BHP - Astonishing result

[Viking]

BHP dropped 10cents today on the back of an astonishing result~ did I missed something?

- Underlying EBITDA up 27% to US$23B
- Underlying EBIT up 31% to US$20.1B (up from US$15.3B in 2006)
- Operating cash flow to US$20.2B (up from US$14.6B in 2006)
- Underlying EBIT margin and ROCE increased to 48% and 38%
- 55% volume growth
- Final dividend increase 46% (US 27c)
- not to mention the share buyback pretty much half way there~
- Significant volume growth expected for Petroleum and others~ (I do favour the increase in petroleum)
- of course Ni and Al had a good run this year~
- the outlook for 2008 isn't too bad either
.....etc.....

I thought we shall have a super run today~ but for some reason we didn't see that happen today~ just wondering, was the market slow catching up or did I missed something?

[shasta]

BHP dropped 10cents today on the back of an astonishing result~ did I missed something?

- Underlying EBITDA up 27% to US$23B
- Underlying EBIT up 31% to US$20.1B (up from US$15.3B in 2006)
- Operating cash flow to US$20.2B (up from US$14.6B in 2006)
- Underlying EBIT margin and ROCE increased to 48% and 38%
- 55% volume growth
- Final dividend increase 46% (US 27c)
- not to mention the share buyback pretty much half way there~
- Significant volume growth expected for Petroleum and others~ (I do favour the increase in petroleum)
- of course Ni and Al had a good run this year~
- the outlook for 2008 isn't too bad either
.....etc.....

I thought we shall have a super run today~ but for some reason we didn't see that happen today~ just wondering, was the market slow catching up or did I missed something?

The million analysts that follow the large caps like BHP, would have had consensus for the 2008/09 earnings/profit etc & the results/forward looking may not have met expectations...:confused:

I wouldnt bother trying to rationalize what the market thinks, just profit from it!:D

What did BHP's SP do in the run up to the ann?

Possibly a bit of buy into the ann & sell on its release?

[Viking]

yip, massive profit

about $18.5 billion NZD after tax!


or to put that into perspective

1 years net profit at BHP buys.........

Telecom $8.6b

Contact Energy $5.2b

Fletcher Building $5.6b


:eek:

:D that is a very cool way of looking at their massive profit!!!
Imagine they really do that~~ buy out our 3 blue chip in NZX, that could be interesting!

[JBmurc]

mmmmmmmmmmmmmm...Was very close to taking a CFD long in BHP on close yesterday nice 100% profit if I had

[Viking]

JBmurc, I was very temped to do the same, but was quite reserved since bleeding badly in the last few weeks~ hehehe...

Well, that's more like it~ the market react little slower than us~ :) to be honest by the time we digested the report, didn't had that much time on hand to translate that into action either... :P

[Hoags]

Thats funny I was also about to click the CFD buy button but BHP ceased trading at 1557 AEST before the announcement at 1600 AEST.

[stevo1]

ok bhp's profit could buy telecom contact fletcher building but obviously they are not going to .so with cash to burn and the stated intention of acquistion who are they going to buy any thoughts on possible takeover targets?

[JBmurc]

JBM would be one -blue chip nickel company-cheap at current low nickel prices

[Viking]

ok bhp's profit could buy telecom contact fletcher building but obviously they are not going to .so with cash to burn and the stated intention of acquistion who are they going to buy any thoughts on possible takeover targets?

What about ADY? They could certainly add some Li into their portfolio~
Or just add to their current Ni and buy MCR or JBM like JBmurc mentioned.

Disc: Hold ADY/MCR

[winner69]

Hit the $40 mark .... good stuff

[younga2]

Couldn't believe my eyes when came home... thru the $40 mark - let's see if it pushes thru $41 tommorrow. With the rate cut, it should be bullish more.

[younga2]

BHP has gone berserk ... tried to get some when they hit $42.10 - ended up getting some at $42.90 ... I heard they had fuond a new gold resource at the olympic dam - the biggest of it's kind... anyone on this one with me??

[georgeofthejungle]

BHP has gone berserk ... tried to get some when they hit $42.10 - ended up getting some at $42.90 ... I heard they had fuond a new gold resource at the olympic dam - the biggest of it's kind... anyone on this one with me??

I'm on board this and enjoying the ride! Apparently all will be revealed on Wednesday...hopefully not a case of buy on the rumour and sell on the fact.

[Huang Chung]

5.2% certainly is a big move for this lumbering giant. If it can maintain the gain, it probably bodes well for other resource stock. :)

[younga2]

Nice rise overnite in the US for BHP - another 3.5% gain.

[voltage]

Have done well with BHP still low PE. Core stock in any portfolio. I wish to compliment with another 2 top stocks in this area. Can I have a few suggestions must have top quality management or is there a good fund that has a good selection of resource stocks.
My choice at the moment would probably be woodside petr followed by a gold stock.

[soltrader]

Certainly not a poor man's pick this one.
Would only be able to afford buying 5 shares at that price.

[Viking]

Broke through $43 yesterday's close~ that's an all-time high doesn't it?

This is the one stock I love along with FBU.NZX...
sorry Tricha, I know you said, we should not fall in love with any of those resource stocks :P can't help it~ :D

[whatsup]

Viking , BHP was trading in the $25.00 range in the mid 1960's ,I wonder what that would be in todays inflation adjusted $'s? $1000.00!!? per share.

[Viking]

Good point~
Lucky me, I started with this one only about a year~ when its also (funny that) around $25.00 :) maybe that's why I like it... though the profit has not been as quickly as some other ones I traded earlier I must say~.

Maybe afterall, Tricha's advice is very sound~ hehehe don't fall in love with any of them.

How much higher do you think it will go, Whatsup?

[pierre]

Yep - I bought some in January when the Sp plunged to $24.50 - didn't buy enough though! However am enjoying the ride right now. Let's hope it rolls on.

[mark100]

whatsup you should probably check how many share splits and bonus issues BHP has done since the 60's. $25 in the 60's is not comparable against today's current price

[younga2]

Hi
another nice rise today ... something must be in the pipeline. Lets see what happens in the US tonite.
Voltage, a possible stock would be OSH - chance of a takeover at $5.30 ish

[whatsup]

Mark100, AS follows.
1965 1/7 Issue
1969 1/14 Issue
1974 1/4 Bonus
1979 1/8 Issue
1979 1/9 Issue
2001 1/1 Purchase when merger with Billiton.
So if 100 purchased in 1965 now with bonuses plus issues now would have 388 shares

[Morebid]

Shares of Australian miner BHP Billiton rose 5.2% to a record A$43.14 ($37.43) Monday on speculation that the company might be sitting on the world’s largest gold deposit at its Olympic Dam project in South Australia. Australian newspaper the Herald Sun published an article Monday saying BHP will reveal it has struck "potentially the largest gold resource in the world" when it releases a resources and reserves statement along with its annual report on Wednesday. BHP acquired the huge Olympic Dam mine -- primarily a copper and uranium producer -- two years ago when it bought WMC Resources for $9.2 billion. In August, incoming BHP CEO Marius Kloppers said Olympic Dam had a "significant" increase in its resource base, but declined to specify further. The mine, located 348 miles north of Adelaide, is the biggest underground mine in Australia. It has the largest uranium deposit in the world and the fourth-largest copper deposit. Gold prices, which have risen for six years in a row, touched a 27-year-high of $747 an ounce on Friday.

[Viking]

Mark100, AS follows.
1965 1/7 Issue
1969 1/14 Issue
1974 1/4 Bonus
1979 1/8 Issue
1979 1/9 Issue
2001 1/1 Purchase when merger with Billiton.
So if 100 purchased in 1965 now with bonuses plus issues now would have 388 shares

in that case it means~ $2500 invested in 1960's would have worth around $16,600 now~

I like Morebid's report much better :P
Looks like the market may open high this morning~ it might just break through $45 in the first hour by the look of things.

[limegreen]

Mark100, AS follows.
1965 1/7 Issue
1969 1/14 Issue
1974 1/4 Bonus
1979 1/8 Issue
1979 1/9 Issue
2001 1/1 Purchase when merger with Billiton.
So if 100 purchased in 1965 now with bonuses plus issues now would have 388 shares

It might have been billiton rather than BHP, but bigcharts suggests the following as well
1989 11:10 Split
1995 11:10 Split

which would suggest that 100 would have turned into 469?
(This is obviously not a particularly reliable source... they also suggest 31:15 rather than an 1:1 at merger; which would get you to 485)

Interesting change in strategy in that they are now actively buying back shares...

[mark100]

Its quite interesting if we look at BHP's 42 year capital growth. If we say 100 shares in 1965 amounts to 400 shares today and the price in 1965 was $25, thats annual growth of 4.8%.
Note dividends not included. If we consider the high inflation we've had at times over those 42 years it appers BHP's share price has not matched inflation over that time.

Goes to show what a tough time resource stocks had before this boom

[younga2]

See BHP has dipped - maybe more news in the making??

[macduffy]

See BHP has dipped - maybe more news in the making??


Just the normal reaction to an over-anticipated announcement.

[fihr]

Amusing to see the price drop today after the rumour was exaggerated. Still - it hasn't dropped all it's gains. Still a great stock.

I don't buy on rumour, because I'm always the last to hear. Rumours are so rampant in resource stocks, esp exploration companies - all those geologists and miners out there love a bit of spec investment!

[Viking]

Its quite interesting if we look at BHP's 42 year capital growth. If we say 100 shares in 1965 amounts to 400 shares today and the price in 1965 was $25, thats annual growth of 4.8%.
Note dividends not included. If we consider the high inflation we've had at times over those 42 years it appers BHP's share price has not matched inflation over that time.

Goes to show what a tough time resource stocks had before this boom

Doesn't look like the stock to pick if we have a time-machine.>>|)

[winner69]

This is what I posted when BHP was about $25 ..... the gist of a review as to what could happen to BHP share price .... suggested $60 possible .... I still believe that


..... small end of resource sector is performing so strongly it is making BHP and RIO (the market leaders) look ridiculously cheap ... not just this making BHP and RIO cheap but compared to 15 times earnings for a Aussie bank, 20 times for a contractor, 30 times for a healthcare .... even Telstra is 15 times .... BUT BHP IS LESS THAN 10 TIMES EARNINGS .... none of these have the attributes like earnings growth, net assets, free cashflow growth, barriers to entry etc etc etc .... one day soon the brokers and analysts will give up their woeful attempts to forecast commodity prices and start basing their valuations on long term future curves .... resulting in broker's upgrades of 40% plus ... we are on the brink of a 'seminal change' in how analysts value resource stocks .... and that one day investors will have decided to commit to major resource stocks ... they will be become acceptable for growth and value investors and fundies will need to be at leat at index if not greater .... based on true fundamentals and not rated as a resource company

Just like the rerating of News in 1999/2000 ..... a large mkt cap company and big component of the index that traded around $20 (pre split) for years and low multiplies compared to junior tech/media stocks and then in 2000 'investors capitulated on their bearish views and News rallied from $20 to $56 in SIX months ..... it was a monumental event and many funds were under exposed and many mangers lost their jobs

[Year of the Tiger]

I received an interesting letter in the mail today from Colonial Capital Corporation Limited (CCC). It had an Acceptance Form in it with an offer to buy my shares in BHP Billiton Limited (BHP) for NZ$72.00 each, payable in 18 annual instalments of $4.00.

They obviously have access to the share register as they had my address correct as well as the exact number of shares I hold.

I'm assuming this crowd are trying to con the less informed Mums and Dads out of their shares.

Anyone else had a letter?

YOTT

[winner69]

YOTT - just like a home equity release thingie eh

[Rif-Raf]

Have posted your entry into it YOTT

[Huang Chung]

Colonial Capital Corporation is apparently one of David Tweed's companies.

