BHP Billiton Share Discussion Threads

[idioterna] 18/12/2015 17:45

"Speaking to Fairfax Media, UBS Group’s head of Australian equity strategy, David Cassidy," - Fairfax Media, David Cassidy… I'm really going to take this call seriously?

Even if (and it's still a big if), the dividend were to be halved and only yield around 5,5% how does one explain a drop of 36% in a month? I'm sure that this one will run and run almost as long as the Partridge Family, then again, given todays' attention span it probably won't last much longer than The Office did in the UK. Twit.

[anley2] 18/12/2015 10:18

LOGANAIR......do you really think for one moment that Fairfax - that great OZ publisher - is any good?

2016 is going to be a much better year for most miners as the impact of mine closures starts to show and debt is reduced. For BLT I expect the dividend to be cut but as for the dam problems that will take years and even if the figures are big the payments will be spread over many years so suiting BLT's cash flow plans.

S32 where I have been a buyer is doing well and in February will announce its 6 months figures so expect some reasonable news as that board has been taking notice of what is going on and adjusting its plans to suit the current market conditions.

So its not all doom as minerals are still worth a great deal left in the ground as I have demonstated this year with BEM.

Have a pleasant Xmas as I am off the South Africa to look at what is going on in the country's mining industry.

[hooley] 18/12/2015 08:14

MMs still closing their shorts. Take advantage while you can - it won't last.

[loganair] 17/12/2015 20:22

Shares in BHP Billiton are sliding again today as the Fairfax press reports that analysts at Credit Suisse think the giant miner should axe its dividend in half to strengthen its balance sheet.

That would mean an end to BHP’s progressive dividend policy whereby the miner committed to at least maintain or raise dividends on an annual basis. However, that commitment was made prior to the great commodities crash of 2015 as China’s slowing demand for iron ore and other metals coincided with the oversupply of oil markets to create a perfect storm for BHP and its investors.

The miner paid an FX-adjusted dividend total of around 168 cents per share in the last financial year which means if that were cut to an FX-adjusted 84 cents per share in the year ahead BHP would still be digging up a fully franked forward yield around 4.94%.

That’s attractive, but likely to be small consolation to investors who have witnessed the value of their shareholdings collapse in half over the past nine months including the value of any shares transferred under the spin-off of South32 Ltd (ASX: S32).

Anyone holding BHP Billiton, South 32 or rival iron ore miner Rio Tinto would likely have to take a long-term view given the weak outlook for metals prices as China’s days of an unprecedented construction and infrastructure boom are over, with few catalysts on the horizon to suggest a demand uplift for commodities like iron ore.

[loganair] 17/12/2015 20:19

Speaking to Fairfax Media, UBS Group’s head of Australian equity strategy, David Cassidy, believes investors should consider limiting their exposure to mining stocks.

He said investors should focus on companies leveraged to a stronger economy and those with overseas earnings.

“China is still likely to slow into 2016 while at the same time we are likely to see supply increases, particularly for iron ore. Slowing demand and increasing supply gives us a bearish setup”, Mr Cassidy told Fairfax. However, he added, “The market is too bearish on the economy.”

Mr Cassidy, who correctly forecast a bad year for iron ore producers, believes investors should turn their focus from mining giants like BHP Billiton and Rio Tinto.

Meanwhile, iron ore, oil, coal and an array of other commodity prices will likely continue to weigh on the share prices of mining and resources companies for the foreseeable future. And even if prices turnaround, there’s a chance it won’t happen for many years.

Foolish takeaway

The resources sector is coming under pressure as the supply of commodities to China surges in response to many years of unprecedented infrastructure growth. Unfortunately, when coupled with plateauing demand from China, more supply equals lower prices.

Such cycles in commodity prices are normal, but can take many years to play out.

[edjge2] 17/12/2015 18:38

Dollar readjust up probably not good for commodities. Good co just squashed by market. 2008 some co's did not cut divvies. Much hinges on that and the waves of muck that will hit this in due course, ask the when question, though like the 25 cents factored in but size less well known?

