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BHP - BHP Group

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Kauri said:
http://www.theaustralian.news.com.au/story/0,25197,23551237-643,00.html

Last week, the news of S. Korea and Japan paying a 300% price rise for Australian coal emerged, with the news this week that the China government is now looking to secure rights to Australian resources including iron ore. Also today, the press is that China has negotiated a 227% increase for Potash from a Canadian/US firm for a $400 a ton increase.
Also, the push higher in the AUD has been on the back of a lot of Asian CB buying... wonder why??

Now, back to Skip, we have 94 option barriers to take out..

Cheers
...........Kauri
Click to expand...

IPL might have been a safe bet on the back of that... short-term?? or even longer term maybe??

Cheers
..........kauri
 
Looks like it's found resistance at the closing of the gap.

This is where I have moved my stop too, just below the gap close level, at around $42 FWIW.

Tonight in the US is options expiration, sure to be a strange night.
 
Up 3.6% to $45.10, real stallion at the moment. From here, a move above 47.70 would be the next target, then to the half-ton! The 'Mums and Dads' might be alright afterall :) :)
 
As a complete amateur I exited BHP at $40! :banghead:

Can any chartists out there give me an idea how I could have identified that it was breaking through previous resistance levels? (increasing MACD?)

Plus identifying new resistance?
 
ASX Banks and Industrials - no earnings growth for the coming year. First world consumers are struggling with mortgages on LCDs, McMansions and renovators delights. No immediate end in sight.

BHP and RIO - 40%+ earnings growth and 9 times PE - China growing at over 10% per annum and the commodity inventories and supply struggling to keep pace.

Where do you want to be?

On a daily basis, we still have to listen to fund managers (typically those who made their money in being long banks) who cannot accept a 10 year (let alone 20 year) commodity bull market saying the demand and good times can't last.

These guys have been WRONG for five years and will continue to carp from the sidelines. They whine that we are in a 'speculative bubble' - but cannot explain the demand for iron ore and coal which attract no speculative funds.

The older punters who actually saw the last bull market in commodities are wiser.

The smart blokes who can understand the FACT that there is NO supply response coming in copper, oil, nickel, molly, coking coal etc are tired of the doubt - but now laugh about how being wrong for 5 years and more has made us so much money.

The 'GLOBAL CREDIT CRUNCH' has not effected investors in high-quality mining/energy houses.

Big miners are making new highs. Many mid-tier producers are only recovering - but they have steadily outperformed the crippled investors in banking, property, consumer, infrastructure, services etc. Many commodities are again hitting all time highs.

What does that say about the so-called commodities bubble??? I would have thought a BUBBLE would have burst in such a climate?

BHP is going up.

GO the big Australian
 
BSD said:
ASX Banks and Industrials - no earnings growth for the coming year. First world consumers are struggling with mortgages on LCDs, McMansions and renovators delights. No immediate end in sight.

BHP and RIO - 40%+ earnings growth and 9 times PE - China growing at over 10% per annum and the commodity inventories and supply struggling to keep pace.

Where do you want to be?

On a daily basis, we still have to listen to fund managers (typically those who made their money in being long banks) who cannot accept a 10 year (let alone 20 year) commodity bull market saying the demand and good times can't last.

These guys have been WRONG for five years and will continue to carp from the sidelines. They whine that we are in a 'speculative bubble' - but cannot explain the demand for iron ore and coal which attract no speculative funds.

The older punters who actually saw the last bull market in commodities are wiser.

The smart blokes who can understand the FACT that there is NO supply response coming in copper, oil, nickel, molly, coking coal etc are tired of the doubt - but now laugh about how being wrong for 5 years and more has made us so much money.

The 'GLOBAL CREDIT CRUNCH' has not effected investors in high-quality mining/energy houses.

Big miners are making new highs. Many mid-tier producers are only recovering - but they have steadily outperformed the crippled investors in banking, property, consumer, infrastructure, services etc. Many commodities are again hitting all time highs.

