The BHP Group Ltd (ASX: BHP) share price has tracked down this past month and is now trading 12% lower in that time.
As the fallout from snap lockdowns in China continues to flow through to global equity markets, diversified mining giants like BHP haven't been immune to the spillover.
In wider market moves, the S&P/ASX 300 Metals & Mining Index (ASX: XMM) is down by almost 14% on the month, suggesting weakness in the broader sector.
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Is BHP too exposed to China?
If asking those at JP Morgan, this might not be the case. In a recent note to clients, the broker acknowledged weakness in the miner's most recent earnings, but also noted BHP's cash generating engine.
This ties into themes of inflation, which could be a net positive for BHP in the short term, the broker reckons.
"[T]hese inflationary pressures are supportive for most commodity prices and miners' earnings have higher operational leverage to prices vs costs," it said in a recent note.
"Despite downside risk to earnings due to the highest industry cost inflationary pressures in around 10 years, at spot commodity prices the sector carries significant mark-to-market upgrades; at spot prices, our revised BHP FY22/23E EPS [earnings per share] is +8%/+75% above Bloomberg consensus," it added.
This view is supported by those over at Citi, with the broker baking in considerable upside over the coming periods for BHP as well, not in the least with beefed-up dividends to shareholders.
As reported by the Motley Fool, "Citi is expecting this cash flow to support fully franked dividends per share of ~$4.86 in FY 2022 and then ~$4.89 in FY 2023".
However, this sentiment isn't shared equally, as Kate Howitt, portfolio manager of the Fidelity Australian Opportunities Fund, reckons it could potentially be hurt by its concentration risk in China.
Howitt said she "likes BHP's positioning, its proactive approach to securing social licence to operate and its strong cash flows", she was quoted as saying by the Australian Financial Review.
"[B]ut," she continued, "there's no denying the stock will be pulled around by perceptions of China's economic outlook and by commodity price swings."
BHP has a 12-month consensus price target of $49.12 per share according to Bloomberg data.
In early trading today, the BHP share price is up 1.09% to $45.44. In the last 12 months, BHP shares have slipped around 10% despite a 7% gain this year to date.
