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BHP - BHP Group

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Whats the point of looking at pe in the short term when the company is too **** to pay out a decent dividend? I mean they are making so much money but paying shareholders nothing.

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If they start paying a higher dividend, the stock will go up.
 
Technically I'd be looking to buy BHP soon, at slightly below $24. I base this on the support trendline in this chart (yesterday's close is marked by the horizontal line as I'm using delayed data). Stop at say 23.50
 

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Jrowl said:
Whats the point of looking at pe in the short term when the company is too **** to pay out a decent dividend?
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Hi Jrowl. Do you know of any companies that pay higher dividends? Who runs them - budhists? Or should I look for islamic companies?

With regards to capital return of profits, international companies prefer to do stock buy backs to increase capital gain, rather than pay dividends. This is because of the way these returns are taxed internationally. Australian franking credits are particularly useless to overseas investors.
 
Might well possibly break $24.00 today, which is a pretty critial level. Has almost done this before in the past few months to bounce fairly strongly. Highs continue to get lower and lower..... :(

Perhaps some support between $20 - $22.00, which will be around the 200d ma by then.

Way oversold on Stochastics.

As a believer in the stronger for longer scenario, I'm still holding for the minute, even if you have a $9 valuation Ducati. :)
 

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Fab said:
This one is a bargain at this level. That is why I bought at 24.50. People have a very short memory I believe. P/E is low, earning I believe where the best reported on the asx and they have been doing a share by back also RSI is low. All these reason push me to buy more and I am very happy about it. I believe it might keep going down a little bit more but in 6 months it should be much higher :) :)
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Well this is better than the type of comments you see on hotcopper in support of stock selection but not much.

Fab said:
earnings I believe were the best reported on the asx and they have been doing a share buy back
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This is a clear indication that you don't understand fundamental anlaysis. The best earnings are not necessarily the highest, you should be looking at the quality of those earnings and whether they are sustainable. BHP's FY06 record profits were a result of both volume and price increases. The question you should be asking is whether these volume and price levels are sustainable are likely to increase or decrease. Of course they are buying back shares - they have to if they want to retain foreign investors to whom Australian franked dividends aren't worth much.

You may well be right BHP may rally from around these levels (at time of this post $20.21) but your reasoning doesn't exactly fill me with confidence.
 
I'll still stick to my $23 prediction a few months back....Waynel agreed too.....well I'll be waiting till then.....:)
 
dhukka said:
You may well be right BHP may rally from around these levels (at time of this post $20.21) but your reasoning doesn't exactly fill me with confidence.
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Sorry above should have been $24.21
 
dhukka said:
Sorry above should have been $24.21
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Nice blog dhukka, or should I say suffering. Why not nirvana?

Interesting you have a link to HC. Plenty of fundamental analysis there. LOL.

Hope to see plenty in your posts here. Cheers!

Have you had a look at any upside from potential trippling of output from Olympic Dam, as has been anticipated? Feasability study is due on this, this month I think. I suppose this is a blip in their overall output anyway.

Is there any way they can increase output across their divisions to keep their growth chugging along, or are we just relying on price apreciation in iron ore, oil, etc? Perhaps they need to start being a little more acquisitive. Their recent purchase on Genghis Khan in the Gulf must value add?

BHP seems to have held above critical support line at $24.00. Perhaps some technical buying going on?
 
kennas said:
Nice blog dhukka, or should I say suffering. Why not nirvana?

Interesting you have a link to HC. Plenty of fundamental analysis there. LOL.

Hope to see plenty in your posts here. Cheers!

Have you had a look at any upside from potential trippling of output from Olympic Dam, as has been anticipated? Feasability study is due on this, this month I think. I suppose this is a blip in their overall output anyway.

Is there any way they can increase output across their divisions to keep their growth chugging along, or are we just relying on price apreciation in iron ore, oil, etc? Perhaps they need to start being a little more acquisitive. Their recent purchase on Genghis Khan in the Gulf must value add?

BHP seems to have held above critical support line at $24.00. Perhaps some technical buying going on?
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Hi Kennas,

Just kicked off the blog so not much to see there yet. Whilst I'm a fundamentalist I'm open to all angles - was just home for Christmas and picked up a copy of Nick Radge's "Adaptive Analysis" so looking forward to an interesting read there. Nirvana would imply I've reached a place beyond suffering which unfortunately I haven't so I'll stick with dhukka for now.

Kennas I can't comment with any accuracy on exactly how much new production BHP is bringing on in the next 12 - 18 months, needless to say one way to offset falling commodity prices is to increase production but as you know bringing new supply onstream takes time. Another way is to make acquisitions - in a climate like this though you have to be careful not to overpay.

Having worked with plenty of resource analysts I know they are usually conservative with regard to their forecasts for commodity prices however I'll be interested to watch any downgrades in earnings coming through in the next few months particularly if other commodities start to follow copper. On the flip side 1H07 is already behind us so downgrades will probably effect FY08 earnings more than this year.
 
I have an average price on BHP of $25.25.

I continue to hold. I think this is period is another chance to accumulate some more, but thats just me.

I am not going to say it cant fall anymore cause it has dropped so much...

However i am prepared to give it 12 months.

Hasnt been a lot of positive light shed on BHP.

When do cas report get released? How do we expect them to fare compared to last year?
 
