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23 August, 2019 (16:00:00 AEST)

BHP Group rises 1.2% from 14-day low

BHP Group Limited (ASX:BHP), Australia's largest Materials company by market cap, increased 22.0c (0.6%) from its previous close of $A35.20 on Thursday. . It hit a 14-day low of $A35.0 during the day but rose 1.2% before settling at $A35.42 on Friday. Its Williams % R is -84.6 which suggests it is oversold, a bullish signal. Its Relative Strength Index [RSI] is 28.6. An RSI reading of between 0 and 30 suggests BHP Group's stock is close to its 14-day low, which is also a bullish signal. Compared with the All Ordinaries Index which rose 21.3 points (0.3%) in the day, the relative price increase was 0.3%. There were 6,473,753 shares worth $A229.3 million traded today. The volume was 0.9 times the average daily trading volume of 7.3 million shares.


Stock Summary
CurrencyAustralian Dollar (AUD) 1 AUD = 0.68 USD
Today's close (AUD)35.42
52-Week Range (AUD)28.5-42.3
SectorMaterials sector
Shares Outstanding5,323,762,901
Market Cap$A188.6 billion ($US127.4 billion)

SENSITIVITY TO ZINC PRICE

Zinc decreases
Thursday August 22, 2019
Zinc (LME:ZS) has decreased $US10.0 (or 0.4%) from its last trading session of August 21, 2019 to close at $US2,247.0 per tonne.

PV$10001-week1-month1-year
ZS.LME992937921

Global Rank out of 88 commodities
The present value of $1,000 invested a year ago is $1,410, ranking it 5 out of 88 commodities.Its 6-month relative strength (or price percentile rank) is 78.
DescriptionValueRankQuartile
Rel Strength 6 Mo (US$)7819Top
PV$1000 (1Year) US$1,4105Top


TODAY'S AGGREGATE VOLUMES AND PRICES
[Volume Index or VI in brackets; 1 is average]
+ ASX: BHP.ASX 6,473,753 [VI of 0.9] volume 98.9% of aggregate. Price: $A35.42.
+ OTCBB: BHPLF.OTCBB 70,022 [VI of 0.1] volume 1.07% of aggregate. Price: $US23.91. Using the current exchange rate of USD1 equals 1.4795AUD, The shares are at a 0.1% discount to the close price on ASX.
+ Aggregate volume: there were 6.5 million shares of BHP Group worth $A231.8 million traded today. The aggregate volume was 0.8 times average trading of 7.9 million shares.


BHP GROUP TODAY'S BULLISH SIGNALS

Undervaluation [compared with sector average]:
Earnings Yield
+ Earnings yield of 2.9% is 3.1 times the 10-year bond yield of 0.94%.
Dividend Yield
+ To quote Benjamin Graham: "A dividend yield of at least two-thirds the triple-A bond yield"; the stock's dividend yield is 9.2 times the triple-A bond yield of 0.9%.
+ The relative yield of BHP, defined by its yield of 8.6%, divided by average yield of dividend yielding stocks in the All Ordinaries Index of 5.5% is 156.5%. This suggests BHP Group stock is undervalued in dividend yield terms.
MCap/Total Assets
+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 1.1. Compared with the rest of the market the stock is undervalued.

Undervaluation Indicator and rank of BHP Group in the Australian market:
DescriptionValueRank In Market
Dividend Yield %8.6In Top 9%


Short Selling:
+ The current short volume equalled its own historical average of 0.1%. It plummeted 36.1% from the previous day, plummeted 34.3% from a week ago, a bullish indicator.

Uptrend:
Past Month:
+ In the past three months the stock has hit a new 52-week high seven times, pointing to a significant uptrend.

