By Jason Fittler

BHP Billiton is the world's largest diversified resources company. It has around 100 operations in about 25 countries.

BHP occupies industry-leader or near-industry-leader positions in major commodity businesses including aluminium, energy coal and metallurgical coal, copper, manganese, iron ore, uranium, nickel, silver and titanium minerals, and has substantial interests in oil, gas, liquefied natural gas and diamonds.

The company reported last week in line with expectations, however, the results of the individual sectors of BHP were not in line with expectations.

A number of smaller sectors vastly outperformed expectations while some of the core sectors such as Iron Ore did not.

There is no doubt that this stock has a place in any portfolio, the question is how much should you hold.
Our vet present value has increased from A$43.26 to A$43.72ps, following changes to our revenue and costs. Our target price has increased in line with this, from A$51.05 to A$51.59ps.

The key downside risks to our target price are lower-than-forecast metal prices with more leverage to bulk spot prices, and a delay in negotiating new sales terms. There is upside risk of a sustained turnaround in China as infrastructure spend improves the demand for BHP’s products and drives spot prices higher.

At present BHP is trading around the $40 mark, for those who pick up share in the last 12 months or have held them for many years you now have a good gain on the stock.

With a small yield, concerns over China slowing down and the reliance on the spot price, I see now as a good opportunity to take some part profits on this stock. 

For more information on BHP please call us on 07 4771 4577.