BHP, what’s our take after the stock fell ~16%?

Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.

Ask a question

The Latest Q&A

Question asked 21/08/2021

BHP, what’s our take after the stock fell ~16%?

Is BHP a buy into weakness? What's MM's downside target? Thanks Rob What's happened to BHP, a blue-chip stock falling so heavily in a week when you said the result was good. That doesn't seem right. Please explain? June

Answer

BHP had a terrible week falling ~16% after announcing FY21 results, the unification of their structure, the proposed spin out of their Petroleum division to Woodside and a large Potash investment all at a time when the Iron price collapsed and is now down ~30% from it’s 12 month high.

To answer the BHP questions and get the view of our Analyst, Peter O’Connor from Shaw, I sat down with ‘Rocky’ on Friday morning for a quick ~10min podcast following his meeting with the CEO & CFO of BHP.

The conclusion being that this weeks update will prove unequivocally positive in the longer term while the big short term moves have now played out given the closure of the gap between the UK and Australian listings. In Peter’s view, a ~5% difference i ‘about right’ i.e. the UK shares should be trading at a 5% discount to Australian shares given tax and franking credit issues. The fate of the stock from here will now be a function of commodity prices.

chart

BHP (BHP)

LAST UPDATED 21/08/2021 08:48

Latest Reports

Afternoon report 23/04/2024

The Match Out: Gold and Oil left behind again, Equities tick higher

Investors continued the 180-degree about-face from last week's sentiment, happy to take on risk for the second consecutive day to start this week seeing the ASX200 through a 200pt gain from Friday’s panic lows early in today’s session. Tech was the standout as US 2yr yields retreated (marginally) from the spike above 5% last week while Healthcare and Financials also joined in the rebound. Energy and Gold were the main areas finding it tough again today, for the same geopolitical reasons as Monday’s session.

Morning report 23/04/2024

What Matters Today: Are Macquarie & now Citi correct that the banks are a sell?

On Monday, Citi joined Macquarie with a “sell call” on the major banks, which saw the sector reverse early gains to close near their intra-day lows, ANZ even slipped into negative territory. There were two major reasons behind their bearish stance: • Citi believes the valuations of the banks are stretched considering the potential political “attacks on their profits”, i.e. when the RBA starts cutting, they will be forced to follow suit at the expense of profitability. • Macquarie said to “sell” the banks in mid-March as the sector posted new highs, again a call on valuation grounds; good timing so far! The cornerstone of Citi's argument is valuation, which could be applied to the whole market when the ASX200 is challenging new all-time highs. Overall, it is an understandable view, but we question if it's a good enough reason to exit the sector, forgoing enticing dividends and potentially incurring capital gains issues after the “Big Four” have run so hard.