BHP Billiton Share Discussion Threads

[anley] 26/2/2018 13:49

From the dealing desk.............

Steel and iron ore prices soar to YTD highs after China’s top steel-producing region said it would extend winter production controls intended to reduce air pollution.

The local government in Tangshan, China's biggest steelmaking city accounting for ~12% of the country’s steel output, says it will extend production limits scheduled to expire when the winter heating season ends in March.

Singapore-traded futures for March delivery of 62% iron ore hit its highest level since April, rising by as much as 1.5% to $79.15/metric ton, and Shanghai-traded steel rebar for May surged as much as 3.8% to 4,047 yuan/ton ($641), the highest since early December 2017.

In a way reflected in the current share price for BLT.

[loganair] 20/2/2018 14:34

Raffles - Good informative article.

[raffles the gentleman thug] 20/2/2018 14:16

Good article on unification of shares which imo is gonna happen ...https://www.bloomberg.com/gadfly/articles/2018-02-20/bhp-and-elliott-can-get-to-yes

[loganair] 20/2/2018 13:01

One of the big investing stories over the last two years has been the rapid recovery of the mining industry. FTSE 100 firms such as BHP Billiton rose by more than 100% in 2016 and delivered further gains in 2017.

So what happens next? Today’s interim results from Anglo-Australian miner BHP make it clear that this business is performing well and generating a lot of cash.

Underlying net profit rose by 25% to $4,053m for the six months to 31 December, while the interim dividend has been increased by 38% to 55 cents per share, or around 39p.

Despite this, shares in this £86bn group have fallen by 3.5% so far today. Why is this?


The strong profit growth seen over the last six months was almost all driven by a single commodity — copper.

BHP’s average copper sale price during the half year was $3.20/lb, 33% higher than the $2.41/lb received during the same period last year. In addition to this, the group produced 17% more copper than it did last year.

As a result of these changes, copper sales rose by 51% to $6,381m during the first half. Underlying operating profit from the industrial metal increased by 83%, from $1,744m to $3,195m.

In contrast, profits from the company’s three other core commodities — oil and gas, iron ore and coal — were largely flat.


The boost provided by copper may not be repeated. But management expects the markets for all of its commodities to remain fairly stable and well supported over the next few years.

Therefore shareholders should continue to enjoy generous dividends for as long as the board resists the temptation to splurge on costly growth projects. Despite the risk that profit growth could flatten out the market thinks BHP’s forecast yield of 4.1% is well-supported.

[foxy22] 20/2/2018 11:33

Market disappointed with results.Expected more...ceo waffles a bit

[loganair] 20/2/2018 11:33

Analysts at Barclays said: “Overall a slightly soft set of results that highlight rising cost pressures and limited deleveraging as a result.”


Nicholas Hyett, Equity Analyst at Hargreaves Lansdown:

“It feels harsh to be criticising BHP this morning, profits are increasing rapidly, debt is falling, and the interim dividend is well ahead of market expectations.

But investors were expecting more. BHP’s better performance is being driven by improved commodity prices, which are out of the company’s hands, while productivity, which it can control, is heading in the wrong direction.

To be fair full year guidance remains largely unchanged, with management expecting to make up the lost ground in the second half and deliver some substantial improvements in productivity next year. That’s easier said than done though, and this morning’s results are not the start the group would have wanted.”

[loganair] 20/2/2018 11:22

Directors of BHP declared a dividend of 55 cents a share, up from 40 cents a year ago, meaning it returned nearly three-quarters of its earnings to shareholders.

It cut its net debt by 23% to US$15.4bn during the period, and said it was on track to reach its US$10bn to US$15bn target before the year-end.

BHP reported profits of $4.05bn, up from $3.05bn last year.



It seems to me that if BHP go for a single listing it will be in the FTSE, rather than in Australia as why would BHP be thinking of a possible buy back in Australia rather then the UK?


Elliott, battling BHP for a year, earlier this month launched a fresh attack on its Sydney-London dual listing. Though BHP on Tuesday defended the structure, Baring Asset Management and Plato Investment Management, which control shares worth about $280 million, have asked the board to set out why it believes the time is not right to consider cancelling one of its listings in London or Australia.

Chief Executive Andrew Mackenzie said he will discuss it over the next few weeks with investors--including Elliott, scheduled to meet with him later this week. After that, he told reporters, "I may have more to say."

