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Good article Cacher.
If BHP Billiton were a teenager, the mining group would be the uncool kid of the class, with spots, greasy hair and a stammer. The big Australian wraps together copper, oil and iron ore. All have been out of favour since the commodities supercycle got a puncture. Oil has slumped furthest, prompting BHP to cut its fleet of rigs pumping high-cost US shale oil by 40 per cent. That implies the group is losing money at $46 per barrel from Permian wells where extractive donkeys will nod no more, but continues to cover costs from Texas’s Black Hawk field. Citi estimates the pullback will trim 2015 capex by roughly $1.9bn. That is small potatoes in the context of expected spending of some $14bn. More to go, no doubt. BHP can be expected to maintain the dividend, even after spinning off the South32 subsidiary. Chief executive Andrew Mackenzie, a steady Scot, is poorly placed to increase the payout. The shares have dropped 26 per cent in a year. Only a better world economic outlook can revive them. Writedowns may continue — the shale business cost $20bn but is valued at just $5bn by one bank. Even so, the stock looks like a haven for the modestly bullish investor. The stock boasts a forecast yield of 6 per cent, a figure associated with distressed retailers rather than big, efficient miners. The uncool kid of the class works hard and gets the grades. His virtue is his reliability.
1. Dividend Yield (dividend in 2014 US$1.21 per share) 2. Strong Cash flow business (free cash flow US$8.1bn, Net operating cash flow US$25.4bn) 3. Commodity prices currently low ( especially Iron Ore & Oil) 4. Ability to lower production costs 5. US dollar strengthened against Aussie dollar last 12 months 6. Likely to demerge part of their business 7. Strong balance sheet Sensitivities (from their annual results in 2014) Approximate impact on FY15 net profit after tax of changes of US$ million US$1/t on iron ore price 135 US$1/bbl on oil price 50 US¢1/lb on copper price 30 US$1/t on metallurgical coal price 30 US¢10/MMbtu on US gas price 25 US¢1/lb on aluminium price 25 US$1/t on energy coal price 20 US¢1/lb on nickel price 2 AUD (US¢1/A$) operations 100 RAND (0.2 Rand/US$) operations 25 I am a holder of BLT shares - hence quite biased!
Can someone with good experience with this company give me some reasons why this might be a good 2015 buy?
Also there have been upgrades from a couple of brokers. 16-Jan-15 Canaccord Genuity Buy 1,670.00 1,690.00 Upgrade 15-Jan-15 Goldman Sachs Strong Buy 1,870.00 1,575.00 Upgrade http://www.stockmarketwire.com/article/4959178/FLASH-Goldman-Sachs-lifts-BHP-Billiton-to-conviction-buy-from-neutral-target-cut-from-1870p-to-1575p.html
BHP Billiton (BLT) have talked about de-merging parts of their business. http://www.bhpbilliton.com/home/investors/demerger/Pages/default.aspx Next week is their quarterly production figures.
Good luck
Picked up some chat about takeover several weeks ago, hard to believe owing to size of company and price any conglomerate would need to pay., My source has change his conception of what it is. Something to do with Chinese buying into company?????? and that allows them to use BHP's expertise as would satisfy nationalized rules,... to help mining operations in Mongolia and start making China self sufficient in common and rare minerals. Would this be good or bad??? I have a few share in BLT, maybe I'll add a few this week while price is low. Someone knows whats going on, brokers are even now making shares a strong buy. Anyone know anything as I'm baffled by it all.... too long on the roller coaster!!! Whats the announcement next week???
mj653 It's worth investing in a pair of brown corduroy trousers for times like these imo. :-)
Many thanks for the the spine stiffening help. I aim for a balanced long term dividend yielding portfolio that adds tax paid divi dosh to our Govt pension. It also has to obey simple rules so that my wife and/or the youngsters can take on the management of it in event of my death or incapacitating illness. So far the rules and my health have treated me well!! Hope you guys are similarly positioned.
BLT has massive swings with commodity prices. Quarterly production figures release around 21 January. strong dividend yield. Positive long term view, I am not a trader so not concerned with short term fluctuations.
Staying put as I don't like turning a paper loss into a REAL one. Also might pick up on the share split. gl.
and BLT and AA all seem to be fickle! Anyone got some good reasons for staying in? They are part of my diversification seems to be the only reason to stay. BUT they are becoming very expensive protection.
Thanks Einvestein
thanks
yes, they are also reducing their costs: "BHP Billiton this week announced a plan to shave $4.5 billion off its annual operating spend by 2017. It hopes to make some of those savings by paying its suppliers less, saying it is focused on lowering contract rates for goods and services. " http://www.abc.net.au/news/2014-11-27/bhp-move-to-slash-contract-costs-will-be-copied-analysts-say/5922914 http://www.businessinsider.com/afp-miner-bhp-billiton-to-cut-700-jobs-in-australia-2014-9?IR=T Also dont forget that lower petrol prices will also mean lower costs in mining operations.
Thank you einvestein Will be interesting if production has increased to compensate for falling commodity prices. Or they might have taken long term approach to reduce supply in some areas. However, I believe in iron Ore there has been increased production. I hear BHP has plans to grow its iron ore capacity even further, targeting production of 290 million tonnes a year by 2017.
01/20/15 | 04:30pm December 2014 Sales and Revenue Release - Operational Update http://www.4-traders.com/BHP-BILLITON-PLC-4001096/calendar/
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where did you read that BHP is reporting on 18th Jan ?
Very good turn around today. Thank you for link einvestein
http://www.ig.com/uk/shares-news/2014/08/15/bhp-billiton-full-year-results-driven-by-the-four-pillars-18658 oil accounts for 20% ebitda ..... but SP falls by 30% should see a good bounce before the 18th I think when it reports
A tough couple of days for BLT - commodity price and world stock markets. Still see as buy for long term.
do you know a guy not on these boards called les rogers from goole,I know he used to write angling articles for the local telegraph and do phone ins for Humberside fm(lincs fm now). ime asking this,because a guy from work says he used to write for the angling times aswell,which I didn't know(I know you write on there) if you do know him,he used to be our furnaceman in the late 70's,early 80's,before he took his redundancy and moved elsewhere,dunno where though.
view on recent commodity cycles.http://video.cnbc.com/gallery/?video=3000343381