Bayon Financial

Graeme Cunningham

Independent Insight Provider

Bayon Financial provides industry and company analysis focusing on mid and small cap equity research coverage across a range of sectors including mining, financials and telecoms.

Equity Bottom-Up

<ul>
<li>Press reports indicated that China could temporarily suspend purchases of BHP’s iron ore from Jimblebar, which could account for a mid-single digit percentage of revenue</li>
<li>The UK press reported Geraldine Slattery will likely be BHP’s new CEO, who currently heads BHP's Australian operations and has over three decades with the company</li>
<li>BHP is 4% above our DCF, its 2.8x P/B is not clearly excessive or attractive, and we see risks to iron ore, copper and coal prices from a broad slowdown</li>
</ul>


Press reports indicated that China could temporarily suspend purchases of BHP’s iron ore from Jimblebar, which could account for a mid-single digit percentage of revenue
The UK press reported Geraldine Slattery will likely be BHP’s new CEO, who currently heads BHP's Australian operations and has over three decades with the company
BHP is 4% above our DCF, its 2.8x P/B is not clearly excessive or attractive, and we see risks to iron ore, copper and coal prices from a broad slowdown


BHP: Press Reports of China Iron Ore Suspension, New CEO

Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

<ul>
<li>
<a href="https://www.smartkarma.com/entities/anglo-american-plc" target="_blank" data-smartkarma-citation="entities:21798:1" rel="noopener">Anglo American (AAL LN)</a> - <a href="https://www.smartkarma.com/entities/bhp-group-ltd" target="_blank" data-smartkarma-citation="entities:147:1" rel="noopener">BHP Group Ltd (BHP AU)</a> fails in May 2024; 17 months later, <a href="https://www.smartkarma.com/entities/anglo-american-plc" target="_blank" data-smartkarma-citation="entities:21798:1" rel="noopener">Anglo American (AAL LN)</a> - <a href="https://www.smartkarma.com/entities/teck-resources-ltd-36dbdad5-1430-4d7a-8578-31bc50086f72" target="_blank" data-smartkarma-citation="entities:33343:1" rel="noopener">Teck Resources (TECK US)</a> merge.</li>
<li>The Anglo Teck portfolio will have more than 1.2 million tonnes of annual copper production, anchored by six world-class copper assets with more than 70% copper exposure.</li>
<li>The company will divest its non-core assets, including DeBeers, steelmaking coal, nickel, and other similar assets, and pivot to consolidating/growing its copper operations.</li>
</ul>



Anglo American (AAL LN) - BHP Group Ltd (BHP AU) fails in May 2024; 17 months later, Anglo American (AAL LN) - Teck Resources (TECK US) merge.
The Anglo Teck portfolio will have more than 1.2 million tonnes of annual copper production, anchored by six world-class copper assets with more than 70% copper exposure.
The company will divest its non-core assets, including DeBeers, steelmaking coal, nickel, and other similar assets, and pivot to consolidating/growing its copper operations.


Consolidation of The Copper Kingdom - The Anglo Teck Merger

<ul>
<li>BHP reported strong operations overall for fiscal Q4/25, with iron ore, copper and coal production up yoy and a qoq recovery after rough Q3/25 Australian weather</li>
<li>The company released 2026E guidance, with the low-end indicating production declines for the three major divisions, although this was expected by the market </li>
<li>We remain concerned of potential iron ore and copper price reversals, while the shares trade near our DCF value and at a moderate premium to big cap iron ore </li>
</ul>


BHP reported strong operations overall for fiscal Q4/25, with iron ore, copper and coal production up yoy and a qoq recovery after rough Q3/25 Australian weather
The company released 2026E guidance, with the low-end indicating production declines for the three major divisions, although this was expected by the market 
We remain concerned of potential iron ore and copper price reversals, while the shares trade near our DCF value and at a moderate premium to big cap iron ore 


