Buy, Sell, Hold: BHP, Saracen and Explaurum

BHP downgraded; Saracen upgraded; and coverage initiated on Explaurum.

Buy, Sell, Hold: BHP, Saracen and Explaurum Buy, Sell, Hold: BHP, Saracen and Explaurum Buy, Sell, Hold: BHP, Saracen and Explaurum Buy, Sell, Hold: BHP, Saracen and Explaurum Buy, Sell, Hold: BHP, Saracen and Explaurum

BHP (BHP)

Analyst: Paul Young, Deutsche Bank

Recommendation: Hold (previously buy)

Price target: A$31.50

Thursday’s close: $30.20

Reason: Value and returns strategy priced in, downgrade to HOLD

Comments: BHP has reported underlying 1H FY18 NPAT of US$4.1 billion, 2% below DBe and 5% below consensus ($4.3 billion) on higher met coal, copper and iron ore costs. Both FY18 and medium term unit cost targets now appear challenging. The interim dividend of 55c/share (72% payout) was ahead of our 46c. Net debt reduced to $15.4 billion (DBe $14.2 billion), BHP is targeting the lower half of the $10-15 billion range. This impli...