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BHP - BHP Group

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What stock has NOT been trading "well above historical averages" ? - only a minority of the market, and most of them are oversold or rubbish stocks.

Imo BHP just keeps on getting cheaper and cheaper!
 
GREENS said:
But will BHP double in the next year, I would highly doubt it. Why? Investors will view the RIO takeover originally as much too expensive considering the high PE multiple they would be paying for the company. The benefits from the takeover will take a couple of years to show through. Lately BHP has been trading well above its historical PE average of around 12-13 x earnings.
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Markets have begun to price in these synergies already. PE ratios are close to useless for valuing mining companies - you might want to think about how you would begin to measure the value of the massive growth in iron ore volumes of both RIO and BHP with PE.
 
Well I scratched an itch. Toped up on BHP. Not heaps but rounding out the number of shares haha. Funny, Spending 2/3rds of my initial buy but I only get 13rd of the shares - can't argue with the gains though!
 
I'm not optimistic for the next few weeks/months. The following seems to mean that for the near term, the only way is down:

a) Concerns that BHP will succeed in its takeover for RIO and overpay in the process - even if the payment is merely in the form of scrip for scrip.

b) Continuing fears about the subprime crisis affecting the world economy and leading to lower demand for commodities.

c) Leading from these 2, a view that BHP is on the way down (share price wise) which of course causes a pack mentality.

I hope I'm wrong, I really do.
 
I don't this will be the case. After the merger, there will be more upside (massive cost savings) rather than downside. BHP's SP is currently undervalued so get it before it's too late. ;)
 
Mr_T said:
I'm not optimistic for the next few weeks/months. The following seems to mean that for the near term, the only way is down:

a) Concerns that BHP will succeed in its takeover for RIO and overpay in the process - even if the payment is merely in the form of scrip for scrip.

b) Continuing fears about the subprime crisis affecting the world economy and leading to lower demand for commodities.

c) Leading from these 2, a view that BHP is on the way down (share price wise) which of course causes a pack mentality.

I hope I'm wrong, I really do.
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I think you're wrong!

Buying Rio @ this scrip price will take BHP 10 years to pay off and will only take its gearing to 24%, it can do more, and with the profit potential of this combined colossus I should think there'd be immense upside.

Ofcourse BHP is on the way down, its given shareholders DOUBLE there money back + dividends/frank after a sustained one year uptrend, people who expect such gains to continue forever should just stick to lottery tickets instead!

Also remember there is plenty of greed, people have sold a good portion of BHP off to have a chance to make a quick buck at Rio should there be another takeover, its only natural for the predator stock to consolidate.

I've topped up more BHP, my 5th buy, boy I hope it falls more, that P/E ratio of 14 is just mouth-watering! Some broker I read in the Fin Review today raised his target to $55.
 
I hope you're right Vis, I really do.

I have over 6000 BHP shares...and though most of them were bought at a much much lower price than 41 dollars, it really really hurts to see the price go down so quickly.
 
Not happy its gone down cuase Im not planning on anymore buying - but I topped up for Long Term. And Long term im sure this is going to benefit. Even without the takeover BHP is still a mammoth and all the chindia boom reasons etc.. Go Bhp!!
 
vishalt said:
What stock has NOT been trading "well above historical averages" ? - only a minority of the market, and most of them are oversold or rubbish stocks.

Imo BHP just keeps on getting cheaper and cheaper!
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haemitite said:
Markets have begun to price in these synergies already. PE ratios are close to useless for valuing mining companies - you might want to think about how you would begin to measure the value of the massive growth in iron ore volumes of both RIO and BHP with PE.
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Please, at least have some substance in your response, very disappointed. Not one of you has obviously looked at how BHP has historically traded over the past few years in regards to its PE at a point in time and its historical PE (even during a period when iron ore prices have been rising strongly). Iron ore prices need to rise to cover the inflating costs hitting the mining industry; skills shortages and higher capital costs and let’s not forget the effect of the rising Australian dollar since the last contracts were singed off.

Back to PE ratios. Why are analysts so concerned then about why the market is trading above or below its average historical PE then? Or believe ANZ now represents good value because it is trading at a discount based on its PE ratio to the average PE of the other Banks? Or could it be the fact that PE ratios are actually an integral part of valuation? However don’t get me wrong they are not designed to be used in isolation and in my original post you can see this very clearly it was 1 of only 4 points made for the case of BHP being weaker over the ST. And actually I didn’t quite understand what your arguments were on the contrary; did you come up with any? Please if you are going criticise my opinion give me something with some substance or something I can learn from. At least we agree on one thing, the big picture, BHP should be a winner LT and why I continue to hold half of my orig holdings and will be buying more as the share price continues to moderately weaken over the ST.
 
