BHP Billiton Share Discussion Threads

[nw99] 08/2/2016 08:12

Copper bottoming out

[tpaulbeaumont] 07/2/2016 13:08

lol only talking the short term adrenalin-addicted nimble-fingered sgi, trends been down for 5 years so far :)

[sogoesit] 05/2/2016 11:47

Indeed ... painful for us short ;-)
But put in a gold hedge couple days ago...

altho can be tempered the other way, as you say!

[tpaulbeaumont] 05/2/2016 09:49

some great bounclings lately

nimble longers 1 - literally everyone else 0 :)

[sogoesit] 04/2/2016 13:20

Sure, agree your long strategy long term, 'erna, but my vehicle for that is Shell.
More secure dividend and would offer a quicker turn-around (based on oil being more easy to switch on-and-off than a mine of iron or copper.. albeit that might lead to a squeeze).

Also see this having more weakness on a fundamental basis and slower return to growth.
Upside for that strategy is BLT has oil&gas compared to other miners.

That's my theory but could be wrong, 'tho.

Good luck.

[idioterna] 04/2/2016 10:24

Currency swings are exactly why I own the ADRs. I'm looking to sell at the top of the next cycle (projected around 2021) for around $60, so I'm a buyer at anything under $30. Billiton has been an excellent example of why you want a dividend yielding stock since 1988 and I fully expect that policy to be back on track once China stops manipulating commodity prices. Food appears to be the one commodity they can't manipulate hence 9% and 16% food commodity inflation the past two years. That's what's causing trouble in China and I don't really see any solutions on the horizon. It's also why my three biggest holdings after this are Monsantos, Syngenta & Heliospectra.

[sogoesit] 04/2/2016 07:57

Due for a bounce but RIO better placed for upside, imv.
Weak dollar favouring commodity prices but, therefore, not gbp earnings from usd.
Swings & roundabouts.
PS think 680 is limit on this.

Edit: or maybe not the limit!

[stavros28] 03/2/2016 23:19

Bottom in Dollar down tomorrow.

[essentialinvestor] 03/2/2016 22:50

BHP ADR's Up over 5%.

IO price now positive YTD and copper up over 2% today.

[leecoyote] 03/2/2016 07:28

Pretty interesting piece on commodities - hxxp://www.alignresearch.co.uk/commodities/standing-in-the-foothills-of-a-commodity-market-bull-run/

[idioterna] 02/2/2016 18:57

My take on this hasn't changed. S&Ps' downgrade was just another nudge to Billiton that the $6 Billion should be paid to bankers to help shore-up their bad loans to the sector. That $6 Billion should be heading into shareholders pockets, nowhere else.

[sogoesit] 02/2/2016 14:52

Thanks for all the updates, loganair; interesting comments.

Well, we might see your 600 entry price quite soon at this rate!
(Gone sour in NY this am)

[loganair] 02/2/2016 14:33

BHP Billiton told to slash dividend to bolster credit rating:


Big investors in BHP Billiton believe the mining group will have to slash its $US6.6 billion ($9.3 billion) dividend to stop its credit rating from being cut again.

Standard & Poor's downgraded BHP's coveted A+ rating to A in the US on Monday and said it was considering another cut if the company kept its policy of not allowing dividends to fall while commodity prices are falling.

BHP, which has not cut its dividend since 1988, will disclose any changes to its dividend policy at its half-year earnings on February 23. BHP shares fell 2.2 per cent to $14.92 on Tuesday.

Investors and analysts expect BHP to cut its interim dividend from US62¢ to US31¢ at its coming results. But there is a growing feeling among investors and analysts that this may not be enough.

"If it is a protracted slowdown, perhaps cutting by 50 per cent is not enough: they wouldn't want to have to come back and cut it again," said Andy Forster, the senior investment officer at large BHP shareholder Argo Investments.

He said it "seems a given" that BHP will cut its dividend this month, and the question is whether it will cut by a specific amount or set dividends as a proportion of profits.

John Manning, who is head of Asia-Pac Credit Research at Aberdeen Asset Management, said BHP "has a long-stated position that their commitment to a strong single-A rating is sacrosanct. It is now time for management to deliver on that".

"The ball is in BHP management's court now," Mr Manning told The Australian Financial Review. "Whether they stay at an A flat or move to an A-minus, will be primarily driven by their response in their results for the half-year as regards to their action under the dividend policy."

"We still think they have further flexibility to rein in capital expenditure if they need to, particularly in the US onshore shale assets. But the fundamental driver from here on in our minds is the dividend policy and management delivering on their previous [credit rating] representations to the market."

Aberdeen is BHP's second-biggest investor, just behind BlackRock.

Still best in sector:

After the credit downgrade, BHP said it still has the best credit rating in the sector. The view within the company is that it would be comfortable with an A-minus rating if it was downgraded again.

BHP chief executive Andrew Mackenzie has over the past 18 months repeatedly stressed the miner's commitment to a solid-A credit rating, saying it was a top priority, supported by maintaining a strong balance sheet.

Ross Barker, the managing director of top-10 BHP shareholder Australian Foundation Investment Company, said it remained to be seen if BHP could deliver on its balance sheet rhetoric.

"Our view is that resource companies need a strong balance sheet during times of stress," he said. "BHP have said they see this as important as well. Let's see how their actions match their rhetoric."

