Wednesday, 11 July 2012 - 20:00
Charts
BHP Billiton Plc ? Strength in Diversity BHP Billiton is one of the world’s largest diversified natural resource companies, and one of the largest companies by market capitalisation listed on the JSE. It is the result of the 2001 merger of the UK-based mining house Billiton and Broken Hill Proprietary (BHP), Australia’s foremost resource company. The two companies’ complementary assets and expertise in different commodities proved to be a successful combination ever since. BHP Billiton is a dual listed company, comprising BHP Billiton Limited with its headquarters in Melbourne and BHP Billiton Plc located in London. BHP Billiton Limited is listed on the Australian Securities Exchange, while BHP Billiton Plc has a premium listing on the London Stock Exchange and a secondary listing on the JSE.
The company has a very strong balance sheet and cash flows, but its true strength lies in its ability to diversify across different geographical regions and a wide range of commodities.
BHP Billiton is a major global player in the mining and production of aluminium, copper, energy coal, iron ore, manganese, metallurgical coal, nickel, silver, and titanium. The company also operates in the petroleum industry, being involved in exploration as well as production of oil and gas.
In terms of geography, the company’s diversification is hard to match. It operates in more than 100 locations on six continents, with most of its mining operations concentrated in Australia, South America, and South Africa.
Interim Results
The company has reported strong growth in revenue in its interim results for the half year ended 31 December 2011, with record high production recorded for iron ore and natural gas. Revenue grew by 9.7% to USD 37.48 billion and underlying EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) increased by 8.3% to USD 18.74 billion. EBITDA is a useful measure for comparing earnings across companies and industries, as it seeks to reduce the effects of financing and accounting decisions on the reported earnings number.
Source: www.bhpbilliton.com
Net operating cash flow increased slightly, up 0.7% to USD 12.28 billion, while attributable profit to the BHP Billiton Group declined by 5.5% to USD 9.94 billion. Profits were impacted negatively by the drop in commodity prices towards the end of 2011, as well as slowing demand from the high growth economies of China and India.
The company managed to increase its interim dividend per share by 19.6% to 55 US cents, continuing a recent trend of increasing dividends paid to shareholders.
The table below illustrates the sources of revenue and EBIT (Earnings Before Interest and Tax) for the half year ended 31 December 2011.
Source: www.bhpbilliton.com
Significant increases in revenue for petroleum, iron ore, and energy coal was partly offset by decreases in revenue for base metals, stainless steel materials, and manganese. These figures illustrate the benefits of diversifying across different sectors, as the company’s revenue stream is not overly exposed to the supply/demand or price cycles of any specific commodity. This should result in enhanced earnings stability over the long term.
Current Valuation
BHP Billiton currently trades on a PE ratio of 7.48 and a Dividend Yield of 3.45%. The forward PE increases to 9.01 as a result of a consensus forecast of a drop in earnings at the release of their financial results for the year ended 30 June 2012.
Billiton currently trades at a PE multiple that is very close to its lows during the global financial crisis of 2008, and the same can be said for most shares in the JSE’s resources sector.
The main factors affecting the fortunes of resource companies going forward remain the European debt crisis and its effect on investor confidence vs. risk aversion, and the question of whether demand for resources in the East will slow down significantly or not.
Considering their stance on these two issues, investors have to first decide when these valuations become attractive enough to warrant an increased exposure to the resources sector, and then select companies within the sector whose fundamentals indicate that they could outperform their rivals over time.
BHP Billiton might just be such a company.
Kind regards,
Cor van Deventer
Sources: MoneyWeb, www.billiton.com
www.seedinvestments.co.za
info@seedinvestments.co.za
021 914 4966
Wed, 11 Jul 2012
Top News
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South Africa's Mondi Group said it will buy German packaging firm Nordenia International from Oaktree Capital, in a $782 million deal that will give the paper maker a bigger presence in consumer packaging. Full story |
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A suicide bomber killed at least 22 people outside a police academy in the Yemeni capital Sanaa on Wednesday, dramatically exposing the government's vulnerability to al Qaeda-linked insurgents despite a U.S.-backed offensive against them. Full storySyria's ambassador to Iraq defected on Wednesday in protest at the military crackdown by President Bashar al-Assad's forces against a 16-month uprising, Syrian opposition sources said. Full storyA Norfolk Southern freight train derailed and burst into flames in Columbus, Ohio, early on Wednesday, forcing nearby residents to evacuate, authorities said. Full story |
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Markets | The S&P 500 was little changed
on Wednesday as investors awaited minutes of a Federal Reserve
meeting to see if officials are. . . Full story | | U.S. equity markets were mixed
in lackluster trading o n W ednesday but crude oil rose on the
off-chance minutes of a policy. . . Full story | | European equities steadied on
Wednesday, with a weak start to the second quarter reporting
season from the autos and luxury sectors denting sentiment,. . . Full story | | Gold rose on Wednesday,
rebounding from the previous day's 1.4 percent drop with lift
from rising grains and energy prices, but the precious. . . Full story |
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| Britain's top share index ended
flat in low volume on Wednesday, with investors uncertain about
the future path for equities due to concerns. . . Full story | | European equities edged down on
Wednesday, with a weak start to the second quarter reporting
season from the autos and luxury sectors denting. . . Full story | | European shares edged higher on
Wednesday, as gains in heavyweight telecoms and