Plenty of news out there....here's a sample.

http://www.theaustralian.news.com.au/story/0,25197,22705710-20501,00.html

My opinion...tear the letter up!

[Jay]

Yeah I got one as well.
Only targeting NZ holders
18 annual installments!, will they be around in 18 years or will they quietly "forget" to send the payments after a year or two.

Stranger though I have not owned any BHP for about 6 months or so.:confused:

[COLIN]

See my posting on the NZX forum, as well.

[Year of the Tiger]

Market predator eyes BHP investors

5:00AM Thursday November 15, 2007
By Helen Twose (http://www.nzherald.co.nz/author/index.cfm?a_id=316)

For the second time this month, Australian sharemarket predator David Tweed is targeting New Zealand investors.
Letters to BHP Billiton shareholders from Tweed's New Zealand registered company Colonial Capital Corporation offer to pay $72 a share - more than $20 above the current market value. However, full payment for the shares would be spread out over 18 years at a rate of $4 a year.
Accepting the offer also appears to give Colonial Capital the option to amend the payment terms.
A spokesperson for BHP Billiton pointed the Business Herald to a response from the company's chairman, Don Argus, to a similar offer by Tweed, targeting Australians last year. Argus then advised shareholders to carefully check the terms and conditions of the offer, the current market value of the shares and to seek the advice of a broker or financial adviser.
"It concerns me that shareholders may unknowingly accept an offer for their BHP Billiton shares that substantially undervalues their shareholding, so if you do receive such an offer, please check it carefully," said Argus.

Last week the Business Herald reported on a similar offer made to shareholders of AXA Asia Pacific.
Colonial Capital Corporation would purchase their shares for $12 per share, around $3 more than the current market price for the shares, with annual instalments of 80c a share spread over 15 years.

[Viking]

I got one of this letter too, but seems their records about the equity holding are not current. Since my holding has been increased just in the last couple of weeks~ and Jay's has own it for over 6 months~ anyway~

Quite an outrageous offer, 18 years?~ at a growth rate of only 10%, 18 years would make it at least 600%~ let alone BHP growth rate is average higher~

Why would someone this kind of offer in the share market I wonder :rolleyes:

[tobo]

Am I seeing BHP breaking down through 12 month support trend line? (Log scaled chart).

A bargain? or not the right time to get in?

- Tobo. Not (yet) holding

[limegreen]

Am I seeing BHP breaking down through 12 month support trend line? (Log scaled chart).

A bargain? or not the right time to get in?

- Tobo. Not (yet) holding

I think it's time to be a little bit patient. Firstly, the trend of which you speak only has two touches (so it is 'unconfirmed'). Secondly, you'll note that immediately preceding the current trend, there was a previous trend that was broken before it started hunting up again.
In red, I've also marked in two 'falling wedges (http://www.marketscreen.com/help/chartpatterns/default.asp?hideHF=&Num=149)'. I think now would be a good time for patience, and wait for the price to break above the upper line of the wedge. Still pretty well off a 220 day EMA, which seems to fit the best, although again, not through the uncertainty so much....

http://img.photobucket.com/albums/v361/limegreenz/bhp9jan08.gif

[tobo]

thanks limegreen, I'll keep an eye on that wedge too.

- Tobo. (holding mostly juniors, and ZFX whatever that is now :eek: )

[yogi-in-oz]

BHP astroanalysis ... 30012008:

:)

Hi folks,

Looking ahead, with the RIO takeover announcement imminent,
our astroanalysis has us expecting some very positive BHP time
cycles, over the next couple of months:

06-07022008 ..... 3 minor cycles should bring some positive news,
probably finance-related ...

08-25022008 ..... underlying positive sentiment for BHP

03-04032008 ..... 2 minor cycles and more news expected here

07-17032008 ..... BHP should be VERY STRONG here ... :)

26-27032008 ..... 2 cycles and more positive news expected

07042008 ..... 2 cycles and negative spotlight on BHP

15-16042008 ..... a difficult cycle

18-21042008 ..... significant and negative cycle here

25-28042008 ..... significant and positive news expected.

07-08052008 ..... positive spotlight on BHP

14-16052008 ..... 2 positive cycles expected


have a great weekend

paul

:)

=====

[Huang Chung]

Hey Yogi

How far into the future does your astroanalysis go for RIO? If it suddenly stops later on this year, I presume that would mean that BHP's takeover was successful?

Any clues?

[yogi-in-oz]

Hey Yogi

How far into the future does your astroanalysis go for RIO? If it suddenly stops later on this year, I presume that would mean that BHP's takeover was successful?

Any clues?

:)

Hi Huang Chung,

Companies may stop, but God's natural time cycles are endless ..... !~!

RIO ..... figure on some news on Monday 04022008, as 2 time cycles come together,
with one of them triggering a sustained move, from 01022008 -to- 14022008.

Normally, this aspect would be positive, however as Saturn is involved, any market
reaction may be flat, during this period ..... so, not really 100% clear, at that time.

However, later in the month, a minor cycle on 22022008 and a positive aspect
on 26022008 ..... :)

..... 2 positive cycles come out to play on 18-19032008, just before 2 negative
cycles on 21-24032008 and again, around 27032008.

happy days

paul

:)

=====

[younga2]

The plot thickens .. someone else takes a stake in the company, making the BHP bid a lot harder to suceed. http://www.thestandard.com.hk/news_detail.asp?we_cat=2&art_id=61108&sid=17429232&con_type=1&d_str=20080204&fc=1

[Tok3n]

Wow, not such as a good 1/2 year report.

That strong AUD is really kicking in, BHP back to $30?

[macduffy]

Merely an outstanding half-year!

I'll be interested at $30. ;)

[gisborne_gold]

BHP up 5% today and now over $48, a new record high, after being in the low 30s earlier this year.

[winner69]

This is what I posted when BHP was about $25 ..... the gist of a review as to what could happen to BHP share price .... suggested $60 possible .... I still believe that


..... small end of resource sector is performing so strongly it is making BHP and RIO (the market leaders) look ridiculously cheap ... not just this making BHP and RIO cheap but compared to 15 times earnings for a Aussie bank, 20 times for a contractor, 30 times for a healthcare .... even Telstra is 15 times .... BUT BHP IS LESS THAN 10 TIMES EARNINGS .... none of these have the attributes like earnings growth, net assets, free cashflow growth, barriers to entry etc etc etc .... one day soon the brokers and analysts will give up their woeful attempts to forecast commodity prices and start basing their valuations on long term future curves .... resulting in broker's upgrades of 40% plus ... we are on the brink of a 'seminal change' in how analysts value resource stocks .... and that one day investors will have decided to commit to major resource stocks ... they will be become acceptable for growth and value investors and fundies will need to be at leat at index if not greater .... based on true fundamentals and not rated as a resource company

Just like the rerating of News in 1999/2000 ..... a large mkt cap company and big component of the index that traded around $20 (pre split) for years and low multiplies compared to junior tech/media stocks and then in 2000 'investors capitulated on their bearish views and News rallied from $20 to $56 in SIX months ..... it was a monumental event and many funds were under exposed and many mangers lost their jobs

That was back in October last year - had a few ups and downs since but today showed that $50 is not just possible but achievable ..... so $60 is definitely on the cards ....... so $80-$100 should be the next target .... sometime in the next year I believe

Nothing has really changed in the fundamnetals recently .... the story is just as compelling ........ believe in the story and keep hold of BHP

[Lizard]

Wow, nothing for over two years... this seems to be the newest BHP thread on ST...

Anyway, just wondering if anyone has a better explanation for why BHP is down 3.5% today than the news that a (previously unknown) takeover offer that they'd made for a potash company has been rejected? Presumably there is something more to this...?

[peat]

saw this -


SYDNEY Aug 17 (Reuters) - Australian Prime Minister Julia Gillard plans to bring in a 30 percent tax on profits at larger iron ore and coal mining firms from 2012 if she wins Saturday's election. Her opponent, Tony Abbott, has pledged to dump the tax. With the poll on a knife-edge, the mining sector faces huge uncertainty. Even if Gillard wins the Greens could end up as kingmakers in the senate and push for a stronger tax.

might explain it
but could also be some aspect of disppointment for the offer being rejected. a reduction of growth possibilities or knowing that they'll have to pay more to acquire.

[upside_umop]

The independents are voting with BHP, RIO and AUD not liking what they're hearing.

Currently going on CNBC at the moment.

[JBmurc]

Labours got it UU Mining Tax here it comes

[STRAT]

Labours got it UU Mining Tax here it comesDunno JB. Labor are on shakey ground. Expect another election before years end I reckon plus they might soften on that mining tax for fear of pushing themselves off the cliff they find themselves standing on the edge of right now.

[JBmurc]

Dunno JB. Labor are on shakey ground. Expect another election before years end I reckon plus they might soften on that mining tax for fear of pushing themselves off the cliff they find themselves standing on the edge of right now.

yeah maybe big unknown I sure the Greens have also supported the labour CNBC news was going on about a likely mining tax to come forward last I remember on the tax it was going to be focused on IRON ORE ,OIL majors??

[Huang Chung]

The watered down mining tax is supposed to be limited to Coal and Iron Ore (there is a seperate tax for some of the O&G developments).

But I read somewhere today that there is a supposedly an $8b black hole in the revenue estimates from the tax, so maybe, now Labor are back in, it might find its way to other ore types mined here.

I'm 99% invested in Pappilon Resources right now, so their west African focus should shield them nicely from any changes to the mining tax.

PS. Come July 2011, the Greens will be in control of the Senate, and those loonies want an even higher mining tax than Labor (as well as being anti-coal mining and even anti-CSG!!)

[Corporate]

Am I dreaming or are they on a forward PE (based on the 31 December half year) of 7-8? This can't be right...can it?

[FarmerGeorge]

Corporate it is worth looking into the numbers for both RIO and BHP.

I usually steer clear of anything with a market cap over about 1.5bn - but in this case I think there is significant value in both these big names.

Take a look at their resource mixes and just how far spot prices (and long term growth rates) need to fall to get the companies back to something 'normal' like perhaps a 13x Fwd P/E.

Why are they trading so low? No way of knowing of course but I suspect it's the European debt woes, coupled with a very high AUD.

May go without saying but I'm a holder and have been buying over the past month or two. Very keen to hear alternative views on this but I believe they're both very undervalued, like, ridiculously so.

[shasta]

Corporate it is worth looking into the numbers for both RIO and BHP.

I usually steer clear of anything with a market cap over about 1.5bn - but in this case I think there is significant value in both these big names.

Take a look at their resource mixes and just how far spot prices (and long term growth rates) need to fall to get the companies back to something 'normal' like perhaps a 13x Fwd P/E.

Why are they trading so low? No way of knowing of course but I suspect it's the European debt woes, coupled with a very high AUD.

May go without saying but I'm a holder and have been buying over the past month or two. Very keen to hear alternative views on this but I believe they're both very undervalued, like, ridiculously so.

Both BHP & RIO have reduced debt, & initiated multi billion dollar share buybacks, suggesting they dont have an immediate need to search for bolt on acquitions.

The Aussie market has some issues ie, AUD/USD, has the resource sector had its run?, project cost blow outs (every few days we hear another story) & the carbon tax uncertainty to contend with, this could delay or stop projects being developed in Australia.

BHP is looking for more Oil & Gas exposure having added to its Potash assets, & RIO are looking to expand there Pilbara Iron Ore projects, so they are still moving ahead, but growth might be slowing down, & will do if the global economy/EU & US debt issues continue to affect credit/credit ratings.

