BHP Billiton Wins Contract - Analyst Blog

A subsidiary of mining giant, BHP Billiton Ltd. (BHP), BHP Billiton Petroleum Pty Ltd. agreed with Oceaneering International Inc. (OII) to provide the latter with umbilicals and distribution equipment for the development of the Macedon gas field in Western Australia.

Recently, BHP Billiton withdrew the buy-out offer for Canada's Potash Corp. of Saskatchewan Inc. (POT) and decided to invest a total of $570 million for investment in Western Australia's iron ore production.

The funds that were raised for the bid will also be used for buying back shares worth $13.0 billion, which will increase shareholder value.

BHP Billiton's commitment to long-term growth through its key investment strategy looks promising with 20 projects on hand. During fiscal 2010, BHP delivered five growth projects and approved two major schemes with a total budget of $695 million. Besides, the company made pre-commitments totaling $2,237 million to start work on four more projects. BHP Billiton, at present has 20 projects on hand totaling $25 billion.

Further, we believe that the ongoing industrialization in China, the largest iron-ore importer, will improve the demand and prices of its products in future. Fiscal 2010 bears evidence of the fact that both demand and prices improved due to strong growth in China and India.

BHP Billiton maintains a progressive dividend policy with fiscal 2010 dividend of 87 cents per share, up from 82 cents in fiscal 2009, which represented an increase of 17.1% from fiscal 2008.

A continuous growth in dividend raises shareholder sentiments and confidence, which inspire our optimism about the stock. Thus, we reiterate our Outperform recommendation on the stock. The stock at present retains a Zacks #2 Rank, equivalent to a short-term “Buy” rating.

 
BHP BILLITN LTD (BHP): Free Stock Analysis Report
 
OCEANEERING INT (OII): Free Stock Analysis Report
 
POTASH SASK (POT): Free Stock Analysis Report
 
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