Australian (ASX) Stock Market Forum

BHP - BHP Group

Jump to new
So I'm looking at factors that could get BHP to test $24, but preserve fundamental value.

1. Capital Distributions of about $5 are possible in the next 9 months, so if SP value doesn't appreciate in real terms in the next 9 months, it would be worth $24.
- Dividend (62c+62c USD) $1.50c, when fully franked is $2.10.
- South32 Spinoff $15B, equals distribution of $2.80.

2. EPS of approximately 150c for 2014 FY is a realistic possibility, I think there has been more focus on narrative than financials as there hasn't been a financial report or earnings forecast yet.

3. Iron Ore fundamentals suggest it's got further to go.

4. Doubts or changes to the progressive dividend due to lower cashflow, could take away the appeal of a 5 to 6% FF dividend range between $25 to $30.

5. General sharemarket weakness. We're only 2% away from the post 2008 high. You can always rely on some sort of weak period from about April/May.

Reasons why the $27 floor will hold:

1. Dividend Yield too good at over 5% and Total Distribution Yield including South32 of about 17%

2. 1st Half and FY EPS absorbs commodity prices above expectations

3. Commodity Turnaround

4. Market happy to pay 16 to 20 PE in a low commodity price cycle

5. South32 split benefits both and creates positive sentiment.
 
TheUnknown said:
I used $4k of my capital on this short position since $31. If i fail i fail and lose less than someone who invested in this junk since 2010. If i do hit my target of $20 well.... i will be cashing in.
Click to expand...

Out of interest, are you still holding this position waiting for $20, I think if you are you would have lost more of your capital than someone who has held since 2010.
 
Bill M said:
I was just having a look at BHP's chart, it first hit the $26 levels around 9 years ago and we are there again today. 9 years of stock growth wiped out in a few Months.:eek:

I don't hold but by crikey I'm looking at this decline and at some point BHP is going to be a buying opportunity. The big question is, when will be that point? Waiting patiently...
Click to expand...

VSntchr said:
Probably the best time to buy is when your decision making comes to the thought process that mirrors something like "This is too cheap now, something isn't right. What does the market know that I don't". When those storm clouds are brewing the light might not be too far away.

For now taking into account all the variables at hand - it's still sunny here in Queensland, but that's just my opinion...
Click to expand...

GEEEZZZZ I knew my tummy rumblings were on the money and never a truer word said as yours VSntchr. I've been thinking about that golden opportunity ever since your post.

I didn't get set, I remember sitting it out for a few days. Then the swings higher just kept on coming in so I bought the only ETF in my portfolio that had BHP in it. Since then the ETF has done well but no where near as good as BHP on it's own. So much for it crashing $20, never thought it would. Just spent 2 weeks in Queensland and it was raining almost everyday, hmmmmmmmm.
 
Nothing on the horizon to think it will go up. I wouldn't be surprised if the share price hits very low $20 mark.

This is what I think their long term plan is (or maybe should be), taking into account that the iron ore price won't rise for ages to come.

Demand is low, stock piles are massive and producers admit they are pulling more out of the ground this year than last...why would prices rise in the short or even medium time frame?

It has become a race to the bottom, and down there BHP is king. The lower the price the greater the weight is born by the other iron ore makers.

- The rest of the iron ore makers can't stay open if prices get close to the $20 range.
- If iron ore producers are forced to close. The costs just to re-open are a massive undertaking. (let alone BHP's iron ore is a superior quality to theirs)
- No producer has better economies-of-scale than BHP or profit margins.
- If iron ore producers close and frequently, then they will not be in a position to take advantage of any re-bound in prices.

Once prices rebound (let us take it for a fact that at some stage prices will rebound, but this might take years), BHP will be in the cat-bird seat with less competition than before.

So the lower the price the more the smaller competitors hit the wall, the less competitors the greater share of the pie to BHP.

Fortescue Metals is a prime example of this, I'm watching for any stress on them considering the massive amount of debt on their books.

I'll say again...this should be their long long term game.
 
This is basically the last setup that can still trigger the rally to $40's. Yesterday's bottom is a stone for this count to be correct.

It is interesting that Iron ore rally has little effect on stock price, but maybe it will catch up later. Commodities are in a positive cycle that could take year or two, so ultimately Oil at $70 and Ore at $75 would start to make sound.


bhp kl.jpg
 
some interesting previous posts on BHP, action in the UK may not bear well for BHP today

whats really going on with the BHP, RIO, GlenCORE at the moment

BHP still wants to increase output, not looking good for shareholders over the next 2-3years imo
 
I reckon $21.61 will get passed before the year end with a continued weekly downtrend.
 
notting said:
My point is that their track record isn't that good on this score especially in 'other places.'
Click to expand...
Hmmm I bought in $22.2 before I knew what the incident was.
Great daily gain but long term????

BHP Billiton holds a 50% interest in the entity that caused the deaths . Samarco Mineração S.A is the operator.
 
A Brazilian prosecutor who warned on problems with erosion and destabilisation at BHP Billiton-owned Samarco iron ore mine two years ago has claimed that negligence and human error caused the disastrous breach of two of the mines tailing dams.

BHP has said it is still too early to say what caused the tragedy and there has been speculation that there may have been some sort of seismic event. But Minas Gerais state environmental prosecutor Carlos Eduardo Pinto said on Tuesday that the bursting of the dams was "no accident".

"What happened was a mistake in the operation and negligence in the monitoring," Pinto told Brazil's top broadcaster, Globo TV.
Click to expand...

Bidding for RIO just before the GFC at $150, Petrohawk massively overpriced ill timed purchase, wasting $450 million on failed Canadian potash take over. The list goes on as far back as you can remember too.

This thing is just a monstrous piece of **** run by clowns.
 
notting said:
Bidding for RIO just before the GFC at $150, Petrohawk massively overpriced ill timed purchase, wasting $450 million on failed Canadian potash take over. The list goes on as far back as you can remember too.

This thing is just a monstrous piece of **** run by clowns.
Click to expand...

Just lucky, they own a lot of the **** people have to buy.

I've put my toe in at $20.97, I did notice a private equity fund picked up 1,500,000 share.

It will be interesting to see what their plans are.

The whole Australia down the tube thing, is a bit overdone.IMO
 
Top