23rd January 2014
Stockbrokers are tipping miner BHP Billiton as a ‘buy’ as the group reports record production levels and sentiment towards the mining sector heats up writes Philip Scott.
In its market update published this week, covering the half-year to the end of December the group reported that iron ore and coal production rose by 19% and 22% respectively while and petroleum liquids increased by 9%.
Management maintains the production guidance for the full year. However despite the new highs reached, the numbers were behind analyst expectations.
New appointed chief executive Andrew Mackenzie says: “We intend to differentiate ourselves further by achieving a superior rate of return.”
Brokers are warming towards the FTSE 100 listed firm, and just last week, Citigroup turned positive on the firm, upgrading its recommendation on the stock to a ‘buy’.
This week, analysts at UBS and Deutsche reaffirmed their ‘buy’ recommendations however brokers at HSBC downgrade to neutral.
BHP Billiton, which also produces copper, diamonds and aluminium has endured a rocky period in line with its peers, with the shares off by 12% over the past year but Helal Miah, investment research analyst at The Share Centre is upbeat on the firm’s prospects.
He asserts that investors should be pleased to hear all major projects remain within budget and on schedule and two key projects have delivered first production.
Commenting on the group’s latest report, he says: “Despite the weak trading environment BHP Billiton continues to perform well.
“We recommend investors ‘buy’ BHP Billiton. The company remains our preferred choice amongst the large cap miners due to its diversity, its management’s prudent stance on new capital investment in a weak market and the fact that it pays a fairly attractive dividend. We believe the company remains in a strong position to grow its profits in the longer term as the global economy recovers.”