"I acknowledge there are some ways in which you can do the numbers where the upside prize looks quite large," Mr. Mackenzie said--but other scenarios "suggest this is a very risky venture indeed."

"Over a 12-month time frame, we'd like to see them sell that onshore business and return cash to shareholders through an uplift in the dividend and an off-market buyback in Australia," said Craig Evans, who co-manages a natural-resources fund for Tribeca Investment Partners. Tribeca oversees roughly 2.5 billion Australian dollars (US$2 billion) in assets, including BHP shares.

Several analysts project the miner could use cash from a sale, whose price should benefit from recovering oil prices, to further boost investor returns.

"We have had a lot of interest from many parties" and "are very much marketing into what is a firming oil market," said Mr. Mackenzie.

[anley] 20/2/2018 10:31

"Helped by robust metals prices, BHP Billiton reported a 25% rise in underlying half-year profit and said its focus remains on cutting debt as it boosted its dividend."

The company also brushed off calls by activist investor Elliott Advisors to change its structure, with listings in both Britain and Australia, and said it plans to sell its onshore U.S. shale assets worth about $10B.

[anley] 19/2/2018 10:27

Wait for news this week from the company............

[raffles the gentleman thug] 05/2/2018 21:51

Indeed going long was a little premature but think weakness will be short lived here and certainly should do better than wider market given renewed dollar support and firm metal prices

[chopsy] 05/2/2018 21:43

Hope you closed your long at 15-30 and went short again...

[chiragmahe] 05/2/2018 13:06

If BHP unifies as proposed by Elliot, what would be impact of the London Shares?

Would BHP dissapear from the FTSE100?

I own them in my ISA

[chiragmahe] 05/2/2018 13:06

Would I gain the Australian BHP Stock?

[raffles the gentleman thug] 05/2/2018 10:21

Reversing my BHP short and heading long here

[raffles the gentleman thug] 22/1/2018 15:58

Well if metal can't rally on a collapsing dollar then BHP shares are gonna have some problems at this level

[anley] 18/1/2018 14:22

Just in from the press...............

BHP Billiton says it is considering several options for its U.S. shale oil unit including a trade sale, de-merger and an IPO.

The miner says it is preparing appropriate documents ahead of opening data rooms for potential trade sale buyers by the end of the March quarter.

BHP announced plans to sell the unit in August following months of pressure from activist hedge fund Elliott Advisors.

BHP's comments on the shale business came as it announced production results for the six months ending in December that generally were in line with market expectations.

[loganair] 16/1/2018 14:24

Deutsche Bank yesterday reaffirmed its buy investment rating on BHP Billiton PLC (LON:BLT) and raised its price target to 1900p (from 1650p).

[raffles the gentleman thug] 16/1/2018 11:24

What is holding this thing up ?? Commodity prices now pretty much flat for the year and feels like dollar about to have short term reversal ...

[cheshire pete] 14/1/2018 20:32

anley.....not long to wait as trading statement due on Thursday. May get a flavour of what to expect with RIO's trading statement on Tuesday though.

[loganair] 13/1/2018 13:25

Over the past couple of weeks I have read many reports of a 'Melt-up' where the stock market is likely to rise 30% to 50% in the next 6 to 12 months quickly followed by a 'Melt-down' where the stock market will crash losing 50% of its valued.

Like anley, I too have a position in gold, my hedge for when the 'Melt-down' comes.

[anley] 13/1/2018 12:34

It just seems that everything is on a big roll the metals and mining shares. However, it would not surprise me if on the first hint of trouble the sector stops for a breather.

I am prepared to wait and let this share drift up - not checked when next announcement is due - but will wait and then decide.

In the meantime I also have a position in gold - physical and miner.......

[the white house] 12/1/2018 10:35

No idea who wrote it but it made a good read!

[argylerich] 11/1/2018 15:09

Who wrote this please loganair?

[loganair] 11/1/2018 14:20

BHP Billiton - Enormous Mining Company With Strong Assets:

BHP Billiton has managed to rapidly increase its cash flow and plans to increase that going forward. The company has been aggressively paying down debt.

Overall, BHP Billiton is a strong investment at this time. The company has low debt and offers investors incredible respectable dividends making it a strong investment.

Going into FY 2018, the company expects a continued decline in petroleum production and it anticipates coal production to remain fairly constant. However, the company expects a respectable 5% increase in its iron production and a similar increase in the company’s copper production. That increase should help support the company’s cash flow going forward.

