Blue-chip stocks that edged lower than expectations in May – Should you buy?

Major project developments are progressing well:BHP Billiton Limited (ASX: BHP) has recently highlighted that group’s efforts on cost reductions can support a 10% value uplift from its portfolio. The group’s major growth projects that are valued at up to US$25 billion are expected to offer potential average returns of over 16% at consensus prices. Further, BHP’s Petroleum exploration program is said to have an unrisked value of over US$20 billion. For 9MFY17, BHP reported a record production at Western Australia Iron Ore (WAIO) and five Queensland Coal mines supported by increased wash plant utilization, while truck utilization also improved at New South Wales Energy Coal. However, copper production guidance was reduced to between 1.33 and 1.36 Mt following 44 days of industrial action at Escondida, while metallurgical coal production guidance reduced to be between 39 and 41 Mt due to damage of third party rail infrastructure caused by Cyclone Debbie. Hence, the commissioning of the Escondida Water Supply project and the planned ramp-up of the Los Colorados Extension project are now expected in the September 2017 quarter. While full year production guidance was maintained for petroleum and energy coal, WAIO production guidance was narrowed to 268-272 Mt. At Queensland Coal, the high-return Caval Ridge Southern Circuit latent capacity project was approved and is expected to have full utilization of the 10 Mtpa wash-plant with ramp-up early in the 2019 financial year.   

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