Australian (ASX) Stock Market Forum

BHP - BHP Group

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ducati916 said:
BSD

Does all the above not leave you somewhat skeptical as to the relevance of estimating supply/demand for their products?

jog on
d998
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Try reading my post again:

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

or from the Raff Report link:

"When looking at the commodity markets remember that it is only the supply side that is well known and even then the error is probably plus or minus 5-10%. But when it comes to demand side, the most important side of the equation, analysts are making a best guess with an error probably ranging between 10% and 20%. "

Without estimating supply and demand - how on earth to you take a view on future price?

Then again, you are the one who doesn't read analyst research because you know more and actually prefer to make no estimates - benefiting at cash rates from balance sheet analysis.
 
BSD

Then again, you are the one who doesn't read analyst research because you know more and actually prefer to make no estimates - benefiting at cash rates from balance sheet analysis.
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That's correct.
You would have been buying at $30+
While I would not consider buying below $12

If BHP in 10yrs is worth $45........who made the better returns?

jog on
d998
 
If you look back (your forte) my interest in BHP on this thread has been in a range between $24 and $28.

Even if I was buying at $30+ - in your little riddle, I will make more money at $45 because you will never get set at below $12
 
Maybe I'm in the minority, actually... I know I'm in the minority here. I do not like BHP's medium or short term prospects.

The reason is simple, the majority of their production increases come when the commodities they are increasing the production of, are coming into balance, and may even be in a supply surplus.

However, I can't see the SP crashing because the Instos love this stock, and couldn't handle a massive loss on this one.
 
When it all boils down, elephants can't dance.

Elsewhere in the resources sector, folks have been absolutely raking it in. Even noobs are share market gurus 'cause they've made a crapper full of cash.

BHP is big old slow dog that should only be bought VERY cheaply.

:2twocents
 
BSD said:
If you look back (your forte) my interest in BHP on this thread has been in a range between $24 and $28.

Even if I was buying at $30+ - in your little riddle, I will make more money at $45 because you will never get set at below $12
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Incorrect.
I could have bought it at that price in June 2004, when it was undervalued, before everyone and their granny jumped on the commodities bandwagon.

You really need to raise the level of your own analysis, it seems you depend far too much on the analysts that you read.

jog on
d998
 

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And of course, as I was originally talking in terms of the US ADR, then here is the same buying point in price in 2002. When everyone hated everything.

jog on
d998
 

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ducati916 said:
Incorrect.
I could have bought it at that price in June 2004, when it was undervalued, before everyone and their granny jumped on the commodities bandwagon.

You really need to raise the level of your own analysis, it seems you depend far too much on the analysts that you read.

jog on
d998
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Raise the level to what?

Why is BHP not in your 'cash return - massive risk' portfolio then?

You would have knocked it out about $10 below the current price anyway

I like PDN at 0.6c too - but I don't have a time machine.


In the short term we are all guessing.
 
ducati916 said:
Incorrect.
I could have bought it at that price in June 2004, when it was undervalued, before everyone and their granny jumped on the commodities bandwagon.

You really need to raise the level of your own analysis, it seems you depend far too much on the analysts that you read.

jog on
d998
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What a coincidence.

I could have bought it at that price in June 2004 as well.
 
chops_a_must said:
Maybe I'm in the minority, actually... I know I'm in the minority here. I do not like BHP's medium or short term prospects.

The reason is simple, the majority of their production increases come when the commodities they are increasing the production of, are coming into balance, and may even be in a supply surplus.

However, I can't see the SP crashing because the Instos love this stock, and couldn't handle a massive loss on this one.
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Chops I'm happy to join you in the minority camp, being in the minority actually gives me more confidence. Remember when the instos loved AMP? Most of them were too scared to call it a dog even when they knew it was a dog - mainly because they didn't want lose business from the biggest fund manager in Australia, but in the end it got dumped.
 
BSD said:
Raise the level to what?

Why is BHP not in your 'cash return - massive risk' portfolio then?

You would have knocked it out about $10 below the current price anyway

I like PDN at 0.6c too - but I don't have a time machine.


In the short term we are all guessing.
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In the short term I can agree we are all guessing, absolutely, 50/50.

As to knoking it out earlier [had I actually held it] correct, I wouldn't have held it past much past 50% return.

As to why is it not there, simply for two reasons, at the time I was making the transition from technicals to fundamentals and never looked at it.
By the time I would have looked at it, it was gone.

The point in regards to BHP really is this; if you thought BHP was the behemoth, cash churning machine that you seem to, why did you not buy it at those bargain basement prices?

Why are you promoting it so vocally at the current high prices?
Simply looking at the charts, does it not seem POSSIBLE that you could get it cheaper, and thus improve your returns in the longer run?

jog on
d998
 
To me there is no doubt that BHP is undervalued at the current level. The question is how long you are planning to hold for. If it is short term then you will probably try to get it at an even lower price that it is otherwise the current level are probably not bad at all to buy now. I have personally bought some BHPJMD (installment warrant) on thursday as I am very bullish on this one for 2007.
My only problem is it does not pay much dividend compared to other stocks. Hopefully this will change.
 
ducati916 said:
In the short term I can agree we are all guessing, absolutely, 50/50.

As to knoking it out earlier [had I actually held it] correct, I wouldn't have held it past much past 50% return.

