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BHP - BHP Group

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Exactly.

P/E ratios dont take into account growth or risk.

A company with high risk and low growth, will have a very low PE. Vice-versa, a company with high growth and low risk, will have a very high PE. Now for a company with high risk and high growth.............:confused: take a look at EQN over the last couple months! Nobody can decide what it is worth which makes it near impossible to value.

Also remember, PEs only take into account earnings and NOT profit. Therefore it takes into account revenue, but not cost. As most companies have focused on cost cutting over recent times "synergies seems the new buzz word", it means PEs can now be slightly higher, as opposed to historical PEs. As profits will increase quickly and therefore the company will become "better value". But these synergies are of course, very limited.

Time for bed, Im confusing myself my brain is so fried! Time for some more dreams (or nightmares as they have become these days) about the stockmarket :banghead:
 
dhukka said:
I thought you might actually have a fundamental reason to hold BHP but it's clear from the above that you don't. As Buffetology said, who cares if a company earns $16billion or $16 million? That has nothing to do with valuing a company. P/E 's are also an irrelevant measure when valuing a company.

You are bound to make mistakes when you don't understand the difference between value and price.
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What I said is my fundamental reason for holding the stock, my calls have been right and I have made big amounts of money from BHP.

You may apply Buffetology in that way if you wish but from what I see I'm owning a very big, simple business at a beaten down price(Buffetology) thats mining the earth for minerals and supply petroleum to power economies.

Anyway ofcourse feel free to disagree with me if you wish, we'll see who the winner is, however I have noticed a lot of people suddenly hopping on the "overvalued" side of the road suddenly since the correction started and for some reason that people expected a profit rise on an already ridiculously high profit figure of $6b.
 
vishalt said:
and for some reason that people expected a profit rise on an already ridiculously high profit figure of $6b.
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I dont get all this massive concern on talk of slowdown and decreased profits, Vishalt is right, you cant just push up and up forever. Even if the actual figure doesnt increase, 6b is still ridiculous and i don't understand why people hammer it because it was less than 7b. 1b difference is a lot, but 6b is shytloads!
 
The thing is guys, you have to calculate the intrinsic value of BHP if you want to value it.

Return on Equity has to remain high every single year which it has done the last couple years and was expected to do (this is YOUR increase in the company) and if its net profits are not rising, but equity is (as their payout ratio is not high) then whilst equity is growing, net profit is not, and hence ROE falls. Which will dramatically cut the value of the company especially over a longer timeframe. Now, factor in you need growth in net profit year in and year out also, if BHP has already started to slow, what is in store for its future growth over the years? Perhaps its not as good as first expected, which will flow right back through all of what I just said.

I valued it at $29 personally, but if this slowdown continues, then that value will fall.

Also remember a company that is liked by the public, historically can trade anywhere upto double fair value over the course of decades. As companies such as MQG and RIO WERE doing IMO.

Anyways, if you are making money and happy with your investment techniques then all good to you. But just be careful, I read read read non-stop on all the different techniques (just getting into options and technical analysis now). Its also CRUCIAL IMHO to have an understanding of economics, hence why I studied an economics degree already.

But good luck to everyone at the moment! I agree with those chart fellas above though, I will wait until it settles in the 20s before I buy into BHP for now.
 
RIO knocked back it's offer so does that mean BHP will still be in talks with RIO? or do they have to go back to the drawing board and offer more?

It finished positive today, so lets hope it continues tomorrow
 
You guys see RIO's ann 30 mins ago?

Rio Tinto reports 3 billion tonnes of additional Resources.
BHP will have to go offer more now lol
 
I'm pretty new to all this stuff and was wondering if anyone could explain todays announcement by BHP, and if you think its good bad or doesnt have any impact.
 
With the announcements by RIO on additional 3 billions tons of iron ore and a billion tons of thermal coal, I am to an extent not too surprise to see the stock price of BHP getting a work over.

How much more does the young head honcho have to cough out to satisfy the RIO share holders? And this is just one aspect of the take over. They have yet to convince the Chinese to happily part with their 9% stake - a task, I believe, is as tough as borrowing a comb from a baldie.

On top of that, with the stake seemingly growing by every announcement, the risk too is getting bigger, especially from the lenders angle. Will they get cold feet and back off?

Probably not. But still, one has to ask what's the upper end before BHP will throw in the towel and get back to more serious matter, like running its current businesses and look into positioning themselves for the forth coming iron ore negotiation?

Still the same conclusion - ZERO. Ok, may be not, let's make it 10% chance of success. But, a better strategy is to throw in the towel now, walk away, wait for 6 months, and then go back and knock on RIO's door. That will keep them RIO board some cold sweat. By then, who knows, they may even come around lamely like they should in the first place!
 
It would be a very big mistake for BHP to up their bid. If they were to walk away now and let RIO drift down along with the market maybe they'll have a better chance to take over RIO at a cheaper price
 
haunting said:
With the announcements by RIO on additional 3 billions tons of iron ore and a billion tons of thermal coal, I am to an extent not too surprise to see the stock price of BHP getting a work over.

How much more does the young head honcho have to cough out to satisfy the RIO share holders? And this is just one aspect of the take over. They have yet to convince the Chinese to happily part with their 9% stake - a task, I believe, is as tough as borrowing a comb from a baldie.

On top of that, with the stake seemingly growing by every announcement, the risk too is getting bigger, especially from the lenders angle. Will they get cold feet and back off?

Probably not. But still, one has to ask what's the upper end before BHP will throw in the towel and get back to more serious matter, like running its current businesses and look into positioning themselves for the forth coming iron ore negotiation?

Still the same conclusion - ZERO. Ok, may be not, let's make it 10% chance of success. But, a better strategy is to throw in the towel now, walk away, wait for 6 months, and then go back and knock on RIO's door. That will keep them RIO board some cold sweat. By then, who knows, they may even come around lamely like they should in the first place!
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Interesting read in the Australian today that pointed out that BHP owned more tonnes in the Pilbara on an equity basis, which RIO were forced to correct by the takeover panel having naughtily quoted tonned owned by JV partners.

3Bt on top on of 30Bt will simply push their mining life along a few years.

As for energy coal in South Africa, well thats hardly something to get excited over.
 
This was kindly posted by Agro in the FMG thread:

http://www.theaustralian.news.com.au...83-643,00.html

"RESOURCES and Energy Minister Martin Ferguson has flagged changes to the Trade Practices Act that would protect BHP Billiton and Rio Tinto from having to allow upstart iron ore rival Fortescue Metals Group use of their rail lines in the Pilbara."

It's an interesting article that makes me consider if FMG fits into the plan for BHP's takeover of RIO. Not only will they take over their biggest competition, but if changes are made to the Trade Practices Act, then they would certainly have a thumb over the upcoming competition. Delaying FMG and potentially owning RIO certainly has BHP in the drivers seat. If causing disruption to FMG's startup is a part of the plan, then I would not be suprised if BHP ups the offer for RIO.

I would be interested to hear others opinion on this?
 
I am dizzy with all this funnymentalist information about BHP. Information overload ain't the word for it. P/E's and forward projections, bubble charts that make mine look anaemic, ore and coal prices, infrastructure and the Chinese, Rio and the take over panel, Lil Rudd and Swannie, projects starting, stopping, London , New York.

What A Kerfuffle as Lou would say in Little Britain.

Lets bring a note of sanity to all this ferment.

A chart.

This is a chart of BHP, and before you all start heading for your prescription medications , its a chart with an inverted Y axis, so it looks a bit like MQG heading down, with lower lows and lower highs.

Its not a bad idea if you are ever unsure about a stock to turn the chart upside down!

Standing at the back of my verandah as the smoke from my Fonseca Cazadore wafts over the volume bars I note that the recent movement up on this chart has been on low volume. Thus the retracement in price has got little support and I would now guess that I will not pick this little beauty up as I said before in the mid twenties. I do hope it retraces again to 30 as I'll be in there if it does, where the double "highs" recently on this chart.

I trust this is not too confusing.

Thus I expect BHP to continue up and up. Its a contarian opinion but there you are.

Cheers

gg
 

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Seems too be finding a trading range between $35 and $40.
May have the odd dip below and test the $40 mark but seems set in that range for some time.
 
Buffettology said:
Exactly.


Also remember, PEs only take into account earnings and NOT profit. Therefore it takes into account revenue, but not cost. As most companies have focused on cost cutting over recent times "synergies seems the new buzz word", it means PEs can now be slightly higher, as opposed to historical PEs. As profits will increase quickly and therefore the company will become "better value". But these synergies are of course, very limited.

Time for bed, Im confusing myself my brain is so fried! Time for some more dreams (or nightmares as they have become these days) about the stockmarket :banghead:
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P/E = Current Stock Price / (Net Profit / Number of shares) Net profit takes into both revenue and cost therefore it does take into account profit. If P/E's, Dividend, earnings growth forcasts are all irrelevant then what is relavant? Technical Analysis,Graphs and trends? vishalt you make more sense than anyone else here keep it up
 
kengaikl said:
P/E = Current Stock Price / (Net Profit / Number of shares) Net profit takes into both revenue and cost therefore it does take into account profit.
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True. As you can see, I dont take much notice of P/E ratios (infact, I dont really look at them whatsoever as I dont factor them into my equations).

I always just assumed it was price/ earnings (as in revenues per share), not net profits. Only reason I look at EPS is to find an upward historical trend and future growth potential.

Still, P/E doesnt take into account future growth potential or risk (Price does to some extent, based on mob (crowd) mentality, which can be very risky in itself), so pretty irrelevent (which is why I never really took any notice of its calculation). My bad, I simply assumed its calculation instead of actually checking.

Earnings growth forecasts are important, but you have to look at these in % terms and see how they will enable ROE to grow (afterall, this is YOUR owning of the company). The higher the growth % forecast, obviously, the higher ROE will grow (or the bigger the dividend will be if the company decides to use its extra profit for higher dividend payouts). Dividend payout ratios matter, because the higher ratio payed, the less profit (earnings) kept for the company and the smaller growth in book value (or equity per share). Risk must too be taken into account, which interwines with management, sector, company, entire stockmarket and economic outlook.

Technical analysis can predict when a share "might" breakout of its current trend, how strong the tend is and when this could be reversed.

Just remember, any ratio is a snapshot of a "point in time" just like the balance sheet. You must also look at the flows and see how things are trending.
 
So far there are still no signs that the future profit growth at BHP are slowing down. the recent figures that missed analyst estimates are largely due to the AUD and the fact that the company itself has invested heavily in its mines to increase output. I believe that the benefits of these investments will be seen in the medium term which will also be reflected in their share price. For those who suggest that they will drop back to 20-27 levels, well i really dont see that happening.
 
Buffettology said:
True. As you can see, I dont take much notice of P/E ratios (infact, I dont really look at them whatsoever as I dont factor them into my equations).

I always just assumed it was price/ earnings (as in revenues per share), not net profits. Only reason I look at EPS is to find an upward historical trend and future growth potential.

Still, P/E doesnt take into account future growth potential or risk (Price does to some extent, based on mob (crowd) mentality, which can be very risky in itself), so pretty irrelevent (which is why I never really took any notice of its calculation). My bad, I simply assumed its calculation instead of actually checking.

Earnings growth forecasts are important, but you have to look at these in % terms and see how they will enable ROE to grow (afterall, this is YOUR owning of the company). The higher the growth % forecast, obviously, the higher ROE will grow (or the bigger the dividend will be if the company decides to use its extra profit for higher dividend payouts). Dividend payout ratios matter, because the higher ratio payed, the less profit (earnings) kept for the company and the smaller growth in book value (or equity per share). Risk must too be taken into account, which interwines with management, sector, company, entire stockmarket and economic outlook.

Technical analysis can predict when a share "might" breakout of its current trend, how strong the tend is and when this could be reversed.

Just remember, any ratio is a snapshot of a "point in time" just like the balance sheet. You must also look at the flows and see how things are trending.
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dont wanna be rude, as you seem to be newish to this whole stock gambling business, but a lot of what you are saying is either incorrect or so basic, it doesnt need to be said at all...

anyway, back to BHP... and more importantly large cap miners in general... i am becoming increasingly concerned that this whole "mining boom cycle" is a myth... fair enough we have had some stellar years, but recently the growth in profits from the large cap miners has not been that impressive... it seems that costs are growing at a similar pace, therefore negating any rise in revenues... that to me signals the boom is over and with most analysts predicting commodity prices to fall, we could potentially see some nasty profit downgrades in the sector over the next year perhaps?

IMO doesnt bode well for BHP
 
mrgroundwork said:
dont wanna be rude, as you seem to be newish to this whole stock gambling business, but a lot of what you are saying is either incorrect or so basic, it doesnt need to be said at all...

anyway, back to BHP... and more importantly large cap miners in general... i am becoming increasingly concerned that this whole "mining boom cycle" is a myth... fair enough we have had some stellar years, but recently the growth in profits from the large cap miners has not been that impressive... it seems that costs are growing at a similar pace, therefore negating any rise in revenues... that to me signals the boom is over and with most analysts predicting commodity prices to fall, we could potentially see some nasty profit downgrades in the sector over the next year perhaps?

Can you point out which analysts are predicting commodity prices to fall. My brokers report states they expect most commodities to increase, would be interested to hear which analysts think they are going to drop, considering most brokers has bhp as a buy.
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