To gain exposure to both BHP & RIO, + global competitors Vale, Xtrata, Glencore etc, have a look at ASX listed GMI - a resource listed investment company, i started a thread ages ago - Might be worth comparing BHP & RIO & there P/E ratios to there global competitors?

[Corporate]

Guys, thanks for your replies. I also think that direct broking may not have the number of shares on issue quite right. Doesn't BHP have a dual listing in the US which would potentially double the market cap of $144billion that I was working with?

[macduffy]

I find BHP to be a difficult beast to get a proper handle on, largely because of its - BHP Billiton, that is - status as a Dual Listed Company. BHP primarily listed in Aust and Billiton in UK. The two companies operate separately but the total group is run as one enterprise, whatever that means when you get down to the details.

As at last balance date, the Market Cap of the BHP Billiton group was quoted as USD165b approx so I would think that the $144b number ($139.5b according to The Age) would apply to the total BHP Billiton group.

Despite the complexities of the BHP Billiton group I hold and regard it as one of the cornerstones of my long term Aussie portfolio.

[modandm]

Despite the complexities of the BHP Billiton group I hold and regard it as one of the cornerstones of my long term Aussie portfolio.

As do I, and I bought a few more recently.

TBH doing your own research on large caps is pointless. There are dozens of well qualified analysts that study the company full time. Almost all have a buy recommendation on both BHP & RIO and both are quite cheap on a forward PE.

The rationale is:
1 - this resources boom is going to play out for a while with China India, so resources is a good place to invest in the long term
2 - the diversified majors have advantages over the juniors and are 10x less risky
3 - in the event of a downturn the majors will do better
4 - i don't possess the geological understanding to invest in the smaller resources

I don't hold RIO because I prefer BHP's more diversified asset mix and better governance record. RIO is very dependent on Iron ore.

[troyvdh]

...I do find it interesting as to why there is so little discussion re this "beast"...in the past 4-5 months the SP has fallen some 27%...it pays 2.5 div...PE 10.2...as the above posts indicate BHP does have its attractions I would have thought...esp...at $36...last week...

I think I read last week that by 2020 there will be 30 cities bigger than Sydney...in China...mmmmm

[macduffy]

Yes, BHP is a sleeping giant!

I hold a few and often have intentions of buying more "on the dips". But like most posters here, I guess the percentage gain from a well chosen smaller company seems to offer more appeal.

I expect a bumper result when they report next week but likely as not the market will yawn and mark them down a bit! A chance to buy on the dip?

[Corporate]

BHP now at $34.5

I'm still trying to get a handle on the total market capitalisation. From the latest annual report I make total share on issue about 5.2 billion, which at $34.5 is a market capitalisation of $180 billion.

I make the historic PE a crazy 7.5 (180b/24b).

Can anyone cast there eye over this?

Cheers,
C

[Toulouse - Luzern]

Hi Corporate
Here is my take (E&OE).
I hope it is useful.

Your calculation is in the ball park. Depends on source and timing of data.
Last years published result was exceptional, top and especially bottom line.

From the detailed tab on BHP at DB site.
My assumption is these are updated daily.

Total Issue: 3,211,496,105
Market Capitalisation: $110,957,190,428 (@3455)

Earnings/Share: 399.57 cents
Price/Earnings Ratio: 8.65
NTA per share 990 cents
From BHP annual report:
http://www.bhpbilliton.com/home/investors/reports/Documents/2011/BHPBillitonSummaryReview2011_Interactive.pdf

June 2110 Capitalisation $160 billion approx and June 2011 $233.9 billion.

PE Calculation is often based on average capitalisation for the year (160+233.9 / 2)

Reuters tab on DB site shows PE as 8.93.

BHP has been doing share buy backs and cancellations ( I think) and this impacts shares on issue.

So the PE is certainly less than 10 based on all of the above and your own analysis.

For the ASX competition run by Jenny I wanted either BHP or RIO in Dec 2010.
I chose RIO from my analysis at the time as the best performer recently.
RIO is down 27% approx in the competition.

If you look at 2 year super charts on DB comparing BHP, RIO and ASX200 you will see in the two years RIO peaked at + 45% (approx) in Feb/Apr in 2011, BHP peaked at plus 29% in April, ASX200 peaked at + 5% in May 2010 and April 2011.

RIO is for the two years now + 2%, BHP - 10% and ASX is -17%.

With current environment while BHP may look a buy the market seems unconvinced over recent months ...

However if you look at the candles over two years BHP is now at a two year plus low...

Is this the moment? <>

[Corporate]

Hi Corporate
Here is my take (E&OE).
I hope it is useful.

Your calculation is in the ball park. Depends on source and timing of data.
Last years published result was exceptional, top and especially bottom line.

From the detailed tab on BHP at DB site.
My assumption is these are updated daily.

Total Issue: 3,211,496,105
Market Capitalisation: $110,957,190,428 (@3455)

Earnings/Share: 399.57 cents
Price/Earnings Ratio: 8.65
NTA per share 990 cents
From BHP annual report:
http://www.bhpbilliton.com/home/investors/reports/Documents/2011/BHPBillitonSummaryReview2011_Interactive.pdf

June 2110 Capitalisation $160 billion approx and June 2011 $233.9 billion.

PE Calculation is often based on average capitalisation for the year (160+233.9 / 2)

Reuters tab on DB site shows PE as 8.93.

BHP has been doing share buy backs and cancellations ( I think) and this impacts shares on issue.

So the PE is certainly less than 10 based on all of the above and your own analysis.

For the ASX competition run by Jenny I wanted either BHP or RIO in Dec 2010.
I chose RIO from my analysis at the time as the best performer recently.
RIO is down 27% approx in the competion.

If you look at 2 year super charts on DB comparing BHP, RIO and ASX200 you will see in the two years RIO peaked at + 45% (approx) in Feb/Apr in 2011, BHP peaked at plus 29% in April, ASX200 peaked at + 5% in May 2010 and April 2011.

RIO is for the two years now + 2%, BHP - 10% and ASX is -17%.

With current environment while BHP may look a buy the market seems unconvinced over recent months ...

However if you look at the candles over two years BHP is now at a two year plus low...

Is this the moment? <>

Thanks for your reply. I think the shares on issue is actually more like 5.2 billion, not 3.2 billion. The 3.2 billion are only those listed on the ASX.

[FarmerGeorge]

Hey guys, my feel is that the deeper you research BHP the more value you'll see. RIO perhaps the same but I'm not 100% as haven't looked into it as deeply myself.

Just a word of warning, if you follow the rule quoted from a post above:

"PE Calculation is often based on average capitalisation for the year (160+233.9 / 2) "

You will likely come into strife. I've never heard of a PE being calculated this way and am unsure where you would see this.
It's a little dangerous to talk in absolutes (especially on internet forums!) but I would 'always' use capitalisation (or the 'P') from a single point in time.

[soulman]

FarmerGeorge, if China indeed is a bubble and China burst, no PE ratio will work for BHP or RIO. I was looking for shorting tools to short BHP amd RIO but I haven't found one yet. I need a provider that's not CFD. A lending company that lends you the physical shares itself. Anyone out there know? Mark100?

[Toulouse - Luzern]

Thanks Farmer George you are absolutely correct about PE calculation.

My apologies.

I was thinking incorrectly about the ROE calculation
-
Investopedia - "Return on equity may also be calculated by dividing net income by average shareholders' equity. Average shareholders' equity is calculated by adding the shareholders' equity at the beginning of a period to the shareholders' equity at period's end and dividing the result by two."




Hey guys, my feel is that the deeper you research BHP the more value you'll see. RIO perhaps the same but I'm not 100% as haven't looked into it as deeply myself.

Just a word of warning, if you follow the rule quoted from a post above:

"PE Calculation is often based on average capitalisation for the year (160+233.9 / 2) "

You will likely come into strife. I've never heard of a PE being calculated this way and am unsure where you would see this.
It's a little dangerous to talk in absolutes (especially on internet forums!) but I would 'always' use capitalisation (or the 'P') from a single point in time.

[FarmerGeorge]

Soulman - RIO regularly comes up as one of the top 20 most shorted stocks on the ASX so you're not alone in looking to get on that trade! And you're quite right: if China is a bubble which bursts then that 'E' side of the equation will fall away pretty quick.
One way or another though, the world needs the 'stuff' those guys produce - and BHP produces it cheaper than most, and has significant, high quality reserves. RIO, from what I can tell, is making most of its money from just a few major projects (particularly Iron Ore) with a lot of its assets barely contributing, hence I'm a bit more hesitant. My position is that they're both undervalued though (thought I thought that when they were 20% higher than today so...).
T-Luz, yeah no worries there's plenty of acronyms out there to get mixed up with.

[soulman]

Hi FG, although, with my basis, maybe other developed nation like Brazil, India and Russia might pick up the slack.

Every boom has a bust and maybe China is about to burst. I saw BHP in my uni days in 2001 rised from $9 to now $35 due to China and the commodity cycle. It's been 10 years now and just wondering how long to go.

RIO with net debt of about $7.5 bil is ripe for shorting, that's for sure.

[FarmerGeorge]

soulman - you might want to check out Vale, a big Brazilian miner which is right up there. Don't hold it and haven't done any research but it might be worth the time if you're interested in the mining side but don't like the the big aussies

[soulman]

FG, there is only a few things I am looking to do ATM. One is shorting most mining stocks with RIO in the top line, and to buy USD.

Although, at any time, BHP might launch a T/O offer for RIO if RIO gets too cheap.

BHP down another 87 cents today.

[troyvdh]

Am ignorant here... again...but i see the trades of BHP ..but have no idea if the volumes/values going up or down...are of significance....I do appreciate the difference here in NZ...basic premise being SP going up low value ...could be negative..and goin g down ...not so...this may sound so basic...but folk must understand what I mean....I aint Mensa....where do i think this stuff..(Im only a nurse).....

[macduffy]

There's not a lot of interest in BHP on this forum but does anyone else find Marius Kloppers' departure from the post of CEO with a golden handshake of $75m - yes, that's right, $75m! - to be a tad obscene?

http://www.smh.com.au/business/going-like-the-kloppers-with-75m-handshake-20130221-2eu8u.html

:drool:

[baller18]

Is BHP on anyones watchlist? Waiting for the tide to turn

[stoploss]

Is BHP on anyones watchlist? Waiting for the tide to turn

Might be quite a while "falling knives " always difficult . Plus the chinese have just lower taxes on CHINESE Iron ORE ........

[voltage]

purchased at $30.50, could not believe it could fall further. Under $30 must be a bargain long term. BHP must be the standout buy in the resource sector for the quality assets BHP owns.

[BFG]

Just when you thought it couldn't go any lower...

I'd stay well from pretty much everything commodity related right now until solid, long term buy signals are fired, like the 50MA 200MA cross.

Buying right now is like catching very sharp knives at terminal velocity...

[Bobdn]

BHP interests me but catching falling knives is not something I'm good at. I didn't think Chorus couldn't go any lower than $2 and it ended up at $1.28. Hmm, maybe this time it will be different and hey, Chorus worked out just fine in the end.

Also NZD is so strong against the AUS.

[Beagle]

I have BHP on my watch list but I will be patient. Wait for it to break back through the moving average on the way up and I won't use a MA of less than 100 days even for a well diversified major resource stock.
The theory I'm working on with BHP is they have the grunt to buy other distressed mining interests at extreme discounts in due course. Best of breed also attracts the brightest and best geologists, engineers e.t.c.
I'm patient with this one notwithstanding the very favourable Kiwi Aussie fx rate and figure in terms of timing of purchase, its really reckless to try and fight what is a clear down-trend at present.

