BHP Group: Solid Execution, But Valuation Limits Upside

FY2026 production and cost guidance were broadly achieved, with iron ore and copper output in line with expectations and realised copper prices materially above consensus. Net debt declined to approximately $9 billion from $14.7 billion in H1, supported by free cash flow, working-capital improvements and asset disposals. FY2027 guidance points to only modest iron ore growth and lower copper production, while major maintenance and development projects will require significant CAPEX. BHP valuation is high, but the supportive commodity-price environment leads us to retain a Neutral rather than a Sell rating.

Following our Q2 update on Rio Tinto with a Limited Upside and A Neutral View, we are back to comment on BHP Group ( BHP )( BHPLF ). At that time, our strategy was to be long on Rio