BHP Billition Ltd (BHP) Update

Submitted by Craig Strzelecki on 20 March, 2007 - 17:31

BHP Billition Ltd (BHP) has a Buy 2 broker call and a price target of $34 per share and a valuation of $26 from analyst UBS. The analyst has been invited to BHP's South America site tour and the first day starts with a copper briefing. BHP Billiton is hosting a one week site visit (18 March to 23 March 2007) to a number of its Latin American assets, including Escondida and Spence in Chile and Samarco Iron Ore and the Alumar aluminium smelter and alumina refinery in Brazil. The trip started with a briefing from Diego Hernandez (President BHP Billiton Base Metals) and John Crofts (Marketing Director Base Metals). BHP was positive on copper in 2007 due to: 1) a view that China will need to re-stock in 07 (commercial stocks if not SRB stocks); 2) that Chinese copper in concentrate production which grew c200kt in 06 cannot do this sort of growth again in 07; 3) rising copper premia in China (above what they were in Dec 06) and a turnaround in European premia; 4) potential for further supply side disruptions. Chile is the world's largest copper producing nation. The 3 most important issues in the analyst's view are: 1) BHP is now paying a 4% revenue royalty in Chile after discussions with the government, but with some additional benefits; 2) With the rise in power demand, there has been some risk that Argentina looks to restrict gas supply to Chile in favour of its own power grid; 3) Water scarcity in Northern Chile. UBS' valuation for BHP Billiton $26.00 based on DCF 10% d.r. and their price target is based on 11x CY07E EPS while maintain Buy 2 rating.

BHP Billiton Limited is listed on the Australian Stock Exchange (ASX) under stock code BHP. You can view their investor website here. BHP was listed on the ASX on 13 August, 1885. Charles "Chip" Goodyear is the CEO of BHP Billiton and Don Argus the Chairman. BHP Billiton was created through the Dual Listed Companies (DLC) merger of BHP Limited (now BHP Billiton Limited) and Billiton Plc (now BHP Billiton Plc), which was concluded on 29 June 2001. BHP Billiton Limited and BHP Billiton Plc continue to exist as separate companies, but operate on a combined basis as BHP Billiton. The headquarters of BHP Billiton Limited, and the global headquarters of the combined BHP Billiton Group, are located in Melbourne, Australia. BHP Billiton Plc is located in London, United Kingdom. The company is principally involved in minerals exploration, production and processing (particularly coal, iron ore, copper and manganese ore) and hydrocarbon exploration, production and refining. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade BHP. Check your charts and good luck with your share trading!

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