[BFG]

I have BHP on my watch list but I will be patient. Wait for it to break back through the moving average on the way up and I won't use a MA of less than 100 days even for a well diversified major resource stock.
The theory I'm working on with BHP is they have the grunt to buy other distressed mining interests at extreme discounts in due course. Best of breed also attracts the brightest and best geologists, engineers e.t.c.
I'm patient with this one notwithstanding the very favourable Kiwi Aussie fx rate and figure in terms of timing of purchase, its really reckless to try and fight what is a clear down-trend at present.

Totally agree. I am transferring more money at 94-95+ on the cross and will be watching for bottoms as well.

Patient patient catchee monkee...

[Bobdn]

I'm an amateur compared to you two ;)

[Daytr]

I think iron ore can go quite a bit lower yet. The spot price is almost a lagging indicator. The forward price is telling me it is heading to $64/5 at least & I wouldn't be surprised to see it at $50-55/ton. There is 150M tons of additional production coming on stream next year & then Roy Hill toward the end of 2015 -2016 with another 55M tons. Obviously there may be a few higher cost producers fall by the way side, however most of them are minor in comparison. I can't see the big 3 cutting production after spending $120Bln in capex expansions in the last 3 years. Their big hope is that China cuts production but there is no guarantee of that either. I'm short FMG for transparency purposes .

[Daytr]

FYI Rio is more exposed to the iron ore price than BHP, with BHP being more diversified.

[Bobdn]

52 week low.

[sharer]

52 week low.

yes. Any thoughts on what a fair value might be for re-entry or expand-holdings contemplations ?

[winner69]

with huge exsposure to iron ore,oil and coal the share price is going to get thumped.
$25 fair value if commodities stay low and $20 is my pick if commodities go lower..... harsh but given the circumstances and irrational markets more than likely.
Oil to go below $50 and hang around this level for a while

Jeez $25 would be a 10 year low

[Daytr]

It still has a massive market cap though A$95+ Bln,
They need to turn a reasonable profit to maintain that sort of valuation I would have thought.
At their peak I think they made USD15.4Bln profit.
Off current prices I think you can at least cut that in half & of course prices could still go lower.
The big question for me is if these sort of prices for iron ore & oil are maintained or possibly lower will their be asset write downs.

[winner69]

Daytr - you need to add in BHP Plc to get total market cap (I think)

[Entrep]

BHP will be one helluva buy when it turns. No need to rush

[Daytr]

Yep you are right, according to Bloomberg market cap is AUD145Bln at the current SP.


Daytr - you need to add in BHP Plc to get total market cap (I think)

[Daytr]

Anyone have any ballpark thoughts on what BHPs likely profit figure would be with current commodity prices.
Nearest billion is probably near enough.
My estimate would be around USD6Bln of A$7Bln.
Not including any significant write-downs.
Which would give BHP a PE ration of circa 20 at the current market cap.
Very ballpark obviously.

[winner69]

Anyone have any ballpark thoughts on what BHPs likely profit figure would be with current commodity prices.
Nearest billion is probably near enough.
My estimate would be around USD6Bln of A$7Bln.
Not including any significant write-downs.
Which would give BHP a PE ration of circa 20 at the current market cap.
Very ballpark obviously.

BHP had this slide in results announcement (as at June)

You could do some sums for me and telle what you get

[Bobdn]

Are we there yet? The stock is at it's lowest levels since March 2009. I have fond memories of March 2009. The DOW was at 6000 and I decided to start investing again after many years away from markets. It was the one and only time, with no exception that I can recall, where I've timed the market perfectly but it was a good one to get right.

[Daytr]

I did do some rough calcs a couple of days back & my estimate of $6-7Bln was probably a little high but about right in AUD terms.


BHP had this slide in results announcement (as at June)

You could do some sums for me and telle what you get

[sharer]

My wallet started twitching recently, but hasn't unzipped itself yet.
I wonder how the BHP split plan for late next year(?) may affect valuations?

[Daytr]

I haven't read up on it to be honest. I assume BHP will hold a certain amount i.e. shareholders of BHP wont be giving something away as I have seen done sometimes. I still think BHP can go lower, but that's probably because I am pessimistic on world growth for 2015.
I really think most people think the likes of iron ore & oil are going to rebound in 2015.
Obviously they could, but I think they could easily go lower yet.
What would you price BHP if the current commodity prices were the average for 2015 for instance?

[Bobdn]

I haven't read up on it to be honest. I assume BHP will hold a certain amount i.e. shareholders of BHP wont be giving something away as I have seen done sometimes. I still think BHP can go lower, but that's probably because I am pessimistic on world growth for 2015.
I really think most people think the likes of iron ore & oil are going to rebound in 2015.
Obviously they could, but I think they could easily go lower yet.
What would you price BHP if the current commodity prices were the average for 2015 for instance?

I tried to buy $20,000 NZ of BHP a week or so ago at $27.70 AUS but, because I'm such a noob, i never realized that I had to first fill out a "chess" form first (or something) and lost my appetite - it was going to take a few days I understood. I see it has appreciated 5% since then. Could have just as easily gone the other way I suppose and still might. However, the fact that BHP had depreciated 20% over the last six months and our currency had appreciated 10% over about the same period made me want to buy. That was the extent of my financial analysis (all I'm capable of). I tend to hold shares for a long time so I'm hopeful that my rough and ready approach will work out ok in the end.

I bought 1200 ANZ instead for 32.50 NZ. I like the idea of owning a little bank like HNZ and a big bank like ANZ. It has a small amount of imputation credits, a DRP, and an ok but not great yield but the potential for bigger dividend payouts. A big thing for me was buying when our dollar touched 95 cents AUS.

I have no more money to invest now. I have now launched all my torpedoes and am prepared to wait a long time to see whether they hit my investing targets.

Merry Christmas all.

[sharer]

After writing a few days ago i did get a bit fidgety & had a wee nibble, throwing a loose div cheque in the pot for a few more bhp before i had some more sensible impulse.
As it turned out (so far) looks like i got lucky with timing. It was the exchange rate that prompted my sudden lurch, Bobdn, but like you i wouldn't be too surprised to see further declines in share price. Starting a little cash reserve now to get ready in case more rational analysis shows the declining guesswork comes to the fore again in the new year.
Either way, i'm happy to rest on historical gains & leave it to my successors to decide when to cash out.

[baller18]

Anyone back in BHP here?

[BlackPeter]

Anyone back in BHP here?

Sure .... and going strong. Oil and resources have in my view lots of upwards potential from here - and quite recently the market seems to agree with my humble opinion :t_up:.

[Daytr]

What's the driver for the upward potential BlackPeter?

[BlackPeter]

What's the driver for the upward potential BlackPeter?

In one word: Demand.

O.k. - lets look at oil. Obviously nobody (well, at least not me;)) can predict what the oil price is next week (or next month), but it is now historically seen quite low. Lower oil price means increasing demand and at the same time lots of new drilling projects are shelved / delayed (quite low rig count these days), reducing at least mid term the supply side. Putting these two together, there is (mid and long-term) in my view only one way for the price of oil (if the market forces still work) - upwards (though not necessarily up to the lofty heights we have seen before)!

While the oil price is low, all sorts of economies will have more money in their pockets than previously. E.g. many Asian economies stopped recently subsidizing the price of petrol, money they can immediately reuse otherwise. All governments and companies will have lower fuel bills. This allows them to refocus e.g. on a in many parts of the world aging infrastructure - I am sure, you've seen as well lots of stories about road and e.g. electricity infrastructure not just in the US reaching the end of their useful life. Same true for Europe. Asia - I read recently somewhere that even the best equipped Chinese cities have only about 10 to20% of rails per sqkm, than Western towns like e.g. London. Lots of potential for more rails, pylons and bridges (needs all steel). Guess what impact this has on steel and metallurgical coal basis.

I guess we could spin this story for all of BHL's products, but just to pick one more: Recent reports I have seen suggest a steep increase in the use of aluminium for the car industry. didn't put much effort into re-googling, but here is e.g. one report predicting in 2 years a 71% rise of the use of aluminium in Asia (and a five folding in the US): http://www.stuff.co.nz/motoring/news/10196862/Asias-carmakers-still-welded-to-steel
Higher demand, again.

O.K. - I might be an optimist, but I see at this stage a world economy boosted by lower oil prices, which over time (some years) will increase the price for resources (including oil). Not sure, how this story ends, but I propose we can worry about that in some years time. I am admittedly not a day trader, but an investor with a medium to long term focus - and looking forward to the ride.

[stevo1]

This article is about oil outlook worth reading http://brazilianbubble.com/bearish-on-oil-saudi-investor-says-the-future-is-natural-gas-and-that-in-ten-years-electric-vehicles-will-be-everywhere/

[Daytr]

You can't have it both ways, lower oil stimulates demand when BHP is an oil producer so wants higher oil prices.
Overall I agree low energy costs will stimulate world growth, but in the short term world growth looks pretty weak.
China I think will start using less iron ore as they switch to a services based economy, meanwhile production is still rising,
When you say historically, you are referring to the last 10-12 years, prior to that these prices would be considered high.
Its going to be an interesting year I think, but I expect to see things get worse before they get better.

[BlackPeter]

When you say historically, you are referring to the last 10-12 years, prior to that these prices would be considered high.


Don't forget inflation when comparing oil prices today with previous years. Have a look at this chart:

http://inflationdata.com/Inflation/Inflation_Rate/Historical_Oil_Prices_Chart.asp

So yes, oil was (even inflation adjusted) much cheaper than now before 1973, and it was (with ups and downs) a bit cheaper between 1986 and 2004. All other times oil was (inflation adjusted) much more expensive than it is now.

I think it is fair to say, that oil is currently quite cheap.

[BlackPeter]

You can't have it both ways, lower oil stimulates demand when BHP is an oil producer so wants higher oil prices.


Actually - you can. I am assuming here that oil prices will move up somewhat from the existing level, but not reaching the heights of the recent years (say maybe moving between US$$55 and US$70 per bl - but than, who am I to predict?).

Given that the current BHP price reflects the current oil price is it fair to assume that the SP will go up with increasing oil price.

If the oil price stays however under the average price over the last 10 years or so, than there is still enough spare cash left for the world economy to put more money into building / fixing infrastructure. Looks like a win - win to me.

As well - BHP is sort of a natural hedge. If the oil price rise is slower than assumed, than they will make more money on their other resources ... and if the oil price goes up faster, than at least they make money with the oil.

Discl: holding, but not too worried about accumulating some more on dips ... i.e. don't rush all out to buy cheap BHP. Be considerate and leave some for me :p.

[Daytr]

Yep fair enough.
I disagree though that the BHP SP reflects the current oil price let alone iron ore or copper price.
The problem I see for BHP is they have incurred a considerable amount of debt based off higher asset prices & this imo is going to catch a few out & in fact already is.
Where do you price oil in a deflationary world?
Personally I think oil's days are numbered, the Saudis know this & will pump as much as they can which will mean sustained lower prices to force out the higher cost production.

[BlackPeter]

Yep fair enough.
I disagree though that the BHP SP reflects the current oil price let alone iron ore or copper price.
The problem I see for BHP is they have incurred a considerable amount of debt based off higher asset prices & this imo is going to catch a few out & in fact already is.

Not sure, which debt you are referring to. Last time I checked (last annual report) their leverage (liabilities / total assets) was below 30%. Sure, could always be better, but in comparison with many others in the industry this ratio looks quite healthy to me.

Agree that I see some others (particularly Juniors and / or shale oil producers) where the leverage looks quite different. Agree - some of these are likely to bite the dust unless resources recover swiftly.

[BlackPeter]

Where do you price oil in a deflationary world?
Personally I think oil's days are numbered, the Saudis know this & will pump as much as they can which will mean sustained lower prices to force out the higher cost production.

