Company Profile

Ord Minnett Research 26 September 2021

BHP Group Limited (BHP.AX)

BHP Group Limited (BHP, formerly BHP Billiton Limited) is a diversified Snapshot natural resources company producing commodities along with substantial interests in oil and gas. BHP's principal business lines are mineral exploration Last Price $37.72 Market Cap. $111,283 million and production, as well as petroleum exploration, production and refining. 52 Week High/Low $54.55 - $33.73 BHP's assets, operations and interests are separated into Petroleum and Shares on issue 2,950 million Potash, Copper, Iron ore, Coal and Nickel. GICS Industry Metals & Mining Mineral Australia: It includes operated assets in Western Australia, Key Dates Queensland, New South Wales and South Australia. Olympic Dam began Accounts Close 30 June operating its third access ramp or decline, opening up the southern mine AGM 07 Nov 2019 area. Western Australia Iron Ore is an integrated system of four processing Listing Date 13 Aug 1885 hubs and five mines connected by more than 1,000 kilometres of rail infrastructure and port facilities in the Pilbara region. Queensland Coal Investment Fundamentals comprises the BHP Alliance (BMA) and BHP Mitsui Coal assets in 2021A 2022E 2023E 2024E the in Central Queensland, Australia. In FY2019, Nickel West Sales Rev. $m 83,225 91,851 88,173 79,047 signed an agreement with the traditional owners of the land surrounding and Rep Profit $m 15,131.4 30,366.9 28,219.2 22,763.5 used by Nickel West’s operations in the northern Goldfields. Norm Profit $m 23,369.1 30,572.8 28,219.2 22,763.5 Minerals Americas: It includes projects, operated assets and non-operated Rep EPS ¢ 305.9 604.5 557.9 450.1 joint ventures in Canada, Chile, Peru, the United States, Colombia and Brazil. Norm EPS ¢ 462.0 604.5 557.9 450.1 Escondida copper production in FY2019 decreased by 6 per cent to 1,135kt. Rep PE x 10.8 6.3 6.8 8.4 Pampa Norte copper production for FY2019 decreased by 7 per cent to 247 Norm PE x 8.2 6.3 6.8 8.4 kt, mostly due to a fire event in the electrowinning plant at Spence in DPS ¢ 411.9 483.1 446.1 359.9 September 2018, which had a production impact of 18 kt. Yield % 8.3 12.8 11.8 9.5 Petroleum: On 13 February 2019, the BHP Board approved the development Franking % 100 100 100 100 of the Atlantis Phase 3 project in the US Gulf of Mexico. The project includes ROE % 31.7 41.7 38.8 30.9 a subsea tie back of eight new production wells and is expected to increase Source: Ord Minnett production by an estimated 38,000 gross barrels of oil equivalent per day at Share Price Chart its peak. Commercial: The function is organised around their core value chain activities - Sales and Marketing; Maritime and Supply Chain Excellence; Procurement; and Warehousing Inventory and Logistics and Property - supported by short- and long-term market insights, strategy and planning activities.

Total Return on $10,000 Investment

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Ratios and Substantial Shareholders Recent Operational History 2017A 2018A 2019A 2020A 2021A 17 August 2021 - BHP Group announced that the Company and Profitability Ratios Woodside Petroleum have entered into a merger commitment deed to EBITDA Margin % 53.91 53.13 52.40 51.21 61.17 combine their respective oil and gas portfolios by an all-stock merger EBIT Margin % 33.20 38.72 39.24 36.98 49.95 (the "Transaction") to create a global independent energy company by Net Profit Margin % 18.52 22.56 22.37 21.36 28.12 production. On completion of the Transaction, the Company's oil and Return on Equity % 12.38 17.71 20.97 19.13 33.36 gas business would merge with Woodside, and Woodside would issue Return on Assets % 7.34 10.23 11.39 10.00 17.27 new shares to be distributed to Company's shareholders. The Debt/Safety Ratios expanded Woodside would be owned 52 per cent by existing Net Debt/Equity % 26.02 18.02 17.78 26.07 10.32 Woodside shareholders and 48 per cent by existing Company Interest Cover x 8.88 13.57 16.33 17.42 23.28 shareholders. The Transaction is subject to confirmatory due diligence, negotiation and execution of full form transaction documents, and Top 5 Substantial Shareholders satisfaction of conditions precedent including shareholder, regulatory Vanguard Group 6.0% and other approvals. BlackRock Group 6.0% 16 August 2021 - BHP Group noted on Woodside speculation regarding a potential transaction between Woodside and BHP Petroleum. Woodside continuously reviews the composition of its asset portfolio and opportunities to create and deliver value for shareholders. It noted that Woodside is engaged in discussions with Company Source: Morningstar regarding a potential merger involving its entire petroleum business through a distribution of Woodside shares to Company shareholders. Principals & Directors 16 August 2021 - BHP Group noted the press speculation regarding Petroleum business. The Company reported it regularly reviews its Principals portfolio of assets in order to seek opportunities to maximise long-term Company Secretary Ms Stefanie Wilkinson shareholder value. It confirmed that it has initiated a strategic review of Mr John-Paul Santamaria Petroleum business to re-assess its position and long-term strategic fit Mr Prakash Kakkad in the Company portfolio. One option is a potential merger of the Directors Petroleum business with Woodside Petroleum (Woodside) and a distribution of Woodside shares to Company shareholders. While Mr Gary Goldberg ( Non-Executive Director ) discussions between the parties are currently progressing, no Mr Malcolm William Broomhead ( Non-Executive Director ) agreement has been reached on any such transaction. Ms Christine Elizabeth O'Reilly ( Non-Executive Director ) Mr Kenneth Norman MacKenzie ( Non-Executive Director,Non-Executive Chairman ) Mr Terence (Terry) James Bowen ( Non-Executive Director ) Mr Ian David Cockerill ( Non-Executive Director ) Ms Anita Frew ( Non-Executive Director ) Mr John Mogford ( Non-Executive Director ) Ms Susan Kilsby ( Non-Executive Director ) Mr ( Chief Executive Officer,Executive Director ) Mr Dion Weisler ( Non-Executive Director ) Ms Xiaoqun Clever ( Non-Executive Director )

