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BHP Billiton is a global resources company. Co. operates under a Dual Listed Company (DLC) structure, which consists of the BHP Billiton Limited Group and the BHP Billiton Plc Group, operating as a single economic entity. As of June 30 2017, Co. operated four reportable segments: Petroleum, which is involved in the exploration, development and production of oil and gas; Copper, which is involved in the mining of copper, silver, lead, zinc, molybdenum, uranium and gold; Iron ore, which is involved in the mining of iron ore; and Coal, which is involved in the mining of metallurgical coal and thermal (energy) coal.
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The strong iron ore price is the dominant driver of no-moat-rated BHP Group’s share price. As with our recent review of Rio Tinto, it’s the key reason we see BHP shares as overvalued. That said, BHP is not as expensive as Rio Tinto given the lower relative exposure to iron ore and the importance of oil to BHP’s earnings and fair value estimate. We are more positive on the outlook for oil given the current price is not excessive, unlike iron ore. We retain our AUD 31 per share fair value estimate for BHP. Fiscal 2019 production generally modestly exceeded our forecasts, with the exception of c...
The strong iron ore price is the dominant driver of no-moat-rated BHP Group’s share price. As with our recent review of Rio Tinto, it’s the key reason we see BHP shares as overvalued. That said, BHP is not as expensive as Rio Tinto given the lower relative exposure to iron ore and the importance of oil to BHP’s earnings and fair value estimate. We are more positive on the outlook for oil given the current price is not excessive, unlike iron ore. We retain our AUD 31 per share fair value estimate...
Iron ore and gold prices are flying but we don’t think either will last. Iron ore is benefiting from unusually strong demand and supply disruptions while gold is rising with negative interest rates. The global miners remain overvalued. The sector trades at an average 10% premium to our fair value estimates, versus a 20% premium three months ago. The iron ore miners--BHP, Rio Tinto, Fortescue and Vale, on average are at a 30% premium, while the rest of our coverage is only at a 4% premium. The coal miners have been soft and New Hope and Whitehaven now stand out as being relatively undervalued. ...
Item 3: Approve the Remuneration ReportThe remuneration structure is satisfactory, though accelerated vesting is possible. Potential and actual total variable remuneration exceed guidelines, but not very much. They are moderate in comparison with UK market practice. Overall, the quantum during the year was not excessive. We recommend shareholders vote in favor.
Item 3: Approve the Remuneration Report The structure is weighted more heavily towards short-term performance. One of the performance metrics for the LTI is the payment of sustainable dividends, which is not considered appropriate as executives can potentially influence the payout level. The LTI also includes relative TSR as a performance metric. Nevertheless, the quantum is not excessive and even maximum potential amounts are moderate. On balance, we recommend shareholders vote in favor. Item 4: Approve the Remuneration PolicyThe main concern with the Company's remuneration policy is that pa...
Item 2: Approve the Remuneration ReportThe remuneration structure is unsatisfactory. The main concern at the Company is that the potential maximum incentive pay including the bonus, matching shares on the deferred portion of the bonus and the LTI amounts to 1000% of base salary, which is considered grossly excessive. Actual incentive pay during the year was1.6 times the ECGS limit. Furthermore, variable remuneration is overly reliant on a single performance metric, benchmark profit before tax. A second performance criteria will be used in the coming year. We note that the Company has adjusted ...
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