $A34.77. An increase is another bullish indicator.

Past Quarter:
- In the last three months the stock has hit a new 52-week high once.
- The shares had their best quarter in five quarters since the quarter ended June 18, 2019.

4.2 Undervaluation
Price/Earnings of 17.6 < sector avg of 35.1:
- Price/Earnings of 17.6 versus sector average of 35.1 and market average of 30.8.

Earnings Yield of 5.7% > Australian ave of 3.2% > Bond Yield of 0.9%:
- Earnings yield of 5.7% is greater than the Australian average earning yield of 3.2%.
- The earnings yield of 5.7% is 6.2 times the 10-year bond yield of 0.9%.
(All figures in %)
Earnings Yield5.7
Australian avg3.2
Dividend Yield4.6
Bond Yield0.9


Dividend Yield > Bond Yield of 0.91%:
The dividend yield of 4.6% is 5.05 times the triple-A bond yield of 0.91%. The times factor of 5.05 is above the benchmark factor of 0.67 times set by Benjamin Graham.
(All figures in %)
Dividend Yield4.6
Bond Yield0.91
Spread3.69

MCap/Total Assets:
- Tobin's Q Ratio, defined as MCap divided by Total Assets, is 1.3. Compared with the rest of the market the stock is undervalued.

4.3 Other Bullish Signals
- Return on Equity of 16.7% versus sector average of 6.3% and market average of 6.1%.
- Total Liabilities/EBITDA of 3.6 is less than 5, this compares favourably with the Joseph Piotroski benchmark of 5.
- Return on Assets of 8.3% versus sector average of 3.5% and market average of 1.3%.
- Return on Capital Employed of 16.4% versus sector average of 8.7% and market average of 4.7%.
- Interest cover defined by EBIT/I is 11.7 times. This indicates it is less leveraged.
- Net profit margin has averaged 19.9% 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 $6.9 billion less Cost of Capital of $2.2 billion was $A4.7 billion. The multiple EVA/Cost of Capital was exemplary at 2.2 times.
- As per the Du Pont analysis, Return on Equity of 16.7% is better than sector average of 6.3%. This is computed as net profit margin of 20.3% times asset turnover [sales/assets] of 0.41 times leverage factor [total assets/shareholders' equity] of 2.0.


SECTION 5 Ongoing Bullish Parameters
5.1 Past four-years
- BHP rose for a fourth consecutive year. In the past four years it has risen $A21.94 (138.3%).


5.2 Rank in the top 1% by Size in the Australian market
DescriptionValueRank
MCap$139.4 billionIn Top 1%
Ave daily Turnover$A537.4 millionIn Top 1%
Annual Revenue$42.9 billionIn Top 1%


5.3 Rank in the top 24% by Productivity in the Australian market
DescriptionValueRank
Return on Capital Employed [ROCE] %16.4In Top 22%
Return on Equity [ROE] %16.7In Top 24%
5.4 Present Value of AUD1000 Invested in the Past [3 Mo, 1 Yr, 3 Yrs]; The Best Periods with PVAUD1000 > 1,102
PVAUD1,0003 mo ago1 yr ago3 yrs ago
BHP.ASX$A1,103$A1,104$A2,161
Materials sector$A1,074$A1,411$A1,468
All Ordinaries Index$A1,014$A892$A1,048

5.5 The Best Periods [3 Mo, 1 Yr, 3 Yrs] with Price Change % > 5
3-Year price change of 75.1% for BHP outperformed the change of 5.2% in the All Ordinaries index for a relative price change of 69.8%.
Price Change %QuarterYear3 Years
BHP8.15.175.1
Materials sector7.441.346.8
All Ordinaries index-0.1-10.95.2


5.6 Moving Annual Return of 9.9% in the past year:
Moving Annual Return was 9.9% in the past year. Based on a dynamic start date of 5 years ago, the real rate of return has averaged 23.1%. The Moving Annual Return has been positive in 4 of the last 5 years.
BHPClose (AUD)Dividends (AUD)Capital Gain / (Loss) %% YieldAnnual Return %
Sep 1837.81.745.14.89.9
1 Yr ago35.973.3431.612.243.8
2 Yrs ago27.331.5626.67.233.8
3 Yrs ago21.591.0636.16.742.8
4 Yrs ago15.860.41(16.7)2.1(14.6)

