Company Interview / Why John thinks BHP has further to fall

Key points:

Lockton expects further BHP (ASX:BHP) weakness as Asian commodity markets resetTransurban (ASX:TCL) and APA Group (ASX:APA) cut to hold on valuation and yield considerationsChallenger (ASX:CGF) sale seen as positive step towards a simpler, annuities‑focused business

John Lockton from Sandstone Insights states that BHP (ASX:BHP) faces near‑term pressure as weaker Chinese data, softer base metals and falling iron ore prices weigh on sentiment. Lockton views the potash project as a long‑dated, lower‑return side story, with recent cost blowouts cutting expected ROE to around 11%. He suggests the recent share price weakness is a catch‑up to sharp declines in Asian commodity stocks and would not be surprised to see BHP pull back a further mid to high single digits over coming weeks.

Lockton outlines rating changes on key yield names. Transurban (ASX:TCL) moves from buy to hold on valuation grounds, with the dividend yield back near its long‑term average and uncertainty over delayed New South Wales toll reform ahead of the state election. APA Group ($APA) is also shifted to hold after strong gains driven by its inflation‑linked, defensive dividend profile.

On Challenger (ASX:CGF), Lockton supports the sale of its funds management arm, arguing it streamlines the group back to its annuities core and could support capital returns and faster annuity sales as demographic tailwinds build. In financials, he sees tactical upside in banks, highlighting NAB ($NAB) post‑DRP as his preferred pick, and expects CBA (ASX:CBA) to show strong demand for international equities via CommSec.