What does that say about the so-called commodities bubble??? I would have thought a BUBBLE would have burst in such a climate?

BHP is going up.

GO the big Australian
Click to expand...

Yep new numbers out for BHP

Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS 275.0 287.6 391.2 422.5
DPS 55.4 64.4 72.2 80.1

Date: 23/4/2008
Author: Yuko Narushima
Source: The Sydney Morning Herald --- Page: 1-2
The Olympic flame is expected to land in Canberra on 24 April 2008 amidcontroversy and protest threats. The flame reached Jakarta on 23 April under theprotection of around 2,500 police and 1,000 military officers. Althoughoriginally due to pass through the city at street level, the relay event wasrelocated to a stadium and the crowd reduced to invitation-only guests.Protesters are expected at the Australian leg of the torch relay afterdemonstrations by pro-Tibet supporters during stops in the US and Europe.Sponsors such as BHP Billiton have moved to distance themselves from the relay,shifting from being a "proud supporter" to a provider of metal for thetorch

Date: 21/4/2008
Author: Barry FitzGerald
Source: The Age --- Page: B1
BHP Billiton CEO, Marius Kloppers, has rebuked claims from its takeover target,Rio Tinto, that its oil business is globally insignificant. Kloppers, uponleaving Australia's 2020 Summit, stated that at $US115 a barrel, oil is awonderful business for BHP. Rio CEO, Tom Albanese, alleged in mid-April 2008that BHP's petroleum business is too small and does not have long-termendurance in comparison to minerals
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Albanese is fighting a losing battle.

http://business.smh.com.au/kloppers-puts-the-boot-into-rio/20080423-280u.html

"On every metric I can envisage they have been beaten. They have missed the boat on China, they are missing the boat on energy,'' Mr Kloppers said.

"It must be terrible that every quarter, BHP outperforms, and that has been the case for seven years,'' Mr Kloppers said, adding that he was incredulous that Rio's chief executive, Tom Albanese, had criticised BHP's petroleum business last week when the oil price was close to $US115 a barrel.

"Rio are energy-short and they will not benefit from the 80% margin in that business. I don't know what Tom was thinking,'' Mr Kloppers said.

--------

Go Marius!
 
BSD said:
ASX Banks and Industrials - no earnings growth for the coming year. First world consumers are struggling with mortgages on LCDs, McMansions and renovators delights. No immediate end in sight.

BHP and RIO - 40%+ earnings growth and 9 times PE - China growing at over 10% per annum and the commodity inventories and supply struggling to keep pace.

Where do you want to be?

On a daily basis, we still have to listen to fund managers (typically those who made their money in being long banks) who cannot accept a 10 year (let alone 20 year) commodity bull market saying the demand and good times can't last.

These guys have been WRONG for five years and will continue to carp from the sidelines. They whine that we are in a 'speculative bubble' - but cannot explain the demand for iron ore and coal which attract no speculative funds.

The older punters who actually saw the last bull market in commodities are wiser.

The smart blokes who can understand the FACT that there is NO supply response coming in copper, oil, nickel, molly, coking coal etc are tired of the doubt - but now laugh about how being wrong for 5 years and more has made us so much money.

The 'GLOBAL CREDIT CRUNCH' has not effected investors in high-quality mining/energy houses.

Big miners are making new highs. Many mid-tier producers are only recovering - but they have steadily outperformed the crippled investors in banking, property, consumer, infrastructure, services etc. Many commodities are again hitting all time highs.

What does that say about the so-called commodities bubble??? I would have thought a BUBBLE would have burst in such a climate?

BHP is going up.

GO the big Australian
Click to expand...