[idioterna] 17/12/2015 09:05

Samarco is a Limited company and despite being co-owned by Billiton and Vale is still limited under Brazilian law. So if you are waiting for some kind of legal resolution then due process will take at least another 5 years, not including the appeals process if the courts try to retroactively rewrite corporate law. BLT is playing this absolutely correctly as opposed to rolling over and playing dead á la BP. You can buy a lot of suits with very thin briefcases for $100 million.

[hooley] 16/12/2015 18:52

I'd be tempted to buy but Samarco is the elephant in the room. The lawyers have only just begun to do their work.

[netnut] 16/12/2015 11:43

anley2 - thank you for the information.

[anley2] 16/12/2015 10:31

That NETNUT is a small trade.......from an ex-MM.

[netnut] 16/12/2015 08:59

According to Hargreaves 'Trades by Volume' this went through?

08:00 - 16/12 Buy 319930 700.00p £2,239,510.00

[loganair] 15/12/2015 20:11

Why Credit Suisse Says Now Is Time to Buy BHP Billiton:

Finding good news in the commodities sector has been more than just difficult of late. So, how about news that is simply less bad? BHP Billiton was raised to Outperform from Neutral by Credit Suisse on Tuesday. The firm’s European Metals & Mining analyst is Liam Fitzpatrick, and this call is somewhat based on valuation and somewhat on upcoming action expected by the company. Credit Suisse revised estimates and target prices lower. Again, it is less bad rather than outstanding news.

Fitzpatrick’s take is that greater supply-side action is needed by BHP Billiton. With the global mining sector reaching multi-decade lows across a range of performance and valuation metrics, Credit Suisse predicts another year of weak Chinese demand in 2016.

The firm also believes that supply curtailments are likely to remain too little too late, particularly in bulks. A ceiling on the U.S. dollar and floor on oil prices will be critical in putting a floor on prices, but Credit Suisse’s strategists expect ongoing, albeit slower, appreciation of the U.S. dollar in 2016. The potential for Chinese depreciation is a further macro threat in 2016.

On the less bad news that is still bad, Credit Suisse did cut commodity and earnings estimates. Fitzpatrick’s note said:

"We retain our preference for base metals over bulks (iron ore and coal), although even in base metals further production curtailments may still be required to firmly push markets back into balance. In bulks the threat has moved increasingly from supply to demand, and we expect another year of negative steel demand growth from China in 2016."

Credit Suisse is now modeling a 50% cut in the progressive dividend to a more sustainable level, but the firm sees this still leaving BHP Billiton with an attractive 5.5% dividend yield. Shares have dropped over 30%, so the firm sees BHP’s valuation being at more than a 15% discount to Rio Tinto. While the Samarco situation will take years before the final cost and outcome is known, Fitzpatrick thinks the shares have more than priced in a worst case scenario.

Credit Suisse’s call was from the London office, and BHP trades in London with a prior close of 669.30p — and the firm’s 900.00p target would imply upside of almost 35%, without consideration of the dividend.

[idioterna] 15/12/2015 16:15

hum teh hum teh hum, just twiddling me thumbs and lying in the sun. Anyone heard a dividend cancellation announcement yet? Twiddle, twiddle, twiddle….

[raweden] 15/12/2015 12:43

Duplicate deleted

[raweden] 15/12/2015 12:42

Large commodity businesses are the new banks. Some will go bust without the bailouts most banks enjoyed.

[anley2] 15/12/2015 10:45

If you want a nickle share look no further than S32.........

[rickmay] 15/12/2015 08:28

STILL GOING DOWN !!! TARGET £2 to £3... BLT was £1 back 1997 can History repeat it self?

[loganair] 14/12/2015 18:45

PRNewswire - Global Nickel Market 2015-2019 - with BHP Billiton, Glencore, Norilsk Nickel, PT Antam & Vale Dominating:

The demand for nickel and the subsequent shutting down of mines across the world has led to the quest for exploration and the development of newer nickel projects in countries where the ban on nickel mining has not been enforced in order to bridge the demand supply gap.