As to why is it not there, simply for two reasons, at the time I was making the transition from technicals to fundamentals and never looked at it.
By the time I would have looked at it, it was gone.

The point in regards to BHP really is this; if you thought BHP was the behemoth, cash churning machine that you seem to, why did you not buy it at those bargain basement prices?
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Because BHP in Jan 07 is a different beast to BHP of Jun 04. Future expectations - hence share price - were very different to today.

In early 2005 I sold shares in a small iron ore company MGX after a 300% return over the prior 3 years. Iron ore price expectations were for a 20% rise, a few months later people finally woke up to China when a 70% price rise was delivered. The iron ore price today is more than double what it was in Jun 04, volumes are much higher too.

People who decide not to buy a stock because its more expensive than an earlier buying opportunity miss the point. Likewise it makes little sense to bemoan not buying the shares when they were "cheap". If you had believed them to be cheap at the time you would have bought them. Obviously you didn't.
 
A major attraction of BHP continues to be a superb pipeline of projects across the globe. There are 23 projects at the feasibility stage or under construction, representing capital investments of around $14 billion. There are also around 200 projects in early stage assessments in 35 countries. BHP is definitely building for the future.

The international spread of such a large pipeline enhances and de-risks BHP in my opinion. The strike in Chile provides a prime example of this. Despite affecting the largest copper mine in the world, full year profitability remains on track. Similarly, due to earnings streaming from a wide range of commodities, BHP is less likely to be seriously impacted by weakness in one or two product markets.
 
annalivia said:
A major attraction of BHP continues to be a superb pipeline of projects across the globe. There are 23 projects at the feasibility stage or under construction, representing capital investments of around $14 billion. There are also around 200 projects in early stage assessments in 35 countries. BHP is definitely building for the future.

The international spread of such a large pipeline enhances and de-risks BHP in my opinion. The strike in Chile provides a prime example of this. Despite affecting the largest copper mine in the world, full year profitability remains on track. Similarly, due to earnings streaming from a wide range of commodities, BHP is less likely to be seriously impacted by weakness in one or two product markets.
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annalivia

First, I would disagree that investing so heavily at this point [historically high commodity prices] is strategically the right way forward, as by the time they are actually productive, the margins may be so squeezed, that they run at a loss.

Second, and more importantly, BHP returns from PP&E are desultory. They are on aggregate $0.93/$1.00 and even with the wind at their backs with high commodity prices, they remain an uninspiring $0.97/$1.00

This is a low return business. It is bad.
It is of course a commodity business, and by definition, they are low return high volume businesses.

There is no guarantee that this $14Billion invested will return ANYTHING.
Assuming for the moment that everything works out well, no hiccups, no delays, no strikes, price rises, cost overflows, etc,.............you will still earn the same on capital investment.

Could there not be a better use for the money?
Increase dividends, buybacks, etc?

Certainly at current prices there is no value to be had, you are paying for a stock, priced for perfection.

jog on
d998
 
ducati916 said:
This is a low return business. It is bad.
It is of course a commodity business, and by definition, they are low return high volume businesses.d998
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this just about tops it

You've confused a commodity business with a supermarket.
 
annalivia said:
A major attraction of BHP continues to be a superb pipeline of projects across the globe. There are 23 projects at the feasibility stage or under construction, representing capital investments of around $14 billion. There are also around 200 projects in early stage assessments in 35 countries. BHP is definitely building for the future.
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Very true - the capital expenditure is the driver of the production growth identified on the previous page.

These new projects need to jump IRR hurdles of 20% and the assumed prices for commodities used in the modelling are very low. - $1.20 Cu, $40 bbl oil etc

Another year will pass and another $10bn of free cashflow for new investment will be generated
 
BSD said:
Very true - the capital expenditure is the driver of the production growth identified on the previous page.

These new projects need to jump IRR hurdles of 20% and the assumed prices for commodities used in the modelling are very low. - $1.20 Cu, $40 bbl oil etc

Another year will pass and another $10bn of free cashflow for new investment will be generated
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Do any of you people actually look at the numbers, or are you all relying on outside analysts to tell you what you "should" think?

Here are 10yrs worth of figures;

Sales..............EBIT......Depreciation.......Total...........EPS.....Tax Rate

32,153.0 ......14,166.0.......2,264.0......... 9,783.0.........1.61 ....25.64
26,722.0 .......8,940.0 .....1,801.0 ..........6,388.0 .......1.04 .....25.86
22,887.0 ......4,369..........1.793.............2,716.0.........0.43.....19.91
15,608.0........2,783..........1,689.............1,581............0.25.....31.7
15,896.0........2,607..........1,769.............1,249............0.21......34.9
10,516.63......1,308...........1,220.............820.............0.22.......41.4
10,096.56......812.............1,087..............314............0.08........3.1
820.23..........55.8............77.2...............148.............0.04........60
9,770.24......[-1,089.8]....1,126.............[-950]..........[-0.27]....0.0
10,766.11....[-514.7]......1,120..............[-297]..........[0.09]......0.0

As you can see from the figures, the likelihood of generating $10Billion cash-flow on a sustained basis might as well be zero.

The returns from this business, as previously detailed are uniformly poor. In fact they are atrocious. I might even have to lower my intrinsic value. You guys are living in lala land.

jog on
d998
 
Ducat

Your figures are wrong.

Earnings per share last year were 225.4 for instance.

Keep jogging.
 
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