High Price Performance Indicators and rank of BHP Group in the Australian market:
DescriptionBHP ValueRank In Market
Today's Trading Turnover$A229.3 millionIn Top 1%
MCap$A188.6 billionIn Top 1%
Volatility %1.6In Top Quartile

Oversold/Bullish Signals:
+ The Relative Strength Index (RSI) of 28.6 has breached the oversold line of 30, suggesting the price decrease of 28.6% in the last 14 days is unusually high.
+ The stock is oversold according to the Williams % R indicator of -84.6, suggesting the price is close to its 14-day low of $A35.0.
+ The Stochastic indicator of 6.6 has pierced the oversold line of 20; this indicates the price is close to its 14-day low and is likely to revert to an uptrend.


BHP GROUP TODAY'S BEARISH SIGNALS

Overvaluation [compared with sector average]:
Price/Earnings
+ Price/Earnings of 34.4 [12.0].
Price to Sales
+ Price/Sales of 2.9 [1.8].
Price to Book
+ Price to Book of 2.1 [1.7].
Price to EBITDA
+ Price to EBITDA of 8.6 [7.1].

Overvaluation Indicator and rank of BHP Group in the Australian market:
DescriptionValueRank In Market
Price/Earnings34.4In Bottom Quartile

Downtrend:
Price/Moving Average Price and MACD:
+ The Price/MAP of 1.0 for BHP is lower than the Price/MAP for the All Ordinaries Index of 1.07.
+ The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 36.44 minus the 26-day EMA of 37.69 is negative suggesting a bearish signal. Both the 12-day EMA as well as the 26-day EMA are falling, another bearish signal.
+ The price to 50-day EMAP ratio is 0.9, a bearish indicator. In the past 50 days this ratio has been under 0.9 just twice suggesting a support level. The 50-day EMAP has decreased to $A38.49. A decrease is another bearish indicator.
+ The price to 200-day MAP ratio is 1.0. In the past 200 days this ratio has been under 1.0 just ten times suggesting a support level. The 200-day MAP has decreased to $A35.54. A decrease is another bearish indicator.
Past Week:
+ BHP Group Limited is placed 901/1243 in BuySellSignals' ranking of Australian performers in the past week, a percentile ranking of 28.
+ In the past week, volume was 0.9 times average and the shares were down 2.1%. Friday's close price is at a 0.6% discount to its 5-day Volume Weighted Average Price (VWAP) of $A35.64.
Past Month:
+ The present value of $US1,000 (PV1000) invested one month ago in BHP Group is $A852, for a capital loss of $A148.

Slipping Relative Strength (1mo, 3 mo):
+ In the Australian market of 1,384 stocks and 22 units traded today, the stock has a 6-month relative strength of 40 which means it has underperformed 60.0% of the market.
+ Also, the relative strength percentile is slipping at 38 for 3 months and 17 for 1 month.


BHP GROUP RELATED NEWS

American Depository Receipts

+ BHP Group ADR continues significant downtrend
BHP Group Limited (N:BHP), the International Depository Receipt (IDR) market's largest Mining company by market cap, has decreased 36.0c (0.8%) from its previous trading session to close at $US47.25. Compared with the Bank of New York Mellon Composite ADR Index which fell 0.8 points (0.6%) in the day, the relative price change was -0.1%. There were 2,154,300 ADRs worth $US101.8 million traded today. The volume was 0.9 times the average daily trading volume of 2.3 million ADRs.


RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF $A35.42):
THE PAST WEEK

Snapshot: BHP Group stock was down 75.0c or 2.1% in the past week. Volume in the week was 0.9 times average trading of 36.4 million shares. It underperformed the All Ordinaries index in 5 out of 5 days.
DayBHP GroupClose price [AUD]Price change %Relative change %Comment
ThursdayDrops to seven-month low35.2-0.1-0.5Price fall on falling relative strength
WednesdayLoses $A5.6 billion in MCap35.25-2.9-2.1Steepest Fall; VI*=1.2
TuesdayRises for a second consecutive day, a two-day rise of 0.4%36.30.1-1.0Oversold: close to 14-day low
MondayRises 0.4% from 14-day low36.250.2-0.8Top Rise
FridayDrops to six-month low on average volume36.17-0.6-0.5Price fall on falling relative strength
[Volume Index (VI); 1 is average]

Corporate Wires: BHP Group (BHP) issued one Release in the past week.