Whilst I am bullish on BHP, I gotta make the following points:

a) According to my Comsec account, BHP has a P/E of about 15, not 9.

b) No supply response? Of course there will be an increased supply in some commodities. Although there are constraints in supply for some commodities, eg oil, for others such as various base metals, it's just a matter of time. There are 2 sub-issues here that we can only guess the answers to:

i) Will the constant increase in demand from China & India outweigh the higher supply that eventuates - so that commodity prices remain high? If so, how high?

ii) If there is a drop in commodity prices due to higher supply, will the loss of profit per unit be made up for by more units being sold, eg (and I'm plucking these figures out of the air, they are only meant to illustrate a point, not to be accurate) instead of 10m tons of Copper being sold at a profit of $6000 profit per ton, maybe they'll sell 20m tons of Copper at a profit of $4000 per ton. But what if they end up selling 20m tons of Copper at a profit of $2000 per ton instead?

The reality is that we are entering into unchartered waters. Nearly half the world is experiencing an industrial revolution, we know that demand for commodities will be strong, we just don't know how strong.
 
Mr_T said:
a) According to my Comsec account, BHP has a P/E of about 15, not 9.

b) No supply response? Of course there will be an increased supply in some commodities. Although there are constraints in supply for some commodities, eg oil, for others such as various base metals, it's just a matter of time. There are 2 sub-issues here that we can only guess the answers to:

i) Will the constant increase in demand from China & India outweigh the higher supply that eventuates - so that commodity prices remain high? If so, how high?

ii) If there is a drop in commodity prices due to higher supply, will the loss of profit per unit be made up for by more units being sold, eg (and I'm plucking these figures out of the air, they are only meant to illustrate a point, not to be accurate) instead of 10m tons of Copper being sold at a profit of $6000 profit per ton, maybe they'll sell 20m tons of Copper at a profit of $4000 per ton. But what if they end up selling 20m tons of Copper at a profit of $2000 per ton instead?

The reality is that we are entering into unchartered waters. Nearly half the world is experiencing an industrial revolution, we know that demand for commodities will be strong, we just don't know how strong.
Click to expand...

I refer to the more important forward PE of BHP - does Commsec offer a one year forward number?

With 90% of brokers unable to provide a recommendation and earnings estimate for BHP due to 'research restrictions' stemming from corporate involvement in the merger plan, it is not easy to find updated BHP forecasts.

Consider though that the tripling of coking coal prices is set to add over $4bn to the bottom line over the next Japanese financial year, oil is at least 40% above the last years number (in a year of large production expansion), copper is bouncing against new highs every day and we haven't even got the iron ore price rise through...

The forward PE may be over 10 now after the recent rally. But as you say, we are in unchartered territory, so maybe it could be even lower.

The supply-response I refer to is the one we have been told is coming for the last five years. The response destined to send metals prices back to 'marginal cost of production'. Of course there is a supply response, but it is hardly of the size we have been promised by the doubters.

Iron ore expansions are taking years and only keeping up with demand.

Copper has lagged years behind all expectation and the issues in Africa and South America are only making it harder.

Nickel only caught up when the price went to $50,000tn! and ultra low grade ore became useful at a cost of $15Kt.

Despite a global credit crisis, a recession in the United States and a major slowing of the European economy - the majority of commodities are in low supply/inventory.

What happens when the first world gets growing again?

As for volume growth, just remember that BHP reinvests its profits into projects with expected returns on investment of 20% (based on conservative forecasts of commodity prices). Check out the 'bubble charts' in their investor presos to ge a feel for the upcoming projects. You will note that the great majority are in energy production.

I agree that we are all guessing and I note that current prices will do very well for investors in miners - we don't need them to take another leg higher to be a believer in the sector.

There is no certainty in investing; but the demographics of 40% of the world's population is a pretty good bet.
 
BSD said:
The supply-response I refer to is the one we have been told is coming for the last five years. The response destined to send metals prices back to 'marginal cost of production'. Of course there is a supply response, but it is hardly of the size we have been promised by the doubters.
Click to expand...

Good post BSD.

As for the part above, it is important to remember that 10% growth in China requires a LOT more material, than 10% growth 5 years ago.

Compounding.

As long as China/India keep ticking along, the resources bull is sure to continue despite continued supply expansion.

However, Lumwana is sure to add to the copper supply in a big way!
 