Looking at the company’s overall goals, the company is continuing to strive to improve its costs and anticipates additional productivity gains of $1.3 billion with a 4% reduction in unit costs. That means the company will increase cash flow by roughly 1% of its market cap every single year thanks to its efforts in productivity. And that means ample cash flow to reward shareholders or buyback stock.

BHP Billiton also has additional projects approved, and has recently completed major projects. The company’s Escondida Water Supply project support its significant copper production and should provide it with growing revenue going forward. The company also has several new discoveries that can turn into new production. This new production will provide the company with growing income.

Nickel West is one of BHP Billiton’s larger projects, with a multi-billion dollar capex, and it makes BHP one of the largest producers for briquettes and powder. In the rapidly growing electric car industry, Nickel West is in a prime position with a significant amount of demand and location near the Asian market. This position will bring BHP Billiton a significant amount of income.

BHP Billiton is planning to significantly expand its Nickel West project bringing the company additional income. The company’s stage 1 project here to take capacity to 100 kilotons here remains on track and the company is considering a stage 2 to double production from there. BHP Billiton anticipates that Nickel West will be able to support the market until 2040 and would become the largest nickel sulphate project worldwide.

Overall, BHP Billiton’s impressive decisions have allowed the company to increase the base value of its operations over the past 12 months. At spot prices, thanks to the company’s actions and a recovering market, the company has more than doubled its base value at spot prices. Even at consensus prices, the company has achieved double digit increases in its base value.

That value has come from continued unit cost reductions and improved capacity. One of the things the company is doing that makes it a good investment is the company is working on incrementally expanding production from its existing assets. That will decrease cost and expand production significantly from these assets with minimal capital costs.

On top of that BHP Billiton has a broad suit of opportunities to achieve further gains. The company plans to grow the base value of its assets by 50% with 10% of additional cost reductions and 20% of latent capacity additions. As a result of these things, the company has more than $25 billion of value in its growth portfolio that could increase its base value by 50%. That gives the company strong potential going forward.

BHP Billiton has significantly improved its financial profile to maintain significant balance sheet strength through the cycle. The company decreased its debt from more than $26 billion to just over $16 billion over the past year, an incredibly performance in the company’s financial profile. The company generates more than $13 billion of cash flow annually or a 10:1 market cap to cash flow ratio, or incredibly impressive.

As we can see, the company’s debt has traditionally remained high, but has since dropped significantly. That means the company has a net gearing ratio of just 12% currently, incredibly respectable. On top of this impressive cash flow and debt reduction, the company continues to offer investors a respectable dividend of almost 4%.

That dividend along with an improved balance sheet shows the strength of BHP Billiton’s financials. And that’s one of the things that makes BHP Billiton a strong investment opportunity at this time.

And BHP Billiton’s debt maturities have an average maturity time period of 9.1 years. That means the company’s $16 billion of debt should come due at a rate of less than $2 billion per year. We saw in 2017 alone that the company paid down almost $10 billion of debt from its free cash flow. Given that the company’s cash flow should increase, the company will be able to easily pay down almost $2 billion a year in debt.

And most importantly, and one of the things that will make this company still a top tier investment, is the company will still have $8 billion annually in free cash flow to spend how it desires. The company can use this for additional investments or the company can use this to reward shareholders. Those rewards for shareholders will allow the company to undergo buybacks or increase dividends.

Overall, BHP Billiton’s impressive portfolio along with the growth potential of that portfolio and the company’s strong cash flow make it a strong investment. The company is increasing its cash flow and improving its balance sheet. In fact, after 2017, the company decreased its interest expenses by several hundred $ million. As a result, the company’s growth potential and finances make BHP Billiton a strong investment.

Conclusion:

BHP Billiton has had a difficult time since the start of the oil crash. The oil crash combined with the commodity crash to put the company in a tough position. However, the company is still a massive company with a market cap of more than $100 billion and the company is in a solid position. The company has been focused on growing its market cap and its valuation and divesting of assets that aren’t as valuable.

BHP Billiton has an incredibly impressive portfolio of assets with significant growth potential. The company’s largest assets iron production and copper should have significant growth in the coming years. And the company has increased the base value of its assets significantly while paying down debt. As a result, in the coming years, the company’s cash flow should increase significantly supporting BHP Billiton’s value.

Overall, the market can see here how BHP Billiton is a strong investment at this time.