GREENS said:
Please, at least have some substance in your response, very disappointed. Not one of you has obviously looked at how BHP has historically traded over the past few years in regards to its PE at a point in time and its historical PE (even during a period when iron ore prices have been rising strongly). Iron ore prices need to rise to cover the inflating costs hitting the mining industry; skills shortages and higher capital costs and let’s not forget the effect of the rising Australian dollar since the last contracts were singed off.

Back to PE ratios. Why are analysts so concerned then about why the market is trading above or below its average historical PE then? Or believe ANZ now represents good value because it is trading at a discount based on its PE ratio to the average PE of the other Banks? Or could it be the fact that PE ratios are actually an integral part of valuation? However don’t get me wrong they are not designed to be used in isolation and in my original post you can see this very clearly it was 1 of only 4 points made for the case of BHP being weaker over the ST. And actually I didn’t quite understand what your arguments were on the contrary; did you come up with any? Please if you are going criticise my opinion give me something with some substance or something I can learn from. At least we agree on one thing, the big picture, BHP should be a winner LT and why I continue to hold half of my orig holdings and will be buying more as the share price continues to moderately weaken over the ST.
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Of course P/E ratios are important, they are a vital starting point in valuing a share. Of course, a P/E needs to be seen in context of a share's future profitability.

Whilst I agree with much of what you say, there is one point that needs to be made. There is an argument that historical P/E's are not a good benchmark for valuing BHP because it is now in an unprecedented situation (regarding China and India). Which does not mean that its P/E should be ignored, rather that there might be a better basis for comparison than its historial P/E.

Bottom line is that none of us knows what will happen in the future regarding BHP. For the simple reason that we are in an unprecedented situation. We are all gambling, no matter how certain we pretend to be.
 
Mr T

I totally agree with you. But I am thinking fairly ST here; I don’t think we have reached that stage quite yet where BHP’s PE will diverge significantly from its long term PE average i.e. a re-rating of miners. I think in the medium to longer term that is definitely a real possibility and hence one of the reasons why I am a long term believer in BHP. I think once the US heads out of this sub prime housing crises and India really heats up, we will see metal demand growth reach astonishing levels. Therefore when brokers and investors alike truly realise this long term sustainability of the commodities super cycle it will be shortly followed by a re-rating of mining stocks, hence pushing up the values in which they trade on. If we had already reached this stage I would suspect that many of the mid tiers with extortionary growth profiles would be trading on much higher values than they are currently (especially oilers and base metal stocks).

I suppose in the scheme of things who really cares about a few extra dollars if we all believe in the LT potential of BHP.
 
Hihi.

Wall Street Journal said:
There is a potential new character on the scene of the globe-spanning mining takeover battle: Pac-Man.

British mining giant Rio Tinto PLC, fighting off an unsolicited $131.57 billion takeover bid from Australian rival BHP Billiton PLC, is considering turning the tables on its rival and launching a counterbid for BHP, according to people close to the matter. The gambit is called the Pac-Man defense, and has a relatively checkered history in the annals of mergers-and-acquisitions maneuvers.

Coined after the videogame in which the pursued character can turn and eat its attackers, the Pac-Man defense still is being studied as part ...
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Counter-bid anyone :D? Hope they gang up on BHP so **** hits the fan basically lol! Bought more BHP today, yay!
 
Captain_Chaza said:
Could RIO now make a bid for BHP??
Stranger things have happened in the past

Sometimes it all depends on who has the better friends

Was it the small BPC that took over the much larger MAY a few tears ago?

Salute and Gods' speed
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I told you so! (~on the 9th of November)

How many of you believed me?
When BHP beat RIO to WMC it then became PERSONAL!!

Let the game begin
My money is on RIO

Salute and Gods' speed
 
Oh and the thought of BHP making a bid for Rio, after Rio ate Alcan wasn't ludicrous?

That came out of the blue like an old man in a bikini, just look @ Symbio v Healthscope, and stranger things have happened anyway.
 
GREENS said:
Iron ore prices need to rise to cover the inflating costs hitting the mining industry; skills shortages and higher capital costs and let’s not forget the effect of the rising Australian dollar since the last contracts were singed off.
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Yep, BHP and RIO are doing horribly with their 70% EBITDA iron ore margins, close to the poverty line.

Luckily the next price rise will more than wipe out the complete cost base.

If you are going to get affronted, you might want to get your facts in order first.
 
I think a pac-man bid by RIO would be awesome.

It would show a real move towards consolidation in the industry and would kick virtually every other miner along imo.
 
vishalt said:
Oh and the thought of BHP making a bid for Rio, after Rio ate Alcan wasn't ludicrous?

That came out of the blue like an old man in a bikini, just look @ Symbio v Healthscope, and stranger things have happened anyway.
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Did you read the article? Stephen's piece is well written, and his arguments are very strong. Basically, RIO is the one receiving the premium being the target. Why would they instead pay a premium by being the predator?
 
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