Mr Manning said the downgrade to an "A" rating was not a concern, and was in fact "overdue". But he said "a move to an A-minus would not be consistent with a strong-A rating in our view".

"Bondholders would normally expect that when a management team makes commitments to a strong A rating that is at least at the midpoint or above."

He expects BHP will pull the two main levers available to it to protect its A rating by "managing" the dividend and cutting capital spending, particularly in its onshore US oil business.

Mr Manning said the miner was likely to switch to a payout ratio, paying out a percentage of its free cash flow.

Over the past 18 months, many Australian investors had warned that BHP was too devoted to its dividend policy.

There has been more of an attachment to the policy among BHP's London investor base, where there was – until recently – more of a tradition for the major listed miners to follow progressive dividends.

Push comes to shove:

Asked whether BHP had moved quickly enough to protect its balance sheet, Mr Manning said its $US6.5 billion hybrid debt issue late last year was an attempt to shore up its position, but commodity prices had deteriorated further since, and now "it's time that push has come to shove".

"We have had a high degree of confidence in management in BHP, that they continue to deliver on their promises, and we view management very highly," Mr Manning said.

"And they have made strong representations in the past that a strong A rating is sacrosanct, and now investors are looking forward to BHP delivering on those promises."

Despite the pressures facing BHP, it has one of the healthiest balance sheets in the global mining industry, and has proven one of the most resilient companies on the sharemarket when the prices of its products fall.

S&P said it expected that BHP's funds-from-operations (FFO) to debt ratio would be between 30 per cent and 40 per cent in 2016 and in 2017, well below the agency's ratio of 50 per cent needed to satisfy an A+ rating.

The ratings agencies usually act in sync, and Fitch Ratings (has BHP at A+), and Moody's Investors Service (has BHP at A1) are both expected to follow S&P's lead and downgrade the miner by at least a notch.

S&P this week also put Rio Tinto on negative credit watch, saying its A-minus rating could be lowered one notch "over the coming weeks if the company does not take supportive measures amid the currently weak commodity prices pressuring its cash flows".

JP Morgan analysts wrote in a note on Tuesday that even if BHP halved its dividend, it might not be enough for the miner to maintain an A-minus rating in the absence of an upswing in commodity prices.

"Even a dividend cut of 50 per cent doesn't seem comfortably fundable through the cycle," the analysts wrote.

Assuming a dividend cut of 50 per cent, BHP would still need to reduce debt by $US4.3 billion in financial 2016-17 to satisfy an "A-minus" rating, JP Morgan said. "We believe it is manageable on a temporary basis, and could be improved with a further cut to the dividend."

[ptgint] 02/2/2016 12:42

I tend to agree Loganair. I'm waiting for 600p but at that price it must surely be worth tucking a few away although its not without risk IMHO. As ever DYOR.

[loganair] 02/2/2016 12:18

BHP Billiton - One of growth investing legend Jim Slater’s tips for investing in turnarounds was that you should only buy when profits are expected to increase over the next year. BHP meets that requirement. Earnings are expected to hit a new low of $0.26 per share during the current year, before rising by 76% to $0.45 in 2016/17.

Although BHP stock still looks pricey, on a forecast P/E of about 21 for next year, I think the group should be quite well-positioned for any recovery. BHP’s balance sheet remains reasonably strong and the group has reduced operating costs and cut capital expenditure. Any rise in the price of oil, iron ore or copper should feed straight through to BHP’s profits.

One risk investors do need to accept is that BHP’s dividend may be cut. Current forecasts indicate that the miner will pay a total dividend of $0.85 per share this year. This gives a potential yield of 9.3% at the current share price of 635p.

Although BHP has been reluctant to cut the dividend, a reduction is now widely expected among City analysts and might not have much effect on the group’s share price.

There’s no doubt that BHP will recover from the current commodity slump. I don’t think there’s a big rush to buy, but at close to 600p I think the price is starting to look quite attractive. Indeed, on a three-to-five-year view, I think a 50% gain might be possible from here.

[loganair] 02/2/2016 12:16

BHP Billiton (BLT LN) 647 pence, Mkt Cap £37.2bn – S&P cut BHP’s rating to A from A+

• S&P have downgraded BHP by one notch based on lower commodity price forecasts and increased uncertainty.

• They expect a material drop in BHP’s earnings over the next 18 months.

• Funds from operation (FFO) to debt which were expected to be 50% are expected now to be between 20 to 30%.

Conclusion: This cut in the rating should not be a surprise. BHP continues to have the highest rating in the sector. The company is highly protective of its balance sheet and rating which can only mean one thing and what people have been saying for a long time – the dividend is unsustainable and is vulnerable to a cut. The question is by how much.

[sogoesit] 02/2/2016 11:27

Lol, 'erna, too right!
I think it's a pervasive mentality of the era; a bit like those climate freaks calling for the end to the hydrocarbon age!
The logic must go something like this:
- you're in the wrong industry;
- you should be changing your business (producing plants instead of mining);
- you can only blame yourselves for what the ills of society sow on you;
etc.
etc.
.. oh, and, "Why didn't you see it coming?"

[sogoesit] 02/2/2016 08:32

Could be a 6% day.
Silence from company til 23 Feb will leave plenty of time for speculation:-
Dividend
Asset write-downs
Rights issue
Samarco

[revell40] 01/2/2016 17:40

Rating cut divi will go