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BHP - BHP Group

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treefrog said:
wonder how they will get the extra cash for RIO (not the execs holiday bash but the takeover) - surely they wouldn't reduce the divvy???

and forget not that the current market price reflects what the expectations are for that stock looking 2-3 years ahead

a $1:30 divvy may eventuate but if there is significantly reduced growth prospects that may mean a 4-5% divvy will be needed to hold the price as a reasonable earnings stock. So does that forecast only that BHP will be $25 this time next year if the divvy forecasts hold - all pure speculation of course
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Cash isn't on the table for the RIO offer. It might have been a possibility in the past, it isn't now.

I think you'll find the divvy will be more like $1.50+ in a year, if only some of the following are true: (if all of them are true, I don't think a divvy of $2 is out of the question).

a) The interim div will have a similar % rise in $US as the final dividend did

b) The Australian dollar stays at a smiliar level (remeber, the div is prices in $US)

c) There is a 70%+ rise in profit (almost a given)

d) The payout ratio is raised from its ridiculously low level of 25%.....BHP, wtf are you doing with all that cash? (this one isn't a given, but would be nice).
 
jonojpsg said:
Absolutely no point in comparing dotcom trash with the biggest mining company in the world :confused: Agreed that lower entry doesn't necessarily lead to higher exit, but seriously you can't think that BHP will never get above $25 again?
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No thats not what im getting at, agree BHP is not trash but it may take many many years to get back to where it was. Look at Microsoft - High of $60 during the dot com bubble, smacked down to $20 after it...
 
Lower than expected growth from China will affect prices I believe.

Take this as an example:
Oct. 20 (Bloomberg) -- China's economy grew 9 percent in the third quarter, the slowest pace in five years, underscoring concern that the spreading financial crisis threatens the biggest contributor to global growth.

The median estimate of 12 economists surveyed by Bloomberg News was for a 9.7 percent expansion, after a 10.1 percent gain in the previous three months. The statistics bureau released the data in Beijing today.

I like many still believe in the medium term that China will still need truckloads of resources but people are still reacting emotionally.

Big funds are also reversing out of short financials long resources trades. And there is no reason why this trade in fact could be reversed pushing down resource stocks in the short term as FMG would attest to.

With price pressure many mines will have to close and/or postpone plans. This can breed short term fear. Conversely this puts on supply pressures. So as resources get oversold this should create a switch. just need to watch the timing on it.
BTW i am still a newbie and these are just my thoughts so any feedback welcome
 
boombubble said:
Lower than expected growth from China will affect prices I believe.

Take this as an example:
Oct. 20 (Bloomberg) -- China's economy grew 9 percent in the third quarter, the slowest pace in five years, underscoring concern that the spreading financial crisis threatens the biggest contributor to global growth.

The median estimate of 12 economists surveyed by Bloomberg News was for a 9.7 percent expansion, after a 10.1 percent gain in the previous three months. The statistics bureau released the data in Beijing today.

I like many still believe in the medium term that China will still need truckloads of resources but people are still reacting emotionally.

Big funds are also reversing out of short financials long resources trades. And there is no reason why this trade in fact could be reversed pushing down resource stocks in the short term as FMG would attest to.

With price pressure many mines will have to close and/or postpone plans. This can breed short term fear. Conversely this puts on supply pressures. So as resources get oversold this should create a switch. just need to watch the timing on it.
BTW i am still a newbie and these are just my thoughts so any feedback welcome
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Reading through newspaper clippings I understand today China will publish its GDP growth result. This will explain officially if iron ore demand still high or slacked.

Enjoy today's rise in market until the Chinese Mystism (good or bad) is unopened today.
 
well i dont see too many posts on bhp today
i wonder why....
it had a very strong end to the day.
chinas gdp of 8/9p is still hot. they will try to grow their economy with infastruture from roads, bridges, nuc power stations etc. just watch them open the spending taps only held back by manning issues.
this has to be so good for the majors, so many lame ducks to pick off when they desire, including rio.
it will really be the big australian then.
 
Yeah bhp did heaps well today, is this because the 9% wasnt far behind projected figures and there was a bit more confidence? All other markets seemed to be doing well too. Not to mention alot of works was postponded during the olympics.

Do you guys think this is just a little peak and theres still room to fall? Or is it going to be up from here on out? I know there are no crystal ball answers but I just want to here some arguments or externalities that may affect this?

Also I herd tommorow there's going to be some sort of company announcement that will affect the stock either way? Sorry I'm a bit of newb here so you got to mind the newb language.

Great forum with some great people here guys.
 
