BHP Billiton Limited (The)

BHP - $12.35: By the time you read this, accusations regarding the quality of management and some of the decisions that have been made during recent years would have once again made the headlines. More on that in the next issue. In the meantime the company has reported that pre-tax profit for the three months to June was up 23.3% to $613m. Some $459m of recurring costs have been cut while foreign exchange profits totaled $50m. Asset sales contributed $79m which together with the FX gains and cost reductions helped to offset difficult trading conditions in the steel, copper and oil divisions. Should asset sales not be deemed as abnormal, afterall, they are hardly recurring? The stock is still trading below our $13.00 BUY price included in our last review on August 14. We still feel comfortable with this recommendation, as sooner or later sentiment towards BHP will change, returning to its 'must have' status.