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BHP - BHP Group

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Earlier in the thread, I fancied that BHP could be a target for LBO. Here is an something I quoted from a link:

(Jim) Rogers said the likes of BHP could become targets for private equity.
“There are now gigantic amounts of private equity being raised. Billions of dollars are being raised for private equity. It has got to go somewhere,” he said.
“BHP, on an asset basis, is a cheap stock. This isn’t a prediction. Whether a private equity group wants to come in and try to buy them or whether BHP wants to sell, I’ve not a clue. But I do know that if you look at their assets and you look at the amount of private equity out there, that’s what these guys do, they go around looking for companies where they think they’ll make a lot of money.”

http://tangibulls.com/category/jim-rogers/
 
reece55 said:
Duc, you seem overly negative to almost every deal at the moment. You obviously a very educated person, but I wonder why you think that you are smarter than thousands of accountants and investment bankers doing the calculations on these buy outs. I would be interested to see what your valuation methodology thought of BHP's acquisition of WMC.
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Be careful on your assumptions - Ducati has repeatedly stated that LIFO/FIFO policy alters cashflow

And he has confused project capex with ongoing operating costs

Not to mention he thinks BHP is a sell because of its book depreciation.
 
haemitite said:
Be careful on your assumptions - Ducati has repeatedly stated that LIFO/FIFO policy alters cashflow

And he has confused project capex with ongoing operating costs

Not to mention he thinks BHP is a sell because of its book depreciation.
Click to expand...

Guys,
I don't want people to think that I am having a go at Duc - if thats the way it was interpreted thats not how it was intended. I actually think his analysis is a breath of fresh air in an otherwise very bullish world at the moment. But as I P&L and Balance Sheet metrics, said, I think he is overly negative from a valuation perspective and focuses on as opposed to a DCF model. This is sensible if buying private companies, but doesn't work on public coy's. In my experience, this leads to a valuation based more on the termination or intrinsic value of a company, rather than the true enterprise value. Additionally, from a stock trading perspective, it is impossible to trade on this sort of analysis unless you are looking to hold for an economic cycle.

For the record, BHP using LIFO as your accounting policy obviously inflates profits dramatically - specifically when prices increase rapidly, which is occurring in the mining industry. Haem, Duc doesn't confuse capex with operating costs - what he is saying is that the projects they are commissioning now are costing a bucket load and when they do come online, they will barely meet the cost of the developed mine. Now, obviously we are looking into the future here - I mean, I wouldn't have a clue if say Raven has cost far too much to build. We will only know this in five years.

Duc, I agree with you on the investment bankers, but the accountants working for the companies constructing these deals will have the organizations best intentions at heart - after all,, it is there balls on the line (+ I have a conflict of interest here - I am an accountant)! And you are right on the mark about BHP and their cash - it's burning a hole in their pocket. They are under immense pressure at the moment to deliver shareholder value and certainly one way of doing this is to acquire an asset with their buckets of dough. In the past (i.e. WMC) they have got it right - lets hope they do as well in future with their future acquisitions.

Cheers
Reece
 
Reece, I didn't think you were having a go at him

Ducati is welcome to his very bearish position - but a fundamentalist he isn't. He banged on for ages about BHP's accounting policy impacting cashflow.

As for burning cash, well many BHP shareholders will be enjoying a nice franked dividend and an enticing capital loss soon. And BHP won't be going anywhere near Alcoa
 
haemitite said:
Reece, I didn't think you were having a go at him

Ducati is welcome to his very bearish position - but a fundamentalist he isn't. He banged on for ages about BHP's accounting policy impacting cashflow.

As for burning cash, well many BHP shareholders will be enjoying a nice franked dividend and an enticing capital loss soon. And BHP won't be going anywhere near Alcoa
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The nice easy explanation.
Depreciation is a non-cash charge.
Thus depreciation increases cash-flow.
Depreciation, to accurately state cash-flow, must be deducted.

reece55

An accountant, should have realized.
Your primary issue then being that the CFO & staff should have a grasp of the financial facts, and understand that AA is a poor choice [fit] for BHP.

Thus we come into the psychological realm of, Institutional Imperative. This can [and does] explain many of the truly zany business decisions within acquisitions.

jog on
d998
 
ducati916 said:
The nice easy explanation.
Depreciation is a non-cash charge.
Thus depreciation increases cash-flow.
Depreciation, to accurately state cash-flow, must be deducted.

jog on
d998
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This is really frustrating.

Where is the depreciation line on the Cash Flow Statement?

Page 5
http://www.bhpbilliton.com.au/bbContentRepository/signedbhpbillitonlimitedjune2006.pdf

or F-7
http://www.bhpbilliton.com.au/bbContentRepository/20ffinancialstatements.pdf


Reece, us dumb brokers and analysts cant explain to Duc the difference between cashflow and accounting profit

Give us a hand please -he listens to other accountants
____________________________

More importantly -

Hills up another 1.5% in the US

Upgrades are coming in bulk commods and copper is going back to $3.00 before $2.00 after the January Chinese imports of copper were 40% higher than pcp and iron ore 30%.

