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1. Company Snapshot

1.a. Company Description

BHP Group Limited operates as a resources company in Australia, Europe, China, Japan, India, South Korea, the rest of Asia, North America, South America, and internationally.The company operates through Copper, Iron Ore, and Coal segments.It engages in the mining of copper, silver, zinc, molybdenum, uranium, gold, iron ore, and metallurgical and energy coal.


The company is also involved in mining, smelting, and refining of nickel; and potash development activities.In addition, it provides towing, freight, marketing and trading, marketing support, finance, administrative, and other services.The company was founded in 1851 and is headquartered in Melbourne, Australia.

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1.b. Last Insights on BHP

BHP Group Limited's recent performance was driven by several positive factors. The company's record iron ore and copper production, reported in its FY2025 earnings call, demonstrate its operational strength. Additionally, BHP's strategic focus on decarbonization efforts and navigating inflationary pressures position it well for long-term sustainability. The company's plan to consider acquisitions in commodities like copper and potash also signals growth opportunities. Furthermore, a bigger-than-expected final dividend declaration and a raised debt target may enhance shareholder value. BHP's involvement in assessing the development of Carbon Capture, Utilisation and Storage (CCUS) hubs across Asia also underscores its commitment to innovation.

1.c. Company Highlights

2. BHP Group: Strong First-Half 2025 Performance Driven by Operational Excellence

BHP Group delivered a robust first-half 2025 performance, showcasing its operational prowess and strategic focus on future-facing commodities. The company reported an underlying EBITDA of $12.4 billion, with margins expanding to 51%, reflecting strong cost management and pricing discipline. The dividend of $0.50 per share underscores BHP's commitment to returning value to shareholders, while net debt of $11.8 billion remained within its targeted range, highlighting a conservative balance sheet with a net debt/EBITDA ratio of 0.4x.

Publication Date: Apr -01

📋 Highlights
  • Strong Financial Performance: Underlying EBITDA of $12.4 billion, margins of 51%, and a dividend of $0.50 per share, with net debt at $11.8 billion within target range.
  • Copper Production Growth: Copper production expected to grow 24% over three years, with plans to expand to over 2 million tonnes annually, and Jansen potash project on track for 2025.
  • Capital Allocation Discipline: $5.2 billion spent on capital and exploration, prioritizing copper and potash, with $83 billion returned to shareholders since 2016.
  • Strategic Partnerships and Expansion: Vicuña joint venture with Lundin Mining highlights growth potential, and Samarco dam resolution provides financial clarity and continuity.
  • Robust Economic Outlook: Strong global demand for commodities driven by urbanization and energy transition, positioning BHP for future growth and resilience.

Operational Excellence and Growth in Copper

BHP's operational performance in the first half of 2025 was exceptional, with copper production set to grow by 24% over the next three years. The company's ambitious plans to expand copper production to over 2 million tonnes annually position it as a key player in the energy transition. The Jansen potash project, on track for a 2025 startup, further diversifies BHP's portfolio, enhancing resilience against commodity price volatility. Additionally, the resolution of the Samarco dam failure with Brazilian authorities provides financial clarity, reducing potential risks and unlocking value for shareholders.

Capital Allocation and Strategic Growth

BHP demonstrated disciplined capital allocation, investing $5.2 billion in capital and exploration, with a focus on high-return projects such as its Vicuña joint venture with Lundin Mining. The company's track record of returning $83 billion to shareholders since 2016 underscores its commitment to balancing growth with shareholder value creation. This strategic approach has been a hallmark of Ken MacKenzie's leadership, and the transition to Ross McEwan as Chair ensures continuity in executing BHP's long-term strategy.

Economic Outlook and Valuation

BHP's strong financial performance aligns with its strategic focus on commodities critical to the energy transition, such as copper and potash. The company's valuation metrics, including a trailing P/E ratio of 10.89 and a P/B ratio of 2.72, suggest the market is pricing in strong fundamentals and future growth potential. BHP's free cash flow yield of 8.38% and dividend yield of 4.84% further enhance its appeal for income-focused investors. With a ROIC of 15.63% and ROE of 25.21%, BHP's capital efficiency and profitability remain industry-leading.