BHP: Operations Strong in Q4/25 But Looking Fully Valued

<ul>
<li>BHP announced an AUD1.5bn (US$1.0bn) deal with Aurizon for transport logistics for South Australia Copper, which could affect about 5% of EBITDA and reduce costs marginally</li>
<li>The shares declined over the past month on declining iron ore and coal prices, and while copper has risen on supply side issues, we see risks of a H2/25 drop</li>
<li>The company looks about fairly valued on an ROE to P/B comparison versus its Australian peers and the current price is almost exactly inline with our DCF valuation </li>
</ul>


BHP announced an AUD1.5bn (US$1.0bn) deal with Aurizon for transport logistics for South Australia Copper, which could affect about 5% of EBITDA and reduce costs marginally
The shares declined over the past month on declining iron ore and coal prices, and while copper has risen on supply side issues, we see risks of a H2/25 drop
The company looks about fairly valued on an ROE to P/B comparison versus its Australian peers and the current price is almost exactly inline with our DCF valuation 


Marginal Cost Reduction from Copper Shipment Deal

<ul>
<li>Jan-Mar 2025 shipments for Australian miners <a href="https://www.smartkarma.com/entities/rio-tinto-ltd" target="_blank" data-smartkarma-citation="entities:13:1" rel="noopener">RIO AU</a>, <a href="https://www.smartkarma.com/entities/bhp-group-ltd" target="_blank" data-smartkarma-citation="entities:147:1" rel="noopener">BHP AU</a>, and <a href="https://www.smartkarma.com/entities/fortescue-metals-group-ltd" target="_blank" data-smartkarma-citation="entities:41:1" rel="noopener">FMG AU</a>  were sluggish, registering -9.3%,-4.3%, and 0.4% YoY, respectively, due to inclement weather.</li>
<li>
<a href="https://www.smartkarma.com/entities/vale-sa" target="_blank" data-smartkarma-citation="entities:23731:1" rel="noopener">Vale (VALE US)</a> shipments were comparatively better, up 3.6% YoY to 66.1 mn tons. The big four kept their annual production guidance intact. </li>
<li>Positive news came from Vales China clients, as blast furnace utilization passed 90%, and some mills are now making cash profits of 200 RMB/ton. </li>
</ul>


Jan-Mar 2025 shipments for Australian miners RIO AU, BHP AU, and FMG AU  were sluggish, registering -9.3%,-4.3%, and 0.4% YoY, respectively, due to inclement weather.

Vale (VALE US) shipments were comparatively better, up 3.6% YoY to 66.1 mn tons. The big four kept their annual production guidance intact. 
Positive news came from Vales China clients, as blast furnace utilization passed 90%, and some mills are now making cash profits of 200 RMB/ton. 


Gleanings From The Q1 CY25 Shipments Conference Calls Of Vale, Rio, BHP, and FMG

Australia

BHP is an Australian multinational mining and metals company that extracts, processes, and markets iron ore, copper, and metallurgical coal, and is developing a potash business. It is one of the world's largest mining companies by market capitalization. The company was founded in August 1885 and is headquartered in Melbourne, Australia.

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BHP (BHP LN)

BHP: Press Reports of China Iron Ore Suspension, New CEO

Press reports indicate that China could temporarily suspend purchases of BHP's Jimblebar iron ore and a new CEO has likely been chosen, while we...

Graeme Cunningham

Consolidation of The Copper Kingdom - The Anglo Teck Merger

The copper complex is consolidating, with major players pivoting by divesting their non-copper assets. The Anglo-Teck merger is a clear indication...

Sameer Taneja

BHP: Operations Strong in Q4/25 But Looking Fully Valued

While BHP's Q2/25 operations were strong overall, we remain concerned on a potential iron ore and copper price pullback and the shares look fully...

Graeme Cunningham

Marginal Cost Reduction from Copper Shipment Deal

BHP's South Australia Copper logistics and infrastructure deal will marginally reduce costs, downside risks remain for its metal prices and it...

Graeme Cunningham

Gleanings From The Q1 CY25 Shipments Conference Calls Of Vale, Rio, BHP, and FMG

We update the operational/shipment performance of the iron ore majors and outline the importance of tracking their numbers.

Sameer Taneja

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