Source: Morningstar

Peer Analysis Market Price PE (x) EPS Growth Dividend Yield Franking Cap %%% Company Name Code Recommendation ($m) ($) 2022 2023 2022 2023 2022 2023 2022 2023 BHP Group BHP 111,283 37.72 6.3 6.8 30.8 -7.7 12.8 11.8 100 100 Fortescue Metals FMG Buy 47,231 15.34 5.3 5.7 -36.5 -6.8 13.9 14.0 100 100 Rio Tinto RIO Buy 36,873 99.33 6.1 6.6 -18.2 -7.3 13.1 12.0 100 100 James Hardie JHX Accumulate 23,463 52.71 29.7 25.4 28.7 16.9 1.9 2.4 -- -- Newcrest Mining NCM Buy 18,871 23.09 15.0 12.0 -20.8 25.0 1.8 2.6 -- -- S32 Buy 15,823 3.39 6.2 7.4 284.8 -16.1 8.0 6.8 100 100 Amcor AMC Accumulate 13,429 16.15 14.8 14.4 8.0 3.0 4.1 4.2 -- -- BlueScope Steel BSL Buy 10,897 21.63 3.1 3.5 200.5 -10.7 3.6 3.6 -- 100 Northern Star Resources NST Buy 10,199 8.76 21.6 16.6 -0.7 30.6 3.1 3.5 -- -- Mineral Resources MIN Hold 8,763 46.40 10.6 9.5 -23.5 11.2 3.8 4.2 -- -- OZ Minerals OZL Lighten 7,731 23.17 19.8 20.1 -25.9 -1.2 1.7 1.7 100 100 IGO IGO Lighten 6,982 9.22 55.6 59.2 -29.2 -6.1 1.1 1.1 -- -- Boral BLD Lighten 6,718 6.09 66.3 41.4 -82.6 60.2 0.9 1.4 100 100

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Please contact your Ord Minnett Adviser for further information on our document. Guide to Ord Minnett recommendations Our recommendations are based on the total return of a stock – nominal dividend yield plus capital appreciation – and have a 12-month time horizon. SPECULATIVE BUY We expect the stock’s total return (nominal yield plus capital appreciation) to exceed 20% over 12 months. The investment may have a strong capital appreciation but also has high degree of risk and there is a significant risk of capital loss. BUY The stock’s total return (nominal dividend yield plus capital appreciation) is expected to exceed 15% over the next 12 months. ACCUMULATE We expect a total return of between 5% and 15%. Investors should consider adding to holdings or taking a position in the stock on share price weakness. HOLD We expect the stock to return between 0% and 5%, and believe the stock is fairly priced. LIGHTEN We expect the stock’s return to be between 0% and negative 15%. Investors should consider decreasing their holdings. SELL We expect the total return to lose 15% or more. RISK ASSESSMENT Classified as Lower, Medium or Higher, the risk assessment denotes the relative assessment of an individual stock’s risk based on an appraisal of its disclosed financial information, historical volatility of its share price, nature of its operations and other relevant quantitative and qualitative criteria. Risk is assessed by comparison with other Australian stocks, not across other asset classes such as Cash or Fixed Interest.

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