Outlook

BHP's first-half 2025 results underscore its position as a leading resource company well-positioned to benefit from global trends in urbanization and the energy transition. With a strong balance sheet, disciplined capital allocation, and a focus on future-facing commodities, BHP is well-equipped to deliver sustained value to shareholders. The company's ability to execute on its strategic priorities, coupled with attractive valuation metrics, reinforces its appeal as a long-term investment opportunity in the resources sector.

3. NewsRoom

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BHP Just Blinked: The $60 Billion Copper War Takes a Shocking Turn

Nov -24

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Stocks to Watch Monday: Alibaba, Tesla, Alphabet, Performance Food

Nov -24

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BHP scraps Anglo American copper mega-merger after repeat failed bids

Nov -24

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BHP walks away from late attempt at Anglo American takeover

Nov -24

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Basic Materials Roundup: Market Talk

Nov -24

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BHP abandons latest takeover approach for mining rival Anglo American

Nov -24

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BHP Ends New Anglo Takeover Bid After Rejection

Nov -24

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BHP Says It's 'No Longer Considering' Anglo Takeover

Nov -24

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.00%)

6. Segments

Iron Ore

Expected Growth: 3.5%

The growth of the iron ore segment is expected to be moderate due to steady demand from China and other developing economies. However, supply chain disruptions and increasing competition from other miners may cap growth at 3.5%, slightly below the global growth hypothesis of 4.0%.

Copper

Expected Growth: 4.5%

Copper demand is expected to be strong, driven by growth in renewable energy, electric vehicles, and infrastructure development. As a result, the copper segment is expected to grow at 4.5%, above the global growth hypothesis of 4.0%, due to its increasing demand and limited supply growth.

Coal

Expected Growth: 2.5%

The coal segment is expected to experience slower growth due to increasing competition from renewable energy sources, declining demand from developed economies, and environmental regulations. As a result, growth is expected to be 2.5%, below the global growth hypothesis of 4.0%.

Group and Unallocated Items/Eliminations

Expected Growth: 3.0%

The petroleum segment is expected to experience moderate growth due to steady demand for energy and limited supply growth. However, the growth will be impacted by fluctuations in oil prices, making 3.0% growth a reasonable estimate, below the global growth hypothesis of 4.0%.

7. Detailed Products

Iron Ore

BHP Group Limited is one of the largest iron ore producers in the world, with operations in Western Australia and Brazil. Iron ore is the primary ingredient in steel production.

Copper

BHP Group Limited is a significant copper producer, with operations in Chile, Peru, and Australia. Copper is a highly conductive metal used in electrical wiring, electronics, and construction.

Coal

BHP Group Limited is a major coal producer, with operations in Australia, Colombia, and South Africa. Coal is a fossil fuel used to generate electricity and produce steel.

Nickel

BHP Group Limited is a significant nickel producer, with operations in Australia and Canada. Nickel is a corrosion-resistant metal used in stainless steel production and other alloys.

Metallurgical Coal

BHP Group Limited is a major metallurgical coal producer, with operations in Australia and Colombia. Metallurgical coal is used in steel production.

Energy Coal

BHP Group Limited is a significant energy coal producer, with operations in Australia, Colombia, and South Africa. Energy coal is used to generate electricity.

Uranium

BHP Group Limited is a significant uranium producer, with operations in Australia and Canada. Uranium is used as fuel for nuclear power generation.

Silver

BHP Group Limited is a significant silver producer, with operations in Chile and Peru. Silver is a highly conductive metal used in electronics, solar panels, and jewelry.

Gold

BHP Group Limited is a significant gold producer, with operations in Australia and Chile. Gold is a highly valued metal used in jewelry, coins, and electronics.

8. BHP Group Limited's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for BHP Group Limited is moderate due to the availability of alternative materials and recycling options, which can reduce the demand for its products.

Bargaining Power Of Customers

The bargaining power of customers is low due to the lack of concentration in the customer base and the high switching costs, giving BHP Group Limited a strong negotiating position.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate due to the presence of multiple suppliers and the availability of alternative sources, but the high demand for certain raw materials gives suppliers some negotiating power.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry, including the need for significant capital investment and the complexity of the mining industry.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several major players in the industry, leading to intense competition for market share and pricing power.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 32.53%
Debt Cost 8.24%
Equity Weight 67.47%
Equity Cost 8.24%
WACC 8.24%
Leverage 48.22%

11. Quality Control: BHP Group Limited passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

22.17$

Current Price

22.17$

Potential

-0.00%

Expected Cash-Flows