BHP Billiton share price slightly up as miner implements South32 demerger

BHP Billiton’s (LON:BLT) share price edged higher this morning, after the mining company announced that it had implemented the demerger of its subsidiary South32 (LON:S32). According to a regulatory filing released today, shares in the spin-off company have been distributed to eligible BHP Billiton shareholders. The number of South32 ordinary shares on issue was 5,323,762,901 as of yesterday, the statement revealed.

Earlier this year, BHP decided to spin off its alumina, aluminium, nickel, silver and lead assets to cut costs and focus on its core divisions such as iron ore, copper and energy resources including coal, oil and gas. South32, named after the line of latitude joining BHP’s main assets in Australia and South Africa, began trading on May 18 with a market value of about $9 billion (£6 billion). The shares began trading in Australia at A$2.13, compared to the A$2.00 to A$3.00 range forecast by analysts, and ended their first day at A$2.09. In London, South32 shares opened at 104p and had risen to 118p by the end of the session.
So far today, the demerged company has been trading around three percent lower in London, despite two upbeat broker notes. Deutsche Bank commenced coverage on South32 with a ‘hold’ rating and 126p price target. “The listing of South32 has created a $10bn diversified global mid-cap miner with a strong balance sheet and reasonable cash flow from what we think is a mixed asset base,” Deutsche said. The bank is positive on the medium-term outlook and forecasts earnings to double over the next five years.
Jefferies also initiated coverage on the stock today, with a ‘buy’ rating and 145p price target. The broker also pointed to South32’s strong balance sheet and said that this, along with the solid free cash flow, justified the ‘buy’ rating despite the lack of organic growth.
As of 12:20 BST, BHP Billiton’s share price was 0.28 percent higher at 1,412.50p, recovering from earlier declines.
As of 13:03 BST, Tuesday, 26 May, BHP Billiton plc share price is 1,415.00p.