BHP Billiton Share Discussion Threads

[w1ndjammer] 07/12/2015 15:46

Support is at 750p lets see what happens.

WJ.

[montyhedge] 07/12/2015 15:44

No way can they pay this dividend, in my view. 535p is my target when they pass it.

[loganair] 07/12/2015 15:42

BHP Billiton: Death Of The Dividend And The Best Short Sale In Commodities by Jesse Moore:

•Plummeting commodity prices are set to reduce BHP's EBIT below $1 billion per year at current values.

•Significant balance sheet pressure will force BHP to cut its dividend.

•BHP's investment grade credit rating is in danger.

•30%-50% downside from the current share price is foreseeable.

BHP Billiton is a stalwart of the commodity sector. It has long been a major producer across the commodity spectrum and has provided significant returns in the past. However, based on the recent annual report and commodity price movements, this is no longer the case and I am shorting BHP.

BHP faces headwinds in every commodity sector it is involved in. Collapsing commodity prices will continue to reduce the available cash flow for the company. Andrew Mackenzie himself has stated, "The first thing I would say is we're relatively bearish about the long-term projections for prices." When a CEO with plummeting cash flow comes out and says this, it means two things. First, the expected prices are going to move even lower than they recently have. Accepting the situation as it is and working within that environment is key to succeeding, albeit as a company with a lower market cap. Secondly, he is preparing the market for a lower return mentality. This will result in a decline in BHP's share price (and much more than we have seen so far).

[rickmay] 07/12/2015 15:36

BROKEN MAJOR RESISTANCE LEVELS...ONE WAY TO £2 to £3.

[rickmay] 07/12/2015 15:17

IT'S COMING FOLKS.... BLT £2 to £3.

[idioterna] 07/12/2015 14:08

Anley, there are way too many short term traders around, and all they really do is provide cannon fodder for the HFTs. But there are an awful lot of investors too, it's just they don't tend towards the hyperactive. Patience is a far harder virtue to learn than most understand.

My next buy will not be until after new years when I'll have plenty of leeway with the capital gains writedowns from 2015. Given the state of play it's looks like bargain prices will still be available.

[anley2] 07/12/2015 13:27

He is quite right but we have too many short term share traders .v. long term investors and all this makes for eratic markets. So lots of people loose and few gain and those that do are the big institutions who can afford to sit it out.

[loganair] 07/12/2015 12:25

Mining major BHP Billiton does not see any immediate uptick in commodity prices, especially in iron ore. The company’s CEO Andrew Mackenzie said he is bearish on the price front but upbeat on demand growth in view of the latent demand from rising Asian economies.

“The first thing I would say is we're relatively bearish about the long term projections for prices,” Chief Executive Andrew Mackenzie said in Melbourne.

The CEO noted that in the current scenario of low commodity prices, the only way to compete effectively is to keep the costs down.

Bright demand:

Sounding bullish on the demand side the BHP boss said he is extremely optimistic. “But, yes, I am optimistic about the long term growth in demand, because I know the kind of resources it requires to push three, four billion people into the middle classes, particularly in Asia, and the kind of consumption that will come from that,” Mackenzie added.

Iron ore prices have been tumbling after world’s top steel producer China started slowing. Mackenzie also expressed skepticism over the forecasts made by some Chinese steel makers that production would stabilise around 600 million tonnes. He said BHP and the other big -producers of iron ore are expecting that Chinese steel production would peak around 1 billion tonnes in the next 10 years.

“I think China will be producing a lot more steel than the 600 million tonnes a year that you're talking about, and some for a while," he told reporters after a speech in the University of Melbourne.

“If China really wants to get along a path towards full development, it does have to get on with further construction of a number of things, including machinery and cars, and that will require more steel to be produced,” Mackenzie said.

[rickmay] 07/12/2015 11:27

TARGET £2 to £3.... it's coming folks

[robertfaulkner] 04/12/2015 18:59

Yip Peeeee up today (well a very small amount)

[loganair] 04/12/2015 13:41

BHP Billiton mired in disaster By Andrew Van Sickle:

Shares in BHP Billiton, the world’s largest miner, fell to a ten-year low this week after the Brazilian government filed a $5.2bn lawsuit against the company. Two dams at BHP’s Samarco iron-ore mine burst in early November, pouring 50 million cubic metres of mine waste over Brazil’s River Doce basin.

Enough sludge to fill 25,000 Olympic swimming pools has covered an 850km area. Thirteen people have died. The Samarco mine is co-owned by Brazil’s Vale, which will share the cost of any damages.

What the commentators said:

If BHP does end up paying half of $5.2bn, “investors might… see value” in a stock that is down 25% since the disaster, said Nils Pratey in The Guardian. But “it’s too soon to make that call”. Bills climb after disasters like this. The government could make further demands and regional authorities may pile in. “As with BP, final resolution will take years.”

“With the fallout from the disaster still not fully known, few seem willing to call the bottom for BHP shares,” agreed The Sydney Morning Herald. “The market is pondering just how low this grand old ship can go.” This incident has tightened the financial screws on BHP, said Rhiannon Hoyle and Alex MacDonald in The Wall Street Journal. It has already been hit by a slump in iron ore, one of its key products.

Prices have fallen by 78% from the 2011 peak. Yet its dividend payout is one of the industry’s highest. Citigroup calculates that dwindling operating cash flow of $11.5bn won’t cover estimated dividends of $6.5bn and capital expenditure of $8bn. Many analysts have already recommended the group cut its payout. This episode may provide a convenient excuse.