Not quite sure whether the price of oil might be impacted by deflation (and I don't expect deflation to stay around forever ...). The price of oil (as of everyting else) is defined by supply and demand.

The big questions on the supply side is - which game are the Saudis playing (I've seen the article re big sale out due to people stopping to use oil for political reasons). Interesting perspective, but not sure, whether I'd take that as the only possible scenario. Other possible (and in my view more likely) scenarios would be
- desire to keep the price low enough to keep shale oil producers out (meaning oil will long term stay below roughly USD 70)
- desire to kill off the incumbent Russian Zar (meaning - oil will stay low for another 2 or 3 years and than rise again).

Who knows.

On the demand side ... I give you that the green lobby might have some impact on the politics of some of the western countries. Though most of them prefer not to put their money where their mouth is - and talk is cheap.

Big and fast growing consumers are however India, China, South East Asia, South America, at some stage Africa. I don't think that the Saudis have enough cheap oil to supply the world until the Greenies managed to convince the last African despot to spend more money for some more expensive source of energy, if they just can use cheap oil instead.

The only scenario I see for mankind changing its preferred energy source is if & when we manage to find a cheaper / easier transportable source. Haven't seen that yet.

[Daytr]

Watch what Toyota roll out this year.
I think what you argue is the general consensus, however I would suggest it wont be the 'greenies' necessarily needing to lobby, I think the impact will be quite apparent & their will be a global shift in sentiment to do something about it.
The environmental cost & I mean cost in dollars will far outweigh any differential of cost of production.
If man can develop a hydrogen bomb in a matter of years because what they deemed at the time as a necessity to win a global war, developing an engine that isn't powered by fossil fuels is a synch. The main reason why it hasn't happened is not cost, its that there is very little money in it, not like oil.

[Daytr]

Just shorted.
Been waiting for the divi announcement & the resulting spike in the SP.
Net debt of $25Bln !
Prices being received now are much lower than the previous.
Oil alone at the current price will mean revenue is down by over $1.5Bln on the previous six months, possibly more & that's at $60 oil.
What if it goes to $30 like I expect.
Well over valued imo with a market cap in the region of $170Bln, PE must be around 30+!
Let alone if prices deteriorate !
I reckon BHP could go to $20 in the coming months.
I bet the demerger is crap for share holders to.
Typically they give it away!

[BlackPeter]

Just shorted.

Ah well, so you have an agenda to ramp it down ...

I guess it all depends on where you see oil and resources going. If its all down from here, than your strategy is the right one. Personally I am not so sure ...

[macduffy]

I'm not convinced either, BP. Just one small point - yes, net debt is $25b - but market cap is $108b!

;)

[macduffy]

I'm not convinced either, BP. Just one small point - yes, net debt is $25b - but market cap is $108b!

;)

Apologies for the inadvertent duplication, but the point was probably worth repeating!

[PSE]

Yes BHP is an economic juggernaut and very safe in terms of debt /low cost iron ore reserves etc, the price of oil will rise long term and fluctuate short term. I have had this sort of argument with daytr previously on another thread.
We could change to renewables these are lower cost than fossil fuels but I can't see it happening anytime soon, as investors our decisions are important but the numbers have to stack up.

[Daytr]

Macduffy I hope you aren't relying on Etrade's market Cap figure as I made the same mistake & I was mildly bearish then.
At $33.57 share price BHPs market cap is a whopping A$176BILLION ! So if you weren't that impressed before, what do you think now.

PSE I think BHP was an economic juggernaut for about 5 years or so. Take out a few horrendous decisions & write offs from time to time.
However them & RIO & Vale have killed the iron ore market out of share ego.
And Saudi Arabia is doing to them in oil what they have tried to do to others in the iron ore market.

I can just see this spin off being a complete give away for current shareholders as well.

[macduffy]

Yes, I'm certainly impressed by $176b!

The $108b number comes from The Age - the Aussie newspaper. I suspect that they don't include the UK-listed Billiton part of the company - or some such "technicality".

Re the proposed 32South spin off, my understanding is that BHP shareholders will receive proportional shareholdings in the new company. Theoretically, that shouldn't affect the overall combined shareprice - which should equal the pre-distribution BHP shareprice. In practice though there probably will be some effect as shareholders weigh the prospects of the two companies and favour one or the other, buying or selling accordingly.

[macduffy]

Further to my post #130, here's the latest I could find on the demerger. Note that BHP Billiton Ltd and BHP plc shareholders will receive 100% of the shareholding of the spinoff company, 32South.

http://www.asx.com.au/asxpdf/20141124/pdf/42txztqrgzh1vv.pdf

[Daytr]

I think you have misinterpreted the announcement it says BHP shareholders will be entitled to 100% of he shares in the new company.
I think what that is saying is that BHP shareholders will have first dibs on buying shares in the new company.
My guess is you will have to pay for the same assets twice. I've seen it done over & over & to be honest I'm not sure how its even legal.

[macduffy]

I don't think so.

From the announcement: "......Shareholders will be entitled to 100% of the shares in the new company through a pro-rata in-specie distribution....."

"In-specie" distributions are similar to bonus issues and dividends in that they are proportional to shareholdings. I've never seen an in-specie distribution that had to be paid for by the shareholder but we'll know soon enough. Documentation is due to be released mid-March.

[macduffy]

I don't think so.

From the announcement: "......Shareholders will be entitled to 100% of the shares in the new company through a pro-rata in-specie distribution....."

"In-specie" distributions are similar to bonus issues and dividends in that they are proportional to shareholdings. I've never seen an in-specie distribution that had to be paid for by the shareholder but we'll know soon enough. Documentation is due to be released mid-March.

[BlackPeter]

Just shorted.
I bet the demerger is crap for share holders to.
Typically they give it away!



I can just see this spin off being a complete give away for current shareholders as well.



My guess is you will have to pay for the same assets twice. I've seen it done over & over & to be honest I'm not sure how its even legal.

Daytr, not quite sure what you intend to say ... your messages seem to be (despite all being quite negative) somewhat inconsistent - and certainly not in alignment with what the company says (have a look through the latest annual report) about the intended demerger.

As well - share holders will have to vote for the proposed demerger, so if we don't like it, we just vote it down, wouldn't we?

Just wondering - is your shortening exercise clouding your mind - or are you trying to mislead others?

[kanaka]

Further to my post #130, here's the latest I could find on the demerger. Note that BHP Billiton Ltd and BHP plc shareholders will receive 100% of the shareholding of the spinoff company, 32South.

http://www.asx.com.au/asxpdf/20141124/pdf/42txztqrgzh1vv.pdf

When I purchased BHP late last year I did a bit of research on why the share price dropped from AUD40 to AUD33 and came to the conclusion it was selling pressure out of the UK as the PLC shareholders would not be in the same position as the LTD shareholders in the divvying out of the new company. Could be wrong - usually am but it seemed a nice thing to own LTD shares. And then along came the oil crash

[Daytr]

Actually there is no inconsistency in what I said, I suggest you just misunderstood it.
By paying for it twice its the equivalent of giving it away.
I.e. paying 100% for something you already own or give it away, its the same effect.

I was involved in a similar exercise & foolishly I thought management would look after shareholders, but they spun out the new assets & if you wanted to participate you had to buy shares in the new company. Its a bit different here as they are off loading mostly what they don't want, but they will need cash in the new company & that's how they raise it by selling the shares. So effectively its like a giant capital raising but all the funds stay in the new entity & the original owner only gets a right to participate. Well that's how I read it anyway.

Good volatility this morning closed out my short on the thumping on the open & then reinstated at higher levels! ;=)

We saw a huge rally in oil overnight. Absolutely suckered by the Saudis soothing words.
What a load of BS, they are pumping more whilst they say it & the dumb market bought every word.
Shorted oil this morning as well.


Daytr, not quite sure what you intend to say ... your messages seem to be (despite all being quite negative) somewhat inconsistent - and certainly not in alignment with what the company says (have a look through the latest annual report) about the intended demerger.

As well - share holders will have to vote for the proposed demerger, so if we don't like it, we just vote it down, wouldn't we?

Just wondering - is your shortening exercise clouding your mind - or are you trying to mislead others?

[BlackPeter]

Actually there is no inconsistency in what I said, I suggest you just misunderstood it.
By paying for it twice its the equivalent of giving it away.
I.e. paying 100% for something you already own or give it away, its the same effect.


.

So could you point us to your source of information, which says that shareholders are paying twice? That's not what the company says ...

[Daytr]

Already answered Black Peter by posts above. Its my take on what has been announced to date on how the spinoffs usually work.

[macduffy]

Already answered Black Peter by posts above. Its my take on what has been announced to date on how the spinoffs usually work.

We're not dealing here with how spinoffs "usually work" but with the official company announcements relating to a specific spinoff. But let's wait until mid-March for the paperwork to shareholders. Meanwhile, BHP's shareprice looks pretty solid in recent days.

[Daytr]

Macduffy, sure I agree there isn't enough detail, but that's how I interpret what they have put out to date.
How does the new company get funded otherwise?
My other main question is what happens to the significant amount of debt that is related to the spun out assets?
Does it say within BHP in its entirety or does some get apportioned to the new entity.
I would suggest all debt stays with BHP, but that's just speculation on my part.

[JimHickey]

Actually there is no inconsistency in what I said, I suggest you just misunderstood it.
By paying for it twice its the equivalent of giving it away.
I.e. paying 100% for something you already own or give it away, its the same effect.

I was involved in a similar exercise & foolishly I thought management would look after shareholders, but they spun out the new assets & if you wanted to participate you had to buy shares in the new company. Its a bit different here as they are off loading mostly what they don't want, but they will need cash in the new company & that's how they raise it by selling the shares. So effectively its like a giant capital raising but all the funds stay in the new entity & the original owner only gets a right to participate. Well that's how I read it anyway.

This is what is wrong with this forum.

People that cannot get basic concepts correct and continuously post factually incorrect information.

The mods think they are better giving warnings to people posting the word "bollocks".

[kanaka]

This is what is wrong with this forum.

People that cannot get basic concepts correct and continuously post factually incorrect information.

The mods think they are better giving warnings to people posting the word "bollocks".

In total agreement with your comments

[Daytr]

Explain please ?


This is what is wrong with this forum.

People that cannot get basic concepts correct and continuously post factually incorrect information.

The mods think they are better giving warnings to people posting the word "bollocks".

[macduffy]

FWIW, Morningstar have a preliminary fair value estimate of $1.50 - $2.00 for South32 and a corresponding reduction for BHP, based on an estimate of 5% of BHP's fair value estimate. Seems as good a guesstimate as any! The rest of the article is behind a paywall so if anyone has access......?

[Daytr]

So $1.50 -$2 of BHPs SP? So they are valuing the new entity in the region of $10Bln by the sounds.

[macduffy]

So $1.50 -$2 of BHPs SP? So they are valuing the new entity in the region of $10Bln by the sounds.

Going on Morningstar's $1.50-$2.00, rightly or wrongly, and the 3.211b issued shares disclosed in the latest annual report, I calculate South32's theoretical "fair value estimate" at $4.81B - $6.42B. Other guesses welcome!

Incidentally, BHP's SP is up nearly 2% today.

:)

[Daytr]

No there are far more shares issued than that.
$176Bln MC divided by say $34 = 5.17 Bln shares on issue & value equates to $9Bln.
Am I missing something?

Nice rally today mostly on China rate cut.
Looking to get short again here. ;-)

[Snow Leopard]

No there are far more shares issued than that.
$176Bln MC divided by say $34 = 5.17 Bln shares on issue & value equates to $9Bln.
Am I missing something?