Will still be interesting to see if China makes any moves concerning BHP over its bid for RIO, now that the iron ore market is softer.
BHP stock price still looks cheap, if there is a strengthening in commodity markets. Cut backs are likely during 2009 that will impact BHP profits, but a guessing game as to how much.
 
treefrog said:
fair and relevant comment red, but as someone who used (in engineering aspects) terotechnology to determine assets and their real worth, a lot of so called assets are in fact liabilities - depending on just where the variables have shifted and which ones have shifted.
Haven't heard/seen anyone suggesting the market won't recover but it may not recover and mirror what it was.
I suspect BHP is big and smart enough to adjust but you never know for sure.
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frog
You will therefore know that most (if not all) have resequenced their mining profiles so that they are extracting minerals with highest grades and least cost.
In the good times producers will mine to lowest ore grade cut-offs to maximise mine life while still maintaining profit.
I'm sure BHP is well into this re-adjustment phase.

Each time I take a reality check it tells me quickly that a greater proportion of the world sees what Americans have, and would like to be there too. (If not Americans, then maybe the French, or Swedes, or Australians.)
Not only does the rest of the world want to catch up with us, at every chance they get, they try their hardest. We would have to have rocks in our heads if we thought we could stop the BRICs and cashed up OPEC members from industrialising.

I strongly believe that the recent bull run in commodities (now temporarily suspended) was the shortest, and that the next will see a repeat performance of even greater intensity. I say this because the run we just had proved conclusively that supply could not meet demand, and prices went ballistic.
It has taken the greatest market meltdown in 80 years to get many of the commodities back to balance. Even now we have copper, lead and zinc stockpiles at the lower end of long term averages. Moreover, market carnage has quickly put to care and maintenance many hundreds of mines that in normal times would have kept churning out minerals at a little better than cost of production.
While risks to the downside will prevail, do not be surprised if several commodities consistently rebound due to a failure to rebuild stockpilies.
 
rederob said:
frog
You will therefore know that most (if not all) have resequenced their mining profiles so that they are extracting minerals with highest grades and least cost.
In the good times producers will mine to lowest ore grade cut-offs to maximise mine life while still maintaining profit.
I'm sure BHP is well into this re-adjustment phase.

Each time I take a reality check it tells me quickly that a greater proportion of the world sees what Americans have, and would like to be there too. (If not Americans, then maybe the French, or Swedes, or Australians.)
Not only does the rest of the world want to catch up with us, at every chance they get, they try their hardest. We would have to have rocks in our heads if we thought we could stop the BRICs and cashed up OPEC members from industrialising.

I strongly believe that the recent bull run in commodities (now temporarily suspended) was the shortest, and that the next will see a repeat performance of even greater intensity. I say this because the run we just had proved conclusively that supply could not meet demand, and prices went ballistic.
It has taken the greatest market meltdown in 80 years to get many of the commodities back to balance. Even now we have copper, lead and zinc stockpiles at the lower end of long term averages. Moreover, market carnage has quickly put to care and maintenance many hundreds of mines that in normal times would have kept churning out minerals at a little better than cost of production.
While risks to the downside will prevail, do not be surprised if several commodities consistently rebound due to a failure to rebuild stockpilies.
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Very good post which makes a lot of sense to me - Thanks for sharing.
I personally envisage profit taking in the short term and some hard times ahead but the long term future is sound IMO.
 
It does depend on what you read and where you read it. BHP Billiton feature in the FTSE100 index and comments in the UK seem to read as if BHP are a British company now. Annoying, but it is at least increasingly international.

There appears zero chance of the demand for commodities getting back to the 2007 levels in the next two years and this could easily stretch out to nearer 10 years.

Iron ore and coal supplies are set to dramatically increase over the next two years just as demand falls back. That is also the case for many other commodities.
Companies will need to cut back supplies of iron ore and coking coal to maintain prices. This is unlikely to work that well, and Opec are the first to be tested on that front shortly.
 
There has been a lot written about slowing demand and price drops on metals. What is interesting is when you look at stock levels they often seem way out of sync. I used to think prices followed the fundamentals of inventory levels but i think that is only part of the story. Like the rapid change in the price of oil investors especially large funds can influence prices violently in either direction.

Demand is slowing, add the recent forced selling and you witness the carnage that has been happening. However I think fundamentally metal levels are low for the demand requirements of Chindia in for the medium to long term. It takes alot of $ and time to get mines up and running and to keep them optimised. When prices force mines to pause or close this will ultimately affects supply moving forward. With the credit crunch still in play it will be harder for smaller companies to get their hands on much needed capital. Repairing all this and gearing up again may not happen as fast as it did in last couple of years. However i do believe once the market repairs people will once again shift back into metals and this will drive the price back up again.