August 21: BHP Group announces dividend
BHP Group today announced a final dividend of $A1.15 per share, franked to 100%. The ex dividend date is Thursday, September 05, 2019 and the record date is Friday, September 06, 2019 and it is payable on Wednesday, September 25.

Volatility:
+ BHP Group is at a discount of 16.3% to its 12-month high of $A42.33 on July 03. It is also at a premium of 24.4% to the 12-month low of $A28.46 on November 28, 2018.

ONGOING BULLISH PARAMETERS

Performance:
+ Return on Capital Employed 15.1% [14.2%].
+ As per the Du Pont analysis, Return on Equity [ROE] of 12.8% is better than sector average of 12.7%. ROE is computed as net profit margin of 17.7% times asset turnover [sales/assets] of 0.39 times leverage factor [total assets/shareholders' equity] of 1.8.


Low Debt Indicators:
+ The debt to equity ratio of 44.2% is under a safe benchmark figure of 50%. Moreover, it has improved from 47.2% a year ago.
+ Total Liabilities/EBITDA of 3.5 is comfortably below the Joseph Piotroski benchmark of 5.





Moving Annual Return (Past 5 years)
Based on a dynamic start date of 5 years ago, the real rate of return has averaged 13.1%. 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 29.5%.
BHPClose (AUD)Dividends (AUD)Capital Gain / (Loss) %% YieldAnnual Return %
Aug 2335.423.0419.310.229.5
1 Yr ago29.691.2530.75.536.1
2 Yrs ago22.730.727.8431.7
3 Yrs ago17.791.08(8.8)5.5(3.3)
4 Yrs ago19.51.47(33.5)5(28.4)

Close 5 years ago $A29.31


Increased ADVT past five years
Avg. Daily Volume Traded 12 months ended Aug 23, million shares
YearADVT
20197.3
20186.8
20178.3
201610.8
20156.6
In the past five years, Average Daily Volume of Trading (ADVT) has increased 9.8% to 7.3 million shares.


Increased VWAP
Past five years, 12 months ended Aug 23 (AUD)
YearHigh PriceVWAPLow Price
201942.3334.3728.46
201832.2626.9922.79
201723.9420.8916.88
201621.6116.1411.79
201529.0524.219.36
In the past five years Volume Weighted Average Price (VWAP) has increased by 42.0% to $US34.37. Based on a dynamic start date of five years ago, there have been declines in VWAP in 2 out of 5 years.


Increased Average Daily Turnover
Past five years, 12 months ended Aug 23 (AUD million)
YearAverage Daily Turnover
2019250.1
2018186.0
2017175.6
2016177.6
2015162.4
In the past five years, average daily share turnover has increased 54.0% to $US250.1 million. This suggests increased liquidity.

Turnover Rate & Turnover Period:
+ The turnover rate in the 12 months to date was 34.2% (or a turnover period of 2 years 11 months). The average length of ownership of the stock is 1.7 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.


ONGOING BEARISH PARAMETERS

Performance:
+ Return on Assets 6.9% [7.0%].
+ Net profit margin has averaged 5.4% in the last 3 years. This is lower than the sector average of 16.1% and suggests a low margin of safety.


BHP GROUP SUMMARY FINANCIALS

Dividend History
Trailing 12 months dividend for the 12 months ended August 23 has improved from $US1.47 in 2015 to $US3.04 in 2019; there were 2 declines in the past 5 years. Dividends were up 143.6% for the 12 months ended August 23 from $US1.25 in 2018 to $US3.04 in 2019..