Nice rally today mostly on China rate cut.
Looking to get short again here. ;-)

Half year report (http://stocknessmonster.com/news-item?S=BHP&E=ASX&N=419442) (plus commentary) says 5,317 Million on Page 43

Best Wishes
Paper Tiger

[macduffy]

Thanks for clearing that up - for me, Tiger.

:blush:

[macduffy]

Here's the demerger proposal. Note that shareholders will retain their BHP shares and receive an equal number of shares in the new company.

http://www.bhpbilliton.com/home/investors/demerger/Pages/default.aspx

[Daytr]

So are they raising equity at the same time to put cash into the new company? Any dilution?
Cheers Daytr

[macduffy]

I havn't read the 196 page shareholders' circular in full either but it doesn't appear that South32 - or BHP -will be raising any new capital. Other sources suggest that South32 will not be overburdened by a disproportionate share of the current group's borrowings but of course, the new board will have its own ideas on future business developments and possibly acquisitions? I guess we'll have to wait and see but the demerger needs to be voted on first to become a reality. Most of the big insto shareholders are "said" to be warm to the proposal at this stage but are, naturally, not making any commitments at this stage.

I see that there will be a voluntary sale facility for South32 shares for shareholders holding less than 10,000 BHP shares. Which probably includes most of us! At this stage, I intend to keep mine - aluminium, nickel, zinc etc may make a comeback some time!

[Daytr]

Cheers Macduffy

[macduffy]

Deutsche Bank's view on South32's valuation.

http://www.afr.com/business/mining/deutsche-bank-cuts-south32-valuation-20150401-1mcg20

[macduffy]

I wonder how much of the 23% increase in April's iron ore price will "stick"?

http://www.theage.com.au/business/mining-and-resources/iron-ore-revival-puts-local-miners-back-in-the-black-20150426-1mteaa.html

[macduffy]

According to an article in today's NZ Herald, the spin-off of South32 will be treated as a dividend in the hands of NZ shareholders of BHP to the extent of 70cps.

May be time to re-assess this company's suitability for my portfolio.

http://www.nzherald.co.nz/transtasman/news/article.cfm?c_id=1502753&objectid=11440027

[BlackPeter]

According to an article in today's NZ Herald, the spin-off of South32 will be treated as a dividend in the hands of NZ shareholders of BHP to the extent of 70cps.

May be time to re-assess this company's suitability for my portfolio.

http://www.nzherald.co.nz/transtasman/news/article.cfm?c_id=1502753&objectid=11440027

Fair enough. Tax treatment of Kiwis owning Ossie shares is appalling enough if we look at the loss of tax credits for dividends. However in this case we would need to pay tax for "receiving" capital we already own, based on an Ossie focussed board making stupid decisions (just caring for themselves I guess). Clearly a good time to vote with the feet.

Discl: sold out some months ago and not looking back ...

[macduffy]

I sold yesterday.( Ahead of the "Sell in May and go away" crowd!).

BHP has been a good stock for me on several occasions over 40 years or so - and still the pick of the Aussie miners for a bit of diversification into that sector for those so inclined, IMO. But the potential tax issue, on top of current iron ore market was enough to send me packing this time. Keep under review.

[money maker]

I sold yesterday.( Ahead of the "Sell in May and go away" crowd!).

BHP has been a good stock for me on several occasions over 40 years or so - and still the pick of the Aussie miners for a bit of diversification into that sector for those so inclined, IMO. But the potential tax issue, on top of current iron ore market was enough to send me packing this time. Keep under review.

Why don't you just buy back this week trading around $28.55 mark. As you said still a pick for Aussie miners and still a great value stock? I also see south 32 up around the $2.25 mark today

[macduffy]

Why don't you just buy back this week trading around $28.55 mark. As you said still a pick for Aussie miners and still a great value stock? I also see south 32 up around the $2.25 mark today

No, I don't buy in downtrends anymore! Learnt that lesson a long time ago and happy to miss out on the occasional great bargain by sticking to that rule. Yes, there'll be a time to buy BHP again but I'll just wait and watch, meantime.

[tim23]

I elected to sell my South 32 shares as part of the demerger in the share sale facility, anyone an idea when they are paying out for these?

[macduffy]

I elected to sell my South 32 shares as part of the demerger in the share sale facility, anyone an idea when they are paying out for these?

The demerger presentation said " no later than eight weeks following ASX listing " ( of South 32).

Bear in mind that all such shares have first to be sold!

[tim23]

Thanks for that macduffy, think they would have sold my modest lot by now!

[winner69]

BHP heading sub $20

Bad enough having a commodities downturn but being party to a disaster killing dozens and the other collateral damage is really bad

Profound sympathies don't excuse corporate cost savings (if that is found to be a contributing factor)

Even if I thought it a bargain now don't think I'll buy any shares

[HRM]

I did see BHP dividend was more than profit this year. I guess to keep share holders from not dumping them. Will just hold out for a recovery and long term investment

[Bjauck]

BHP heading sub $20

Bad enough having a commodities downturn but being party to a disaster killing dozens and the other collateral damage is really bad

Profound sympathies don't excuse corporate cost savings (if that is found to be a contributing factor)

Even if I thought it a bargain now don't think I'll buy any shares
The disaster is terrible. It is another to add to the sad litany of industrial disasters. It underlines the need for independent and effective inspectorates to ensure codes are followed (& to recommend new codes) across all industries. Sadly all industries carry risks, which we can only strive to mitigate to the best of our ability. It is a continuous balancing act of cost/benefit. Maybe BHP will become the latest bete noir? In the United States environmental damage and human life is calculated to be very expensive (as BP is now accounting for). In Bhopal India, it was calculated to be quite cheap, as Union Carbide, the American multinational, discovered. Brazil is vowing to make BHP pay. Let's hope they boost the funding of their independent inspectors too. Perhaps it is easier to make foreign multinationals into scapegoats, as opposed to rooting out deficiency in national standards, lax enforcement procedures and corruption amongst inspectors? That is speculation on my part. I don't know the causes of this latest disaster. However, poorer countries often have lower requirements to attract business.

[cammo]

Ok this is sharetrader not Facebook .St mod can you sort these baboons out? Pack of beaters heaping on spoonfuls of conjecture. Please consider the environment before typing.

[Bobdn]

I still want some BHP but will get them by increasing my contribution to my Smart OZY fund. BHP makes up a whopping 9% of that fund. Smart OZY has of course been doing really badly lately.

[Bobdn]

I tried to buy $20,000 NZ of BHP a week or so ago at $27.70 AUS but, because I'm such a noob, i never realized that I had to first fill out a "chess" form first (or something) and lost my appetite - it was going to take a few days I understood. I see it has appreciated 5% since then. Could have just as easily gone the other way I suppose and still might. However, the fact that BHP had depreciated 20% over the last six months and our currency had appreciated 10% over about the same period made me want to buy. That was the extent of my financial analysis (all I'm capable of). I tend to hold shares for a long time so I'm hopeful that my rough and ready approach will work out ok in the end.

I bought 1200 ANZ instead for 32.50 NZ. I like the idea of owning a little bank like HNZ and a big bank like ANZ. It has a small amount of imputation credits, a DRP, and an ok but not great yield but the potential for bigger dividend payouts. A big thing for me was buying when our dollar touched 95 cents AUS.

I have no more money to invest now. I have now launched all my torpedoes and am prepared to wait a long time to see whether they hit my investing targets.

Merry Christmas all.

See above, meant to quote this in (December 2014)

[winner69]

http://www.smh.com.au/business/mining-and-resources/brazil-tragedy-mires-bhp-amid-wider-troubles-20151112-gkxx6g.html

No doubt there will be more mining company catastrophes in years to come

think of BHP as just a squiggly line on a chart and such things don't really matter but others may take a ethical/principled point of view

[Bjauck]

Ok this is sharetrader not Facebook .St mod can you sort these baboons out? Pack of beaters heaping on spoonfuls of conjecture. Please consider the environment before typing.
FACT: "BHP Billiton and Vale are to pay a further 1bn reais (£171m; $260m) for the mining disaster that killed 11 people in Brazil earlier this month. The mining giants had already been ordered to pay 250m reais after a dam burst at a mine run by Samarco, a firm they jointly own." http://www.bbc.com/news/business-34839390

FACT: "Brazilian government said the Anglo-Australian mining giant could face a fine for the “environmental catastrophe”. http://www.theguardian.com/business/2015/nov/12/brazil-vows-to-make-bhp-pay-for-mine-disaster-as-shares-continue-plunge

LIE: Baboons can post on the forum.

Clarification Needed: How is the environment affected by my typing?

I clearly marked my ruminations expressed in the post as speculation - the exchange of opinion is a key part of the forum on this site.

[Joshuatree]

Ignore that post BJ, c ammo is firing blanks:) .

More importantly will BHP reneg/change their High Divi policy currently paid from debt. Will be an int GM.S/P sub$20 and falling into a black hole(empty pit) atp

[Bjauck]

Ignore that post BJ, c ammo is firing blanks:) .

More importantly will BHP reneg/change their High Divi policy currently paid from debt. Will be an int GM.S/P sub$20 and falling into a black hole(empty pit) atp I think BHP must have to reevaluate their commitment to progressively increasing dividends - depending on the scale of remedial costs.

Although on a bigger scale, when BP had the Gulf of Mexico Spill, it was at a time when oil prices were still relatively high so it was financially able to make provisionings when asset prices were relatively high. However I think BP cancelled dividends for some years.

I guess it could be a matter of perceptions.

[Joshuatree]

This from the Chairman a short time ago re divi, clear as mud to me.S/P back over $20.

As I said at the London AGM, the dividend is an outcome of appropriate capitalmanagement. Our starting point is to maintain the strength of the balance sheet through thecycle. The balance sheet must always come first. As you would expect, and has always been the case, your Board reviews the level ofdividend on a regular basis. It does this against the background of the external environment,our progress on capital and operating productivity and the need to invest to ensure profitablelong-term growth.



In the context of this challenging global economy, we have seen a significant drop in theshare price of resource companies this year, including our own share price. Like you, we aredisappointed in our current share price performance. However, the resources business iscyclical.
Our job is to concentrate on creating value through the cycles. Our focus, in terms ofbusiness strategy and shareholder value, is always on the long term. We have a uniqueportfolio of large, long-life, low-cost assets, combined with a strong balance sheet. Thisallows us to focus on the fundamentals of our business.
So despite the volatility, we have a robust and resilient set of businesses led by a world classmanagement team. During the 2015 year, we achieved record production in our Iron Ore,Metallurgical Coal and Petroleum businesses.

[winner69]

This from the Chairman a short time ago re divi, clear as mud to me.

Maybe 'clear as mud' not best of terms to use Joshua .....esp when the mud is toxic as

http://www.theguardian.com/business/2015/nov/22/anger-rises-as-brazilian-mine-disaster-threatens-river-and-sea-with-toxic-mud

And the Chairman 'was close to tears' - yeah, probably because of the share price

[Bobdn]

I sold my TME shares and bought some BHP with the proceeds on 14 December (December 15 would have been better). I bought knowing that there is a real possibly that the dividend will be cut; commodity prices will remain low for years to come and there's more oil in the world than you can shake a stick at.

One thing I find really interesting is how much copper is used in renewable energy: see, http://www.businessinsider.com/copper-prices-will-increase-due-to-green-energy-2015-6

Will be interesting to see what happens over the next 10 to 15 years.

[BlackCross]

Merrill put out a note yesterday arguing that both BHP and Rio should be capital raising “to be ready to acquire distressed Tier 1 assets”

Discussions with investors suggest that there may be a limited pool of equity available for recapitalizations. If “blue chips” move early, it might make it more difficult for other lower quality more leveraged companies to access equity markets. [...] we believe that early recappers could be rewarded with mandates to consolidate. More marginal leveraged players may be left with no choice but distressed asset sales. Management change might also be required to effect recaps....