When these upgrades and the accretion of buying back $10bn worth of shares hits the models, the PE will slump to 8 and the analysts will be calling for $35

Plenty more to come in this story
 
More news on the Alcoa takeover rumour, James Regan of Reuters, commented yesterday that BHP “had no plans to have a go at Alcoa”. It will be interesting to see if the market continues to speculate.

Cheers
 
ducati916 said:
The nice easy explanation.
Depreciation is a non-cash charge.
Thus depreciation increases cash-flow.
Depreciation, to accurately state cash-flow, must be deducted.
Click to expand...
Depreciation is a non cash item -> it does not increase cashflow

And perhaps by now you may have realised that book depreciation and tax depreciation are different beasts
 
Am up about 12% since buying BHP in December, which is a reasonable outcome in a few months.
Again, the commodity doomsayers are found to have misjudged the market.
ducati is welcome to present his cumbersome valuations and accompanying incongruent jargon, but its value remains elusive given his additional capacity for significant error.
It is all good and well to announce the "sky is falling" and have the Chicken Littles of the world worrying the bejeebers out of everyone - if the sky is indeed falling.
BHP is just a few dollars away from blue sky again and has the capacity to fly even further if broad-based commodity market tightness can again put a strangle on copper prices.

If I was a WPL executive at the moment, I would be looking at where BHP might place me on the corporate ladder. Or be looking for another corporate opportunity.
 
rederob said:
Am up about 12% since buying BHP in December, which is a reasonable outcome in a few months.
Again, the commodity doomsayers are found to have misjudged the market.
ducati is welcome to present his cumbersome valuations and accompanying incongruent jargon, but its value remains elusive given his additional capacity for significant error.
It is all good and well to announce the "sky is falling" and have the Chicken Littles of the world worrying the bejeebers out of everyone - if the sky is indeed falling.
BHP is just a few dollars away from blue sky again and has the capacity to fly even further if broad-based commodity market tightness can again put a strangle on copper prices.

If I was a WPL executive at the moment, I would be looking at where BHP might place me on the corporate ladder. Or be looking for another corporate opportunity.
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Hi not bad BHP

Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 225.4 286.0 299.8 287.8
DPS 48.4 54.9 57.5 60.4

thx

MS
 
Bush Trader said:
More news on the Alcoa takeover rumour, James Regan of Reuters, commented yesterday that BHP “had no plans to have a go at Alcoa”. It will be interesting to see if the market continues to speculate.

Cheers
Click to expand...
Unless Regan doubles as a BHP executive then his comments are as credible as the original speculation.
 
haemitite said:
Depreciation is a non cash item -> it does not increase cashflow

And perhaps by now you may have realised that book depreciation and tax depreciation are different beasts
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Well neither yourself, nor BSD managed to understand the second time round.
With regards to Book Depreciation as opposed to Tax Depreciation, you only need check Deferred Tax Liabilities for the rates used.

The net effect of course, is to reduce Tax paid, without effecting a reduction in Net Profits reported to the shareholders.

Now, if you can think logically; if the company accelerates the depreciation for Tax purposes, reduces their Tax and capitalises the liability........does this effect their cash-flow?

Ponder on
d998
 
michael_selway said:
Hi not bad BHP

Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 225.4 286.0 299.8 287.8
DPS 48.4 54.9 57.5 60.4

thx

MS
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Can you guys remember when the dividend date is for BHP?

Cheers,
 
Hills up 2% in London ATM


The next massive catalyst is the ASX buy back completing.

Company buys $3billion of shares back at massive discount and sellers rush to buy-back vended shares on market.

More broker upgrades coming into an already cheap stock to fuel the fire.
 
BSD said:
Hills up 2% in London ATM


The next massive catalyst is the ASX buy back completing.

Company buys $3billion of shares back at massive discount and sellers rush to buy-back vended shares on market.

More broker upgrades coming into an already cheap stock to fuel the fire.
Click to expand...

Hi BSD,

I'm fairly new to trading but I bought 2000 BHP today because it seemed like a temporary pull-back. I read posts on this thread to try and pick up fundamental reasons to buy/short or avoid this stock. Can you tell me please what relevance/effect has Hills (Hills Industries?) on BHP sp?

Cheers,
hector
 
Sorry Hector

BHP is often referred to as 'Hills"

Broken Hill Proprietary Company

Those 2000 shares should be worth a bit more tomorrow

Good luck
 
BSD said:
Sorry Hector

BHP is often referred to as 'Hills"

Broken Hill Proprietary Company

Those 2000 shares should be worth a bit more tomorrow

Good luck
Click to expand...

Thanks mate, I'll flash my knowledge when I'm in the company of Brokers next.

Oil up, Dow down, UK up, ADR down... Bit hard to predict an open this morning. (what does ADR stand for?)

Looking forwards to a good day, cheers
 
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