Is there any way they can increase output across their divisions to keep their growth chugging along, or are we just relying on price apreciation in iron ore, oil, etc? Perhaps they need to start being a little more acquisitive. Their recent purchase on Genghis Khan in the Gulf must value add?
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If BHP increase their SUPPLY to the market, that will have the effect of lowering prices even further/faster. The same effect is found if BHP hedge their production, the selling pushes prices down [they do lock in their price or margin]

BHP Revenues [net profits] have been predicated upon a very strong commodity bull market, and there are economic forces afoot that will start to limit that effect.

The outsourcing, and placement of manufacturing capacity is now slowing, due to a number of factors tied to logistics. The seeming net effect will be a slowing in the capital invested within new PP&E within the developing economies, thus slowing demand for basic commodities [non-agricultural]

Combine that with a possible slowdown/recession in the US, and resource based businesses will again feel the bite of cyclical business swings.

The credit cycle, also is starting to show signs of weakening. China increased their reserve requirements, Europe will tighten, Japan & US?

If the credit cycle swings the other direction, BHP and the likes will enter my buying range.

jog on
d998
 
BHP have a project pipeline of 30B to spend over the next few years. While prices - especially base metals - will come off production volumes will be significantly greater.

Additional iron ore, coal, copper, alumina and petroleum capacity is coming online now.
 
Ken said:
I have an average price on BHP of $25.25.

I continue to hold. I think this is period is another chance to accumulate some more, but thats just me.

I am not going to say it cant fall anymore cause it has dropped so much...

However i am prepared to give it 12 months.

Hasnt been a lot of positive light shed on BHP.

When do cas report get released? How do we expect them to fare compared to last year?
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I have to say I agree I remain positive in the mid term for BHP. I bought some more on thursday. Unfortunately the drop might not be finished yet
 
kennas said:
Might well possibly break $24.00 today, which is a pretty critial level. Has almost done this before in the past few months to bounce fairly strongly. Highs continue to get lower and lower..... :(

Perhaps some support between $20 - $22.00, which will be around the 200d ma by then.

Way oversold on Stochastics.

As a believer in the stronger for longer scenario, I'm still holding for the minute, even if you have a $9 valuation Ducati. :)
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Kennas,
Could you please explain what is the stochastic used for? I mainly use the RSI :)
 
Setting aside the current short-termist selling which could take BHP down to any price (<$20 perhaps, who knows?) the long term story is undeniable.

For those seeking a high quality company with a growth story priced at very cheap multiples - BHP is a standout.

Forgetting the current noise in the pricing of the commodities, contemplate the current forecasts of volume growth from 2006 to 2010.

Oil (mboe)
2006 115
2010 176
Up 53%

Copper ('000t)
2006 1275
2010 1420
Up 11%

Coking Coal (Mt)
2006 35.6
2010 51.9
Up 45%

Iron Ore (Mt)
2006 89
2010 113
Up 27%

Nickel ('000t)
2006 183
2010 260
Up 42%

Alumina ('000t)
2006 4,187
2010 5,327
Up 27%

*These are October 2006 Estimates from Goldman Sachs.

It is these growth numbers that put BHP on sub-10 PEs into the coming years, even when bearish metals price forecasts are used.

_______________________________________________________

The current copper panic is one-way betting for shorts at the moment.

Amazing how many forecasts are emerging for a copper surplus when three months ago all the talk was of deficit.

While supply is relatively easy to estimate, demand is almost impossible.

Contemplate that the rumoured Chinese destocking last year was in the vicinity of 200,000tns.

A similar amount of Cu is all that is available right now in the apparently 'bloated', LME inventory.

What happens if a decent portion of the Chinese demand last year met by the no longer existent strategic stockpile comes into the open market again.

Deficit anyone?

Some interesting reading:

http://www.henrythornton.com/article.asp?article_id=4444

http://www.kitco.com/ind/Field/jan032007.html
 
BSD

Setting aside the current short-termist selling which could take BHP down to any price (<$20 perhaps, who knows?) the long term story is undeniable.
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But if your heart is set on buying BHP shares, which would you rather pay, $30, or $15 [assuming you will hold until your zimmer rusts to a pile of scrap]
I would rather pay less, and receive more.

For those seeking a high quality company with a growth story priced at very cheap multiples - BHP is a standout.
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Cyclical, cyclical, cyclical.
Cyclicals are bought at low P/E's when the earnings are low, not high.
BHP's earnings are at cyclical highs.

Forgetting the current noise in the pricing of the commodities, contemplate the current forecasts of volume growth from 2006 to 2010.
*These are October 2006 Estimates from Goldman Sachs.
Amazing how many forecasts are emerging for a copper surplus when three months ago all the talk was of deficit.
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Does all the above not leave you somewhat skeptical as to the relevance of estimating supply/demand for their products?

jog on
d998
 
ducati916 said:
BSD

Cyclicals are bought at low P/E's when the earnings are low, not high.

d998
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I guess you have typo, should be bought at high P/E

Do you know how long this cycle is? Do you believe the commodity cycle has about 18 years bull market, and this cycle started in 1999?
 
mmmmining said:
I guess you have typo, should be bought at high P/E

Do you know how long this cycle is? Do you believe the commodity cycle has about 18 years bull market, and this cycle started in 1999?
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Not at all.
You would like, in an ideal world [for cyclicals] low earnings and a low price, this will give you a lower P/E than low earnings + higher price.

Do I know how long this cycle will be..........no.
Will there be smaller cycles in the larger cycle......I have no idea, but possibly
Did it start in 1999..........No, it started well before 1999

jog on
d998
 
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