Both BHP & Rio Tinto do presently have “progressive” dividend policies i.e. dividends flat or up. This is an onerous call on the cashflow of the companies, for example for BHP dividends cost some US$6.6 bn/yr. Based on comments from BHP’s chairman, we have formally cut our FY2016E dividend forecast by 50% to US$0.62/sh, cutting the annual dividend cost to US$3.3 bn. For Rio Tinto, the current dividend cost is about US$3.9 bn/yr. For now, we assume Rio’s dividend is not cut although we don’t rule it out for the future. Of course, shoring up balance sheets needn’t be an either / or choice. We that a combination of dividend cut and equity raise could get companies ready for M&A.

[macduffy]

I wouldn't place too much reliance on "progressive" dividend policies surviving current low metal prices but both BHP and RIO will interest me when prices bottom out and their shareprices start to trend upwards.

[macduffy]

Goldman Sachs reckon Aussie miners are still overpriced.

http://www.smh.com.au/business/markets/mining-valuations-skyhigh-as-investors-hope-for-recovery-20160119-gm8tab.html

Anyone think otherwise?

[Daytr]

I think it depends on their costs and that their costs including debt have remained in Aussie dollars.
So many of the banks were recommending USD denominated debt and many got sucked in and are paying for it now.

[BlackPeter]

Goldman Sachs reckon Aussie miners are still overpriced.

http://www.smh.com.au/business/markets/mining-valuations-skyhigh-as-investors-hope-for-recovery-20160119-gm8tab.html

Anyone think otherwise?

Haven't looked at this one (BHP) for some time now .. but the trend chart looks shocking ... falling knife springing to mind. So yes, Goldman might be still right (until the trend changes, of course).

[macduffy]

Haven't looked at this one (BHP) for some time now .. but the trend chart looks shocking ... falling knife springing to mind. So yes, Goldman might be still right (until the trend changes, of course).

That's pretty much my thoughts, too, Peter. BHP has been a great medium term investment for me -several times - in the past 40 odd years. Looking forward to another opportunity when the dust settles!

[Beagle]

Haven't looked at this one (BHP) for some time now .. but the trend chart looks shocking ... falling knife springing to mind. So yes, Goldman might be still right (until the trend changes, of course).


That's pretty much my thoughts, too, Peter. BHP has been a great medium term investment for me -several times - in the past 40 odd years. Looking forward to another opportunity when the dust settles!

I'm with you guys on this one. Waiting until a new uptrend is confirmed. I think if BHP are smart they'll be able to pick up some incredibly cheap assets from the junior miners in the next few years.

[trader_jackson]

I would be careful with BHP (or Rio)... I know yesterday Ord Minnett slashed its 12 month target from $18 to $13, with a lighten recommendation. Balance sheet is OK, but except the dividend to be dramatically cut (Ord Minnett expecting it to be halved)

In my view, it is all about the cash flows for many of these mining companies right now, from Bathurst to BHP. As BHP is expected to be free cash flow positive, I think long term should be ok, but tread with alot of care.

Disclosure: Not holding (but a year ago almost exactly thought it was 'good' at $29, lucky I didn't buy!)

[macduffy]

I'm with you guys on this one. Waiting until a new uptrend is confirmed. I think if BHP are smart they'll be able to pick up some incredibly cheap assets from the junior miners in the next few years.

Yes, one would think so. But BHP tend to favour mega projects - some of which have come badly unstuck over the years! - so I wonder if any of the juniors will have much to interest them.

[Daytr]

These guys that defend dividends at all costs are reckless at best and are risking shareholder money and in some cases the very viability off the company.
How many times have you seen dividends paid only to see a CR months later at a much lower SP for instance.
Share buybacks the same. In the US how much stock was bought back at the top of the market?

[macduffy]

Agree, Daytr.

BHP havn't admitted it yet but the odds are increasing that they will reduce their dividend, particularly as they have recently stated that they are "committed to protecting their balance sheet".

[macduffy]

Too early for me but Credit Suisse rates BHP an Outperform.

"Credit Suisse rates BHP as Outperform (1) - December quarter production was lower than the preceding quarter. Credit Suisse adjusts volumes for the FY16 production guidance, which is unchanged other than for the exclusion of Samarco iron ore, which remains suspended.
Credit Suisse retains an Outperform rating and $20.00 target.
Target price is $20.00 Current Price is $14.21 Difference: $5.79 If BHP meets the Credit Suisse target it will return approximately 41% (excluding dividends, fees and charges). Current consensus price target is $20.16, suggesting upside of 41.9%(ex-dividends)The company's fiscal year ends in June.
Forecast for FY16:
Credit Suisse forecasts a full year FY16 dividend of 83.08 cents and EPS of 44.96 cents . At the last closing share price the estimated dividend yield is 5.85%. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 31.61. How do these forecasts compare to market consensus projections?
Current consensus EPS estimate is 35.9, implying annual growth of N/A.Current consensus DPS estimate is 128.6, implying a prospective dividend yield of 9.0%.Current consensus EPS estimate suggests the PER is 39.6.Forecast for FY17:
Credit Suisse forecasts a full year FY17 dividend of 83.08 cents and EPS of 59.57 cents . At the last closing share price the estimated dividend yield is 5.85%. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.85. How do these forecasts compare to market consensus projections?
Current consensus EPS estimate is 68.1, implying annual growth of 89.7%.Current consensus DPS estimate is 126.2, implying a prospective dividend yield of 8.9%.Current consensus EPS estimate suggests the PER is 20.9."

[winner69]

BHP one day will be back to $40 odd

Plenty f time to buy in cheap I reckon ....wait until an uptrend starts

[Beagle]

Too early for me but Credit Suisse rates BHP an Outperform.

"Credit Suisse rates BHP as Outperform (1) - December quarter production was lower than the preceding quarter. Credit Suisse adjusts volumes for the FY16 production guidance, which is unchanged other than for the exclusion of Samarco iron ore, which remains suspended.
Credit Suisse retains an Outperform rating and $20.00 target.
Target price is $20.00 Current Price is $14.21 Difference: $5.79 If BHP meets the Credit Suisse target it will return approximately 41% (excluding dividends, fees and charges). Current consensus price target is $20.16, suggesting upside of 41.9%(ex-dividends)The company's fiscal year ends in June.
Forecast for FY16:
Credit Suisse forecasts a full year FY16 dividend of 83.08 cents and EPS of 44.96 cents . At the last closing share price the estimated dividend yield is 5.85%. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 31.61. How do these forecasts compare to market consensus projections?
Current consensus EPS estimate is 35.9, implying annual growth of N/A.Current consensus DPS estimate is 128.6, implying a prospective dividend yield of 9.0%.Current consensus EPS estimate suggests the PER is 39.6.Forecast for FY17:
Credit Suisse forecasts a full year FY17 dividend of 83.08 cents and EPS of 59.57 cents . At the last closing share price the estimated dividend yield is 5.85%. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.85. How do these forecasts compare to market consensus projections?
Current consensus EPS estimate is 68.1, implying annual growth of 89.7%.Current consensus DPS estimate is 126.2, implying a prospective dividend yield of 8.9%.Current consensus EPS estimate suggests the PER is 20.9."

Thanks. Like many in these sort of circumstances I prefer to simply follow the technicals and wait till the 100 day MA is clearly broken through back to the upside...whenever that might be ? I doubt with the extreme velocity of the price drops in so many commodities that any analyst can reliably predict future earnings at this stage.

[winner69]

Motley Fool email spam stuff had this tweet included in it

@pgker: Barclays estimate the ''upside'' share price estimate for BHP over the next year is $14.70.The downside: $6.30


Did the world ever find out how many died and what was the degree of pollution/damage caused when that dam collapsed in Brazil.

One reason not to buy

[Bobdn]

Wow, I think I need to go on an Understanding Results" 101 course. I was expecting a serious dent in my networth when I read about the result this morning (dividend cut/multi billion dollar losses) but the market absolutely loves it.

[macduffy]

Wow, I think I need to go on an Understanding Results" 101 course. I was expecting a serious dent in my networth when I read about the result this morning (dividend cut/multi billion dollar losses) but the market absolutely loves it.

Yes, the market was expecting something worse. The big write offs, loss and dividend cut had been either previously advised, hinted at, or at least widely anticipated. A relief rally which may or may not be sustained but the (slightly) improving metal prices, especially iron ore, will help.
Disc: Not holding.

[Bobdn]

Yes, looks like you're right. Imagine if this result had come in before the surge in metal prices. Would have been nasty for a while.

[moimoi]

Wow, I think I need to go on an Understanding Results" 101 course. I was expecting a serious dent in my networth when I read about the result this morning (dividend cut/multi billion dollar losses) but the market absolutely loves it.

Short covering...a squaring up of positions taken prior to the results announcement.

A narrow trading range given the volume. Algorithmic meaningless. Down the next few days unless POO levitates further...

[macduffy]

Yes, the market was expecting something worse. The big write offs, loss and dividend cut had been either previously advised, hinted at, or at least widely anticipated. A relief rally which may or may not be sustained but the (slightly) improving metal prices, especially iron ore, will help.
Disc: Not holding.

And down 8% today! Yesterday's iron ore and oil price rises didn't stick!
Disc: Still not holding.

[winner69]

Any corporate conscience - ok, maybe a tad

As Bill Gross has commented - Capitalism is broken -- instead of making great products we're just making money

Anyway back to BHP

"Amid enormous confusion about the agreement Vale and BHP Billiton have reached with the Brazilian authorities, it appears the cost of remedying the damage caused by the collapse of the tailings dam in their Samarco iron ore joint venture and paying compensation for the disaster is going to be far less and more manageable than once thought."

http://www.businessspectator.com.au/article/2016/3/3/industries/bhp-breathes-sigh-relief-over-samarco

[Bobdn]

BHP up 20% in just 5 days. Iron ore surging. Sure it might not last but I'm taking the time to enjoy the moment. It's been a brutal couple of months.

[JBmurc]

Yes MGX looks ready to pop ..... BHP should well pass $20 before the weeks out ....

[Bobdn]

BHP increased a whopping 20% over the last five days. I hope the gains stick but we've been here before :)

[Bobdn]

Will it go to $20 today? That would feel good.

[macduffy]

Will it go to $20 today? That would feel good.

Did it easily, Bobdn. The big question now is - will it go higher?

The firmer iron ore price is the big driver but my gut feeling is that it's more a case of "less low expectations" rather than "high expectations". Oversupply continues.

[Bobdn]

Quite right macduff. Seems like there's a huge amount of oversupply of just about everything. Anything could happen with this stock. I want to hold onto this one for at least 10 years. India and extreme copper demand for all those Tesla cars and other such machines makes me want to keep it medium to long term.

I read on Bloomberg that there might be one more oil super cycle left in the late 2020s. Wouldn't that be great.

[macduffy]

If you havn't already seen this, Bobdn, you might be interested in this video of Peter Beaven, BHP CFO, speaking at a recent Morgan's presentation.

https://www.morgans.com.au/Blog/2016/March/BHP-Q-and-A-Peter-Beaven-CFO.aspx

[Bobdn]

Encouraging video, thanks for the link.

That CFO looks in good shape. It's clear he pushes weights around. Nothing crazy but an exercise regime that helps him look good and release stress.

[winner69]

Whats up today - down 7%

[macduffy]

Whats up today - down 7%

Copper down, oil down. $58b civil suit against Samarco joint venture..

[trader_jackson]

http://www.abc.net.au/news/2016-05-04/brazil-files-billion-dollar-lawsuit-against-vale-bhp-for-dam/7381824

This might explain why it has "dipped a bit" ;)

[Bobdn]

Thought I was out of the woods with this one but at this rate the price will be below my 16.74 buy price in a couple of trading days.