[loganair] 04/12/2015 13:36

Life as an investor is challenging at the present time. That’s because the outlook for the Australian economy has been disappointing for most of 2015, with a recession apparently being on the cards. However, GDP figures for the September quarter beat expectations and show that the economy is performing relatively well even with the resources sector continuing to struggle.

As a result, it is difficult to know whether to buy, sell or do nothing. However, one aspect of great interest to investors is the potential for improved performance from the mining sector over the long run. In other words, while the short term could be tough, a number of mining companies are positioning themselves to deliver growing profitability over the medium term.

One notable example is BHP Billiton. It has endured a very challenging recent period, with the tragic events at its 50% owned Samarco mine in Brazil potentially leading to the company being sued for $7.2bn. This, plus plunging commodity prices for oil and iron ore have left the company’s share price trading at a ten-year low.

This, though, could present an opportunity for less risk averse investors to buy a slice of the business. After all, historically the best time to buy any stock is when ‘blood is running in the streets’. In the long run, BHP’s strategy changes could have a positive impact on its financial performance, with the company likely to become more efficient having spun-off its non-core assets and also being focused on reducing its cost base. This has potential to further squeeze BHP’s competitors and could lead to a relatively strong position for the company in the long run.

In addition, with BHP reducing its net debt levels by US$1.4bn to US$24.4bn in its most recent financial year and having free cash flow of US$6.3bn in the 2015 financial year, it appears to have sufficient financial standing to emerge from the current commodity rout. And, with a price to book value (P/B) ratio of 1.15 versus 1.23 for the ASX, it appears to offer good relative value for money.

[netnut] 04/12/2015 11:16

Deanroberthunt - divi not being mentioned till Feb though? Price appears to want to be above 792 ( without any news ) imo

[essentialinvestor] 04/12/2015 09:25

dean, you may have missed your opportunity here imv.

Unfortunately was not quick enough to buy RIO this morning.

[ny boy] 04/12/2015 08:41

Just btfd's here, with stop below the 731p lows. Ok nimble trades, until the share price stabilises.

[stevenrevell] 04/12/2015 08:23

Do u not think lower dean if divi goes

[deanroberthunt] 04/12/2015 07:21

would have to fall circa 7% today to hit my target, whilst possible, not probable....so maybe next week.

[deanroberthunt] 04/12/2015 07:02

Asian shares sell off, could be another big down day for the big miners....but 731p and I'm in for a credit crunch bottom technical rally..

[tpaulbeaumont] 03/12/2015 16:20

NYB agreed, if you wanna try and be clever and catch the interim lows before the lows then you gotta be very nimble imo :)

[sisouhail] 03/12/2015 10:04

jac nassar is mr doom, the same when he was the chairman of Ford Motor.
he should resign

[ny boy] 03/12/2015 08:51

Looks ok to buy dips now, good one recently but now, say ok for quick 2-3%+ in & outs. Buy for longer rallies after the FED decision in next few weeks.

[loganair] 02/12/2015 20:15

BHP Billiton's decision to increase copper production in fiscal year 2016 and lower cost guidance are symptomatic of some of the factors that are ailing the wider copper mining industry, as firms add tonnes in a bid to lower their unit costs, adding to the existing oversupply, Goldman Sachs said.

The miner increased its guidance for copper production in fiscal year 2016 to approximately 1.55mt from 1.5mt and projected about a 20% reduction in group costs, the broker said following the start of a copper briefing and tour of BHP's Chilean operations which started on 1 December.

However, whereas cost reductions and weaker producer country currencies should see the cost curve flatten and marginal costs fall - and hence prices too - BHP Billiton in fact guided towards higher costs at Escondida for fiscal year 2016.

Management now expects costs of $1.21 per pound, up from $1.18 per pound previously - despite a weaker Chilean peso.

While that may just be a function of the company being conservative, it is a "slight negative", analysts Eugene King, Craig Sainsbury and Christopher Jost said in a research note sent to clients.

Goldman Sachs trimmed its twelve month target price on the stock to 925p from 950p previously, while staying 'neutral' on the shares.

[loganair] 02/12/2015 20:13

By Ryan Newman - BHP Billiton warned on Friday that the Brazilian government intended to commence legal actions in response to the catastrophic dam disaster recently, and now, that appears to have become a reality.

According to the ABC network, Brazil’s government has filed a $7.2 billion lawsuit against the Samarco mining company, together with its co-owners BHP Billiton and Vale. The damages being sought are related to costs associated with the clean-up, environmental recovery and compensation after 60 million cubic metres of mud and mine waste spread roughly 80 kilometres.

Samarco would be required to set up a private fund with the money with payments to be spread across a 10-year period.

As cited by the ABC, the chief prosecutor of the coastal state of Esprito Santo, Rodrigo Vieira, said: “If Samarco does not have the financial resources to cover payments for 10 years, Vale and BHP will be held responsible for providing their share.”

It has been reported however that the Brazilian government would prefer to settle the issue out of court, suggesting the miners could settle on a lower price.

The Brazilian mine disaster was a catastrophe from both a human and environmental perspective, and BHP Billiton has handled the aftermath quite appropriately. It has focused predominantly on responsibility and ensuring that everyone impacted is being looked after.

Not to take away from that, but it is also a financial tragedy for the group. BHP Billiton’s earnings and cash flows are already being strangled by tumbling commodity prices, while its progressive dividend policy is also under attack by analysts, most of whom believe it is unsustainable.

Although the shares might look cheap, there is still a lot of uncertainty surrounding the company and the industry as a whole which could continue to drag on the share price. There could certainly come a time to buy the shares but, in my opinion, they haven’t hit that price to justify the risk just yet.