UBS analysts suggest that BHP Billiton Group may give US$15 billion back to its shareholders over the next three years, in addition to its annual dividend forecast of an average 93 U.S. cents per share, The Australian Financial Review reported June 9.
The Swiss bank said it doubted the company's claim that it can deliver value growth of 50% while upgrading the mining giant to a "buy" rating from "neutral."
Analyst Glyn Lawcock termed the 50% value growth plan, using existing assets and without any increase in commodity prices, as ambitious.
"There are also elements of BHP's plan, which are already included in our forecast," Lawcock said. "We do however see 10% to 15% upside to our base case [net present value] based on elements of BHP's plan, which are not included in our forecasts."
Lawcock, however, is confident in the company's ability to increase shareholder returns as soon as fiscal 2018, even after paying 50% of underlying attributable profits every six months under the stated dividend policy, with 60% forecast.
The UBS analyst also predicted that the company may look to buy back 19% of its Australian shares on issue between fiscal 2018 and fiscal 2020.
The forecasts are based on average iron ore prices of US$57 per tonne in 2018 and 2019 and US$58 per tonne in 2020, and an average oil price of US$57 per barrel in 2018, US$62 per barrel in 2019 and US$67 per barrel in 2020.
The analysis assumed a copper price of US$3.30 per pound over the next three years, with average coking coal prices of US$120 per tonne in 2018 and US$105 per tonne in 2019.
Lawcock estimated the net present value of BHP's U.S. shale assets at US$4.5 billion while agreeing that, considering recent sales in the sector, the business segment could fetch US$9.5 billion for the company.