[Bobdn]

Thought I was out of the woods with this one but at this rate the price will be below my 16.74 buy price in a couple of trading days.

Things were looking bleak in May but now its sunny uplands.

[Valuegrowth]

52 week

(14.06 - 25.77)



Will it hit 52 week high again?

http://seekingalpha.com/article/4008271-another-look-bhp-billiton

Another Look At BHP Billiton

[winner69]

Hope they get fined billions for their part in the deveststion and loss of lifes when that dam in Brazil burst

Subtly trying to distance themselves from it

Big bad oorporate

[Bobdn]

52 week
(14.06 - 25.77)



Will it hit 52 week high again?

http://seekingalpha.com/article/4008271-another-look-bhp-billiton

Another Look At BHP Billiton

We might get there sooner than later. I see tonight in Old Blighty BHP Billiton plc is having a rollicking good time.

[Bobdn]

Copper is king.

http://www.bloomberg.com/news/articles/2016-10-03/base-metals-hold-quarterly-gains-on-signs-of-china-stabilization

PS: In London, BLT is a hair's breadth away from a 52 week high. Come to daddy.

[Bobdn]

And there she blows, it has just touched the 52 week high in London.

[Valuegrowth]

In bull market stocks touch 52 weeks high.
And there she blows, it has just touched the 52 week high in London.

[Bobdn]

Down 33% over the last 5 years. Over 10 years? Down a cool 10%.

[BlackPeter]

Down 33% over the last 5 years. Over 10 years? Down a cool 10%.

Did you take the demerger with South32 into consideration?

[Bobdn]

No I didn't but I'm guessing that even after taking that into account BHP has still been one of the worst blue chip investments you could have made over the last five years - and this is in a bull market, imagine the losses in a bear market ;)

I bought in at $16.74 but I just got lucky. I tried to buy in at $29 but hadn't done the CHESS paper work so wasn't able to that day. just one of those things.

[Valuegrowth]

Some commodity companies are not generating any cash flow at all.

BHP UK had good run in September. There were few commodity stocks globally they also had some run. It may be mainly due to current bull market. Some were very short lived as they were speculative driven. Post-Brexit UK gave some good returns. It became a winner in Europe. In other words it outperformed other European markets.

Different indexes in UK one month return: 2.63% to 3.97%
One year return: 10-12%

Many commodity oriented companies will have to wait for some time to generate some cash flow. Strong ones can have demand provided they have value and long term prospects. Next year we can see further fall in commodity prices. Inventory levels are very high for some commodities. Chinese demand is also weak. Still there could be short term speculative driven rally for some commodity. I believe Fed should begin their next rate hike in 2017. Although I expected rate rise in December, I have a doubt about it now. I expect very weak market for gold in 2017. We should see very hot USD by 2018/19.


No I didn't but I'm guessing that even after taking that into account BHP has still been one of the worst blue chip investments you could have made over the last five years - and this is in a bull market, imagine the losses in a bear market ;)

I bought in at $16.74 but I just got lucky. I tried to buy in at $29 but hadn't done the CHESS paper work so wasn't able to that day. just one of those things.

[Aaron]

How has anyone holding BHP on capital account treated the South 32 demerger for tax purposes in their 2016 income tax return.
My understanding that it is to be treated as a dividend based on $2.41NZ a share.
The NZSA was protesting this with IRD but I haven't heard anything further.
http://www.scoop.co.nz/stories/BU1509/S00442/ird-doesnt-have-funds-to-fix-unfair-demerged-shares-tax.htm

[Aaron]

No one has returned the income on their South32 shares??

No one owned BHP shares at that time??

No one gives a f**k??

[macduffy]

No one has returned the income on their South32 shares??

No one owned BHP shares at that time??

No one gives a f**k??

I fall into your second category, Aaron. (See post 153), wasn't prepared to risk the potential tax liability. Still keeping the company under review but not tempted back in at present.

[BlackPeter]

I fall into your second category, Aaron. (See post 153), wasn't prepared to risk the potential tax liability. Still keeping the company under review but not tempted back in at present.

Same for me - sold out prior to the demerger to conserve capital. Didn't look back (so far).

Re IRD treatment ... I understand that the NZSA is still on the issue - and that there is agreement from government side that it is unfair to treat demergers as income and to change the tax rules accordingly. Don't know, though whether the issue passed already all necessary political and bureaucratic hurdles - and neither whether any change would be retrospectively applied to the BHP demerger.

If you are effected (I am not ...) why don't you check with IRD (and potentially NZSA) and report back?

[Aaron]

Thanks Macduffy, I should have read the posts back around that time.

You might have done OK buying back in around $1 in January. South32 that is.

[Aaron]

Same for me - sold out prior to the demerger to conserve capital. Didn't look back (so far).

Re IRD treatment ... I understand that the NZSA is still on the issue - and that there is agreement from government side that it is unfair to treat demergers as income and to change the tax rules accordingly. Don't know, though whether the issue passed already all necessary political and bureaucratic hurdles - and neither whether any change would be retrospectively applied to the BHP demerger.

If you are effected (I am not ...) why don't you check with IRD (and potentially NZSA) and report back?
I can't find anything that says the rule changed so I would assume it is taxable income.

I was a member of the NZSA a couple of years ago but found they were doing important advocacy work on behalf of small shareholders and I wasn't really reading it(too educational). I prefer shorter sentences like, "It is all blue skies from here man" or " Toot toot all aboard" or "This one's going to the moon baby". I should really renew my membership because they are the only ones who will rock the boat in the corporate world. I always wondered why CEO's salaries were so crazy high but I assume fund managers and institutional investors get paid pretty good as well and directors are on a pretty good gravy train so no-one wants to rock the boat on ridiculously high remuneration.

In regard to contacting IRD, getting hold of someone who would actually know the answer would probably be a challenge.

[cyclist]

In regard to contacting IRD, getting hold of someone who would actually know the answer would probably be a challenge.

Quite right. In those cases where you suspect it might be beyond what the call centres are trained for, I find a letter is the best approach.

[Bobdn]

8% increase today so far. Trump is going to be great for BHP.

[Bobdn]

Anybody else here following BHP at the moment. Can't believe the increase over the last few months

[macduffy]

Anybody else here following BHP at the moment. Can't believe the increase over the last few months

Following, but not invested, unfortunately.

Yes, the miners have had a resurgence in popularity with others such as RIO and OZL showing similar gains. My biggest issue now is when to sell my OZL!

[Bobdn]

Omg OZL is up 100% over the last year I see. Nice work.

I think I'll sell BHP if it ever gets over $30.

[longy]

Anybody else here following BHP at the moment. Can't believe the increase over the last few months

Hi Bob. I have been with BHP and S32 for a few years now. That was a lot of pain but they have recovering well. I was with S32 right from the split and finally back in green. I like S32.

I can't say the same for BHP. However, Intelligent Investor in OZ have sold some of S32 and bought some BHP just recently.

[BlackPeter]

Anybody else here following BHP at the moment. Can't believe the increase over the last few months

Yep, hard to resist riding the current uptrend ...

Obviously - this is a case of "join the party but dance close to the entry" scenario ... if the (politically influenced) resource prices drop, than so will BHP's share price. However - there still might be some mileage left in the current bull.

[Bobdn]

The big day has arrived, half year results at 4.15pm Melbourne time.

Last year we were miserable, remember? This year it's happy, days (I hope:)

[BlackPeter]

The big day has arrived, half year results at 4.15pm Melbourne time.

Last year we were miserable, remember? This year it's happy, days (I hope:)

Not unhappy I missed last year's party ... but yes, looking forward to this one.

[Bobdn]

Wow, big interim dividend, 40 cents USD. Was 16 cents last year.

[Bobdn]

BHP is a long term hold for me. I'm guessing that one day electric cars are going to be huge (EVs use three times the amount of copper than a petrol car) and I believe that coal fired power stations will still be charging many of these cars 20 years from now. Coal's death has been greatly exaggerated. The day to day movement of the share price therefore is not something that greatly concerns me.

Still, I can't believe the price has dropped over 3% since the announcement of the monster dividend. This is why I could never be a trader. I'd call it wrong every time.

[Joshuatree]

$10.8 billion, looks like another big div/ return for investors
Sale of Onshore US Assets 4 pages 87.1KB (https://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=02002818)

[Bobdn]

$10.8 billion, looks like another big div/ return for investors
Sale of Onshore US Assets 4 pages 87.1KB (https://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=02002818)

Yes exciting stuff. Apparently the entry into shale has cost BHP $20B! Wow, talk about the destruction of shareholder wealth. I got into BHP in November 2015 so I guess I get the benefit of the sale without the loss :) Just dumb luck like all my investing.

[Bobdn]

Omg OZL is up 100% over the last year I see. Nice work.

I think I'll sell BHP if it ever gets over $30.

Post from 2016.

I changed my mind :) Might keep these until the bitter end.

[Bobdn]

Even in these dark days, BHP just keeps on delivering. Sometimes it pays to just keep it simple and invest in a blue chip...

https://www.smh.com.au/business/companies/bhp-announces-special-dividend-after-ditching-us-oil-and-gas-assets-20181217-p50mnp.html

[kiora]

Even in these dark days, BHP just keeps on delivering. Sometimes it pays to just keep it simple and invest in a blue chip...

https://www.smh.com.au/business/companies/bhp-announces-special-dividend-after-ditching-us-oil-and-gas-assets-20181217-p50mnp.html

I concur.Bluechips will be the first to recover in any future rally

[wizAlvin]

ASZ 2019 competition closing in few hours

[Bobdn]

I just sold the last of my BHP today. Special dividend appeared in my account this morning and there was a nice increase in the the share price today. I'll bank the proceeds and think about what next. No hurry.

I have a managed fund that has a chunk of BHP and hold a tiny amount of S32 and Rio directly. That's enough mining sector exposure for me.

[HanSolo]

@Bobdn what happened to keeping them to the bitter end :)?

Jokes aside I only have a small exposure to mining stocks.Still waiting for the China slowdown to hit the mining sector like everyone keeps telling me so I can pick up some bargains.

[Bobdn]

A good question! I don't have as much courage as I used to :)

[winner69]

BHP one of these bastards

Must be happy ScoMo won

https://thenewdaily.com.au/money/finance-news/2019/05/19/oil-lobby-climate-change-policy/

[macduffy]

BHP profit up 29%.

https://www.abc.net.au/news/2020-02-18/bhp-results-hy2020/11974696?section=business

Disc. Not holding.

[moimoi]

2015 underlying attributable half year profit $5.4B

2020 underlying attributable half year profit $5.2B

Effectively unchanged.

[Joshuatree]

However In 2015 they split off S32, current mkt cap A$12.8 billion. Iron Ore and steel down up to 10% in one month, could go alot lower if supply chains continue to be disrupted.

[peat]

seems like another pretty good result to me....
was thinking of selling as am up 25% and well commodities are cyclical but nah lets hold on and see.... this commodity boom seems to have real legs!


Disc. hold a parcel.

[Joshuatree]

Very int,Woodside WPL taking over BHP oil and gas assets in a scrip based deal.

[peat]

Very int,Woodside WPL taking over BHP oil and gas assets in a scrip based deal.

i saw that it was up 8% in the UK overnight (dual listing) but suddenly its down 6% in Australia so I am now considering that the market doesnt like the deal as the loss does not appear to have been transferred to WPL.

or maybe its just the dividend announcement?

[Joshuatree]

Maybe it's thatBHP holders will end up with re half of WPL and are reducing their BHP holdings.

[Joshuatree]

And BHP will delist from the UK if it goes thru.

[peat]

wow how to destroy wealth - do a deal!