Discovery of newer mines is happening across leading nickel producing nations such as the Philippines, Indonesia, Burma, and many other Asian countries through funding from big companies that have nickel mining as an important part of their business portfolio.

According to the report, Electricity is an invaluable resource and its demand keeps increasing on a daily basis. The demand for electricity is attributed to the growth of the population and industrial and infrastructural development. To meet this ever increasing demand for electricity, more and more power generating plants have to be built across the globe.

Irrespective of the type of resource used (fossil fuels, renewable sources, or nuclear energy), a large quantity of nickel-based stainless steel and superalloys will have to be developed and fabricated. This will increase the usage of nickel and thereby increase the sales of nickel.

[loganair] 14/12/2015 18:42

By Harvey Jones - Anglo American was going to have to cut its dividend sooner or later, so it’s better it acted sooner rather than let the uncertainty drag on into next year. Unfortunately, all it has done is sharpen the focus on those FTSE 100 mining giants that have yet to cut their dividends, BHP Billiton and Rio Tinto.

Cuts, cuts, cuts

Rather than the end of the story, this is beginning to look like the start of a trend for miners. With share prices plunging, juicy yields were the main reason to stay true to the commodity sector but now these are being squeezed dry. Anglo-American tried fighting the inevitable with cost slashing and asset disposals, but had to give way in the end. The yield hit an unsustainable 14% by the time it acted, announcing last week that it would axe its workforce by more than half from 135,000 to 50,000, and suspend dividend right to the end of next year.

That will save Anglo American about £1bn a year, money it desperately needs to survive lower prices. Even when the dividend does return, it will no longer be progressive, something management claims is unaffordable in the notoriously cyclical mining sector.

Triple Trouble

Even more worryingly for BHP Billiton and Rio Tinto, by slashing £1bn from capex and canning plans for new mines it’s effectively saying there is enough commodity supply today to last for years to come.

Rio Tinto quickly followed Anglo American’s lead to announce $1.5bn of capex cuts by the end of next year. There was no talk about cutting the dividend, but markets seem to be pricing that in, with the share price down 10% in the last week. That’s the problem when the dividend comes under pressure, the share price collapses as well.

BHP Billiton has also been burning through cash and looks even more vulnerable. Its share price is down more than 12% in the past week. Citi reckons it will burn through around $3bn a year. With BHP hit by institutional downgrades, its payout must surely be on borrowed time.

In A Hole

The situation at BHP Billiton and Rio Tinto isn’t quite as drastic as at Anglo American. Their yields haven’t yet hit double digits, but BHP is close at 9.23%, so you can draw your own conclusions. Rio currently yields 7.15%. Commodity prices continue to fall, with iron ore hitting a seven-year low of around $40 a tonne. Both companies are clearly at the sharp end of a cyclical shift in China, a shift that only looks set to sharpen.

The mining sector is notoriously cyclical. At some point, all this cost slashing will lead to supply shortages and force up prices again, but it would take an optimist to suggest we’re at that point now. Larger operators appear to be following the Saudi strategy of maintaining high-margin production to drive out low-margin rivals and hang onto market share. Commodity prices may have further to fall in the new year. Unless they recover sharply, I fear that BHP Billiton and Rio Tinto’s dividends will fall as well.

[loganair] 14/12/2015 18:38

The boss of Fortescue Metals Group has given an interview to The Australian newspaper in which he takes the opportunity to slam BHP Billiton and Rio Tinto for overproduction of iron ore.

Mr Forrest reportedly saying: “BHP and Rio are just expanding and cutting their own throats”, while claiming the two are continuing to push the iron ore price down through overproduction.

[ny boy] 14/12/2015 16:45

Yes, kiss of death for them, another sickening slide tomorrow judging by what's happening across the pond, markets starting to breakdown, heading for another trap door situation I feel.

[tpaulbeaumont] 14/12/2015 16:31

gotta love the 666 buyers :P

[montyhedge] 14/12/2015 15:18

510p target still a high p.e.

[rickmay] 14/12/2015 15:10

BLT was £1 before can HISTORY REPEAT IT SELF?