Close 5 years ago $A19.05


5.7 Buybacks and 5-Years Decrease of 4.9% in Total Shares on Issue
In the past 5 years total shares on issue have decreased by 261 million (4.9%) from 5.3 billion to 5.1 billion. Buybacks have averaged 44.3 million shares [0.8%] 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 %
20205,057,000,0002020123,000,0002.4%
20195,180,000,0002019143,000,0002.7%
20185,323,000,0002018--
20175,323,000,0002017--
20165,322,000,0002016--
20155,318,000,0002015--
Total266,000,000
Average per FY44,333,333

5.8 Created Market Value [CMV] past 15 yrs of $A81 billion
- Market Capitalization has increased by $A121.2 billion from $A70.4 billion to $A191.6 billion in the last 15 years. This increase comprises cumulative retained earnings (RETE) of $A40.2 billion and Created Market Value of $A81 billion. The Created Market Value multiple, defined by the change in MCap for every AUD1 of retained earnings is exemplary at $A3.01.


5.9 Annualised Period-based Total Shareholder Returns [TSR %]: The Best Periods with TSR > 9.5%
TSR %1 yr3 yrs5 yrs10 yrs20 yrs30 yrs
BHP.ASX10.428.921.59.614.611.9


5.10 Safe Interest Cover and Improving
Interest cover of 11.7 is above a safe benchmark figure of 3. Moreover, it has shown steady improvement in the past two years.
YearsInterest cover
202011.71
201910.97
201810.41

5.11 Increased VWAP, up 130% in 5 years
In the past five years Volume Weighted Average Price (VWAP) has increased by 129.8% to $A33.65. 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 Sep 18 (AUD)
YearHigh PriceVWAPLow Price
202039.7133.6523.57
201939.0232.0826.23
201829.7325.2821.0
201722.7119.6715.71
201619.9114.6410.86

5.12 Increased share turnover, up 54% in 5 years
In the past five years, average daily share turnover has increased 54.5% to $A242.3 million. This suggests increased liquidity.
Past five years, 12 months ended Sep 18 (AUD million)
YearAverage Daily Turnover
2020242.3
2019234.8
2018170.3
2017164.3
2016156.8

5.13 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 5.7% is 6.2 times the triple-A bond yield of 0.9%.
- The P/E of 17.6 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 5 times the triple-A bond yield of 0.9%.
-"Total debt less than tangible book value"; total debt of USD27.3 billion is less than tangible book value of USD51.6 billion.


SECTION 6 Today's Bearish Signals
6.1 Downtrend
Negative MACD:
- The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 37.38 minus the 26-day EMA of 37.39 is negative, suggesting a bearish signal.

Falling Relative Strength:
- The stock has a 6-month relative strength of 42 in the Australian market of 1,540 stocks and 22 units which means it has underperformed 58% of the market.
- Also, the relative strength percentile is falling at 42 for 6 months, 39 for 3 months and 35 for 1 month.


SECTION 7 Ongoing Bearish Parameters
7.1 EPS growth [FY2020 vs FY2019] of -1.9%:
FYEPS ($)Growth %
20201.57-1.9
20191.6130.3

7.2 Declining Volume, down 32% in 5 years
In the past five years, Average Daily Volume of Trading (ADVT) has decreased 31.8% to 7.2 million shares.
Avg. Daily Volume Traded 12 months ended Sep 18, million shares
YearADVT
20207.2
20197.3
20186.7
20178.3
201610.6

7.3 Satisfies 4 out of 9 criteria of Joseph Piotroski [pass mark 5]:
- Positive net income.
- Positive operating cashflow.
- Good quality of earnings [operating cashflow exceeds net income].
- Reduction in total shares on issue.


7.4 Year-over-year (%) Change in Dividend:
Final dividend for FY 2020 was 77.0c. The year-on-year change was down 33.0% from $A1.15 in the previous year FY 2019.
FinalFY 2019FY 2020
Dividend (AUD Cents)115.077.0


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)
Moving Average Price (n periods): Sum of Prices for each Period/Number of Periods
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