Financials Summary
Year endedJun 2018Jun 2017Jun 2016
Sales (USD B)43.636.130.9
Pretax (USD B)14.811.1(7.3)
Net (USD B)3.75.9(6.4)
EPS (USD)0.6961.107(1.2)
+ Net profit was down 37.1% from US$5.9 billion in 2017 to US$3.7 billion in 2018.
+ Earnings Per Share (EPS) was down 37.1% from $US1.11 to 69.60c.

Half-Yearly Report: Key Parameters
Interim Report (Half Year) Analysis H2 2018: BHP Group reports 87% rise in Half-Yearly Net Profit

BHP Group (ASX:BHP), announced net profit of $US3.8b for the half year-ended 31 December 2018, up 86.8% from the previous corresponding period.


Compared with the previous corresponding period [PCP; H/31 Dec 2017], year-over-year [y.o.y.] Revenue was up 1.1% and Net Profit was up 86.8%.
Half year-ended31 Dec 201831 Dec 2017
EPS, c71.038.0
PCP growth in EPS %86.84-36.67
Net Profit$US3.8b$US2.0b
PCP growth in Net Profit %86.8-37.11

Major changes compared with previous corresponding period [Year-on-Year]:
Favourable Changes:
- Net profit up 86.8% from $US2.0b to $US3.8b
- EBIT to Sales up from 35.3% to 36.5%
- Profit before tax to Sales up from 31.7% to 32.8%
- Profit after tax to Sales up from 9.8% to 18.1%
Unfavourable Changes:
- Interest expenses to Sales up from 3.6% to 3.7%


Annual Report: Key Parameters
FY2018 Annual Report: BHP Billiton profits hit by 37.1% fall

BHP Billiton (ASX:BHP) reported net profit for the year-ended 30 June 2018 of $US3.7b, down 37.1% from $US5.9b in the previous year.



Major changes compared with previous year:
Favourable Changes:
- EBIT Margin up from 30.8% to 33.8%
- EBIT to total assets up from 9.5% to 13.2%
- Total revenue to total assets up from 0.3 to 0.4
- Profit before tax to Sales up from 30.8% to 33.8%
- Interest revenue to Sales up from 0.4% to 0.7%
- Debt to Equity down 6.4% from 0.5 to 0.4
- Current ratio up 35.7% from 1.9 to 2.5
- Total current assets to Total Assets up from 18% to 31.4%
- Total Liabilities to EBITDA of 3.5 compares favourably with the Joseph Piotroski benchmark of <5. This ratio has improved by 28.5% from the previous year's ratio of 4.9.
- Total Liabilities to Operating Cash Flow of 2.8 compares favourably with the Joseph Piotroski benchmark of <4. This ratio has improved by 13.9% from the previous year's ratio of 3.2.
Unfavourable Changes:
- Net profit slumps 37.1% from $US5.9b to $US3.7b
- EPS slumps 36.9% from 111.0c to 70.0c
- Total non-current assets to Total Assets down from 82% to 68.6%
- Fixed Assets to Total Assets down from 68.8% to 60%
- Future income tax benefit to Total Assets down from 4.9% to 3.6%
Note:
- Retained earnings to total assets steady at 45.6%
- Current Inventory to Total Assets up from 3.1% to 3.4%
- Net tangible assets per share steady at $US11.25

Annual Report [Year-on-year comparison: 2018 vs 2017]
Company Name : BHP Billiton Limited (BHP)
June 3020182017Change
Description$US m$US m(%)
Sales Revenue43,63836,135Up 20.8
EBITDA14,75111,137Up 32.5
EBIT14,75111,137Up 32.5
Pre-Tax Profit/(Loss)14,75111,137Up 32.5
Profit/(Loss) after Tax3,7055,890Slumps 37.1
Current Assets35,13021,056Up 66.8
Current Liabilities13,98911,366Up 23.1
Shareholders' Funds60,67062,726Down 3.3
Total Liabilities51,32354,280Down 5.4
Total Assets111,993117,006Down 4.3
Non-Current Debt24,06929,233Down 17.7
Total Debt26,80529,627Down 9.5
Operating Cash Flow18,46116,804Up 9.9
Net Assets60,67062,726Down 3.3
Net Tangible Assets59,89258,758Up 1.9
AuditorKPMG 

