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BHP Group share price: H1 results update and technical analysis view

In this article we review the BHP Group Interim (H1 2021) earnings results, as well as identify  technical analysis trading opportunities on the various listings of the company.

The BHP Group results update

A significantly higher iron ore and copper price has bolstered interim earnings for the BHP Group, who now look to payout their highest half year dividend on record. Elevated iron ore prices in particular are extremely earnings accretive for the group and of course its diversified mining sector peers, most notably: Rio Tinto, Vale, Anglo American PLC and Fortescue Metals. The BHP Group has seen record output at its Western Australia Iron Ore (WAIO) operations over the reporting period. A pick up in Chinese demand ‘post-Covid’, has buoyed prices of the steel-making ingredient. China remains by far the largest importer of iron ore (along with most base / industrial metals) and demand from the region is expected (by the BHP Group) to continue for at least the remainder of the financial year.

A summary of the salient features from the interim results release are as follows:

  • Underlying EBITDA $14.7 billion at a margin of 59%
  • H1 2021 underlying profit (from continuing operations) increased to $6.04 billion from $5.19 billion in H1 2020
  • Net operating cash flow $9.4 billion
  • Free cash flow $5.2 billion
  • Interim dividend declared of $1.01 per share (H1 2020 dividend $0.65)

BHP Group share price: technical analysis

The below technical analysis looks at the Australian (ASX), London (LSE) and South African (JSE) listings of the BHP Group share price.

The BHP Group (ASX)

The BHP Group share price has gapped higher after the results announcement. The gap higher shows a bullish momentum to the price after finding support from the channel drawn on our chart. The recent high at $47.50 becomes the initial upside target from the move. A break above this level (confirmed with a close), would target further gains towards channel resistance currently considered at $50.05. Should the share price instead move to close below trend line/channel support, the bullish indications would be deemed to have failed.

The BHP Group (LSE)

As with the BHP ASX price, the LSE pricing shows a gap higher (grey box), highlighting a bullish momentum to the price after finding support from the channel drawn on our chart. The recent high at 2245 becomes the initial upside target from the move, while a break above this level (confirmed with a close), would target further gains towards channel resistance currently considered at the 2365 level. Should the share price instead move to close below trend line/channel support, the bullish indications would be deemed to have failed.

The BHP Group (JSE)

The JSE listing of the BHP Group also shows a reversal off trendline/channel support, although at the time of writing, a less pronounced gap higher. The recent high at 46905 becomes the initial upside target from the move, a break of which (confirmed with a close) would see channel resistance at around 47700 a further resistance target. A move below trend line/channel support would instead consider the failure of the bullish assumptions.

In summary

  • The BHP Group has posted a robust set of results with strong margins and decent growth in profit from continuing operations
  • Earnings for the group have been boosted by higher iron ore and copper prices which have seen improved demand from China
  • Demand for base metals is expected to continue for at least the remainder of the financial year
  • The group has posted strong operational and free cash flow figures
  • BHP has declared a record interim dividend
  • The ASX, LSE and JSE listings of the BHP Group share price show clear uptrends with a short-term bullish momentum targeting near-term highs

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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