BHP Boasts a World-Class Portfolio of Assets

With higher medium-term metal prices and prospects of softer regulation in Australia, we are increasing our fail value estimate

Mark Taylor 15 October, 2010 | 10:56AM
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Fair Value Estimate: 2445p | Uncertainty Rating: Medium | Economic Moat: Narrow

Thesis (Last updated 13/10/10)
As the world's largest publicly traded mining conglomerate, BHP Billiton (BLT) has the financial wherewithal to weather the boom and bust cycles of the inherently volatile commodity markets. Geographic and product diversification give BHP more stable cash flows and lower operating risk than most of its mining peers. Most revenue comes from the relative safe havens of Australia/New Zealand, North America, and Europe.

This narrow-moat company has several key advantages. It produces a range of commodities from oil and gas to diamonds, and it is a major producer of iron ore, copper, nickel, thermal coal, metallurgical coal, and manganese. It also offers a full suite of conventional energy products. The company can benefit from a rally in any of its product lines. Finally, BHP is a major Australian commodity producer in close proximity to the Asian markets.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
BHP Group PLC1,867.80 GBX-1.27Rating

About Author

Mark Taylor  is an equity analyst at Morningstar.

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