Year-on-year comparison of Per Share figures
June 3020182017Change (%)
Description$US $US
Sales8.26.8Up 20.8
EBIT2.82.1Up 32.5
EBITDA2.82.1Up 32.5
Cash32.7Up 13
Shareholders' Funds11.411.8Down 3.3
Total Liabilities9.610.2Down 5.4
Total Assets2122Down 4.3
Non-Current Debt4.55.5Down 17.7
Total Debt55.6Down 9.5
Net Tangible Assets11.211Up 1.9
EPS Final70c111 cSlumps 36.9
   EPS Factor*1.0  
* EPS Factor = Net Profit change/ EPS change

Year-on-year comparison of Performance Ratios
June 3020182017Change (%)
Return on Equity (%)12.810.7Up 19.6
Return on Assets (%)6.95.7Up 21.1
Total debt to net tangible assets (%)44.850.4Down 11.1
Total Liabilities to EBITDA3.54.9Down 28.5
Total Liabilities to Operating Cash Flow2.83.2Down 13.9
Debt/Equity0.40.5Down 6.4
Total Liabilities/Total Assets (Steady % from 0.46 to 0.46)0.50.5Steady
Current Ratio2.51.9Up 35.7
Common Size Ratios by Assets %
Total non-current assets to Total Assets 68.6 82.0 Down 16.3
Fixed Assets to Total Assets 60.0 68.8 Down 12.8
Total current assets to Total Assets 31.4 18.0 Up 74.5
Future income tax benefit to Total Assets 3.6 4.9 Down 27.2
Current Inventory to Total Assets 3.4 3.1 Up 8.3
Common Size Ratios by Sales %
Profit before tax to Sales 33.8 30.8 Up 9.7
Interest revenue to Sales 0.7 0.4 Up 76.9
Tax expenses to Sales (16.1) (12.3) Down 30.9



5-year record of growth and performance:
In the last 5 years Total Revenue averaged $US43B, EBITDA averaged $US13.6B and Net Profit averaged $US4.8B. Compound Annual Growth Rate (CAGR) averaged -9.3% for Total Revenue, -19.9% for Net Profit and -12.1% for EBITDA.
DescriptionAnnual ($US B)5-year Avg ($US B)5-year CAGR %
Total Revenue43.643(9.3)
EBITDA14.813.6(12.1)
Operating Profit14.810.3(6.9)
Net Profit3.74.8(19.9)

5-year record of EBITDA, Operating Profit, Net Profit, ROE, ROA and ROCE
In 2018 Net Profit Margin of 17.7% was above its 5-year Avg of 9.0%
Description20185-year Avg
EBITDA Margin33.827.7
Operating Profit Margin33.820.9
Net Profit Margin17.79
Return on Equity12.86.6
Return on Assets6.93.6
Return on Capital Employed15.19
All Figures in %




CORPORATE PROFILE

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.

Top Management
The chairman is Ken Mackenzie, the chief executive officer is Andrew Mackenzie and the chief financial officer is Peter Beaven.

Issued Capital and MCap
Based on 5,323,762,901 issued shares the market capitalisation is $A188.6 billion.

Vanguard Total World Stock ETF 7701:
The stock was one of 7701 global stocks selected by Vanguard Total World Stock ETF (VT) who sold 6,992 shares in the period May 31, 2019 to Jun 30, 2019 worth $US-276,352 at an estimated Volume Weighted Average Price (VWAP) of $US39.524. As at Jun 30, 2019, the Vanguard Total World Stock ETF he