Financial Mail - Investors Monthly - - Opening Bell -

Share price: R293.18 JSE code: BIL

been BUY out­per­form­ing IN GEN­ERAL, the RE­SOURCES Top 40 in­dex HAVE over the past two years and given the du­al­listed and rand-hedged na­ture of th­ese com­pa­nies, re­sources com­pa­nies can be ex­pected to con­tinue out­per­form­ing the lo­cal in­dex at least for the medium term.

BHP Bil­li­ton has man­aged 52-week highs dur­ing Oc­to­ber on the back of higher com­mod­ity prices, ap­par­ently due to the US-China trade war and a weaker rand.

In Au­gust, Bil­li­ton recorded a 33% in­crease in un­der­ly­ing profit on on­go­ing oper­a­tions and de­clared a record large fi­nal div­i­dend. It has made some dras­tic changes to the port­fo­lio of as­sets and mines that it owns to be­come more stream­lined.

This does mean its earn­ings have been kept down by var­i­ous one-off charges re­lat­ing to its re­struc­tur­ing, though those now seem to be out of the way. From here they can ben­e­fit from a dras­ti­cally sim­pler port­fo­lio of high-qual­ity as­sets and per­sis­tently higher com­mod­ity prices.

Bil­li­ton has been in­creas­ing pro­duc­tion across most of the com­modi­ties within its port­fo­lio. Cop­per pro­duc­tion is up 32% over the past year, iron ore pro­duc­tion is up 3% and coal 7%. The com­pany is also plan­ning to sell its shale busi­ness in Arkansas, US for $300m. It in­tends to ei­ther pay the cash out as a div­i­dend or use it to buy back its own shares.

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