People have short term memories they will forget the current pain and drive up hard again. Particularly boomers who need to build up their super once again. For now the overall market will dictate direction. We are probably going to bounce around current levels for a while and this volatility will still probably spook most people if it hasn't already.Once the market starts to trend up again BHP will do well. It is not often that you get blue chips on sale. For now though we will probably experience some rollercoaster time, not for the faint hearted, i know my sleep patterns have been screwed up watching the DOW at night :)
 
rederob said:
frog
You will therefore know that most (if not all) have resequenced their mining profiles so that they are extracting minerals with highest grades and least cost.
In the good times producers will mine to lowest ore grade cut-offs to maximise mine life while still maintaining profit.
I'm sure BHP is well into this re-adjustment phase.

Each time I take a reality check it tells me quickly that a greater proportion of the world sees what Americans have, and would like to be there too. (If not Americans, then maybe the French, or Swedes, or Australians.)
Not only does the rest of the world want to catch up with us, at every chance they get, they try their hardest. We would have to have rocks in our heads if we thought we could stop the BRICs and cashed up OPEC members from industrialising.

I strongly believe that the recent bull run in commodities (now temporarily suspended) was the shortest, and that the next will see a repeat performance of even greater intensity. I say this because the run we just had proved conclusively that supply could not meet demand, and prices went ballistic.
It has taken the greatest market meltdown in 80 years to get many of the commodities back to balance. Even now we have copper, lead and zinc stockpiles at the lower end of long term averages. Moreover, market carnage has quickly put to care and maintenance many hundreds of mines that in normal times would have kept churning out minerals at a little better than cost of production.
While risks to the downside will prevail, do not be surprised if several commodities consistently rebound due to a failure to rebuild stockpilies.
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Sounds like its all smooth sailing red. Can't say I believe history is likely to keep recycling to the same formula though.
Highly likely to affect the future model is global warming (the greens are really excited about this as they believe they have the rudder now and can use it to steer towards slowing growth) so whether warming turns out to be fact or fiction, modelling needs to factor this in and chindia will not be immune as it has been so far.
Secondly the population growth you are swinging on has downside as well as traditional consumerism upside- particularly now it is near exponential: the 'have nots' have seen how effective terrorism is to disrupt the status quo and containment is extremely expensive.
I think we are looking at continued turbulance with far less long, steady periods of growth.
 
shag said:
well i dont see too many posts on bhp today
i wonder why....
it had a very strong end to the day.
chinas gdp of 8/9p is still hot. they will try to grow their economy with infastruture from roads, bridges, nuc power stations etc. just watch them open the spending taps only held back by manning issues.
this has to be so good for the majors, so many lame ducks to pick off when they desire, including rio.
it will really be the big australian then.
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false start shag; the starter has called all BHP scrip back to the $25 blocks again for a restart. Mind you, may well head them downhill again as punishment for the premature break.
 
In my simplistic way I look at bhp's chart over the long term.

If it drops below $24 it will go to just above $10 and then down to $8 or thereabouts., on the support resistance levels.

However I believe this will not happen as the closes recently have been above the inital lows on high volume.

Should I have another large win in lotto next week it will all go on bhp, whatever the price.

a chart is enclosed.

gg
 

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Garpal Gumnut said:
If it drops below $24 it will go to just above $10 and then down to $8 or thereabouts., on the support resistance levels.
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eeeek, 8-10 bucks!

While the S&R of just about any code on the ASX has been well unsupported recently, $25 might hold, then $20 ....

Maybe...:eek:
 

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Hedge funds are also liquidating due to record redemptions in the last quarter. First the commodity contracts themselves, and then the stocks subject to them. Double whammy.

It is realistic to expect reduced profit from BHP over the coming couple of years. Analysts will be downgrading from 285cps profit of last year to possibly -30%, if not 08/09, at least 09/10

A forward "guesstimate" of EPS: 200cps = $20 target @ P/E 10 (negative sentiment)

I remember people were saying "The banks are cheap with P/E's of 8, what gives?!" as the share price slid continuously. Previously (late 2007) it was expected that the banks would continue to beat profits, but people were looking at the past to predict the future.

Now ANZ comes out and announces a 21% fall in net profit, EPS of 204.8 becomes 170.4. 170.4 x 12 = $20.44. Current pricing is not far off that.

So often the chart may seem nasty, but can be a forward leader of where "those in the know" believe the profits of the company are heading. They may be off a little, but often by not much ;)
 
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