Today was either profit taking or could have signaled some distribution (perhaps the beginning).

Next couple trading days will be important for BHP.
 
kennas said:
Perhaps probably :)cautious: lol), not going down any more, but not necessarily up. Another higher low might help. :2twocents
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Breaking 40 was outstanding, discounting that H&S. Now the next challenge is ATH.

Lot's of support established to the downside now around 35-40. LOTS!
 

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BSD said:
I refer to the more important forward PE of BHP - does Commsec offer a one year forward number?

With 90% of brokers unable to provide a recommendation and earnings estimate for BHP due to 'research restrictions' stemming from corporate involvement in the merger plan, it is not easy to find updated BHP forecasts.

Consider though that the tripling of coking coal prices is set to add over $4bn to the bottom line over the next Japanese financial year, oil is at least 40% above the last years number (in a year of large production expansion), copper is bouncing against new highs every day and we haven't even got the iron ore price rise through...

The forward PE may be over 10 now after the recent rally. But as you say, we are in unchartered territory, so maybe it could be even lower.

The supply-response I refer to is the one we have been told is coming for the last five years. The response destined to send metals prices back to 'marginal cost of production'. Of course there is a supply response, but it is hardly of the size we have been promised by the doubters.

Iron ore expansions are taking years and only keeping up with demand.

Copper has lagged years behind all expectation and the issues in Africa and South America are only making it harder.

Nickel only caught up when the price went to $50,000tn! and ultra low grade ore became useful at a cost of $15Kt.

Despite a global credit crisis, a recession in the United States and a major slowing of the European economy - the majority of commodities are in low supply/inventory.

What happens when the first world gets growing again?

As for volume growth, just remember that BHP reinvests its profits into projects with expected returns on investment of 20% (based on conservative forecasts of commodity prices). Check out the 'bubble charts' in their investor presos to ge a feel for the upcoming projects. You will note that the great majority are in energy production.

I agree that we are all guessing and I note that current prices will do very well for investors in miners - we don't need them to take another leg higher to be a believer in the sector.

There is no certainty in investing; but the demographics of 40% of the world's population is a pretty good bet.
Click to expand...

I've cut and pasted this from Comsec, so the formatting wont' be ideal, but here it is. Basically, the Forward P/E for the 2008/9 financial year based on Median estimates = 11.5.

Which probably still makes BHP a good buy. Just not quite as brilliant as it was when it was $35 a month or so ago. Though it goes without saying that forecasts are just that, forecasts, and the future is always unpredictable.



Year Ending 30-06-08 --------- Year Ending 30-06-09
EPS(c) PE Growth --------- EPS(c) PE Growth
Median 287.6 15.6 4.6% 391.2 11.5 36.0%
High 355.0 12.6 29.1% 512.6 8.8 44.4%
Low 263.9 17.0 -4.0% 349.5 12.8 32.4%


Number of Analyst
Estimates 8
 
Some solid support found around the $42 mark. Im waiting for a pullback to close the gap below in this consolidation zone (which is subsequently at a former resistance point) before we see a run to test the old highs and hopefully some volume to enter the fray.
 
I heard on the news today that BHP and RIO are close to be getting a freight premium from China. BHP was up almost 4% overnight in London. I am wondering how high this will push BHP and RIO share price if they get this iron ore price premium specially after the 200% + increase in coking coal price . Looks very bright for BHP at the moment:)
 
I am getting conflicting information today on BHP. I heard on channel nine that BHP shares where down more than 4% in the US (I did not know they were listed there) and when I check their share price in London they went down only 0.41%. Bgi difference. I am wondering what that will mean for BHP opening today in the ASX. Probably down but will it be a lot down or just a bit :banghead:
 
Weekly Dilernia 'Drops' :- expectation that BHP is rotating back down into MAY 50% level.....

If BHP is going to continue higher, then I would look for a lower Weekly close and support around the 50% level this week, and then rise Upwards from a lower Weekly open next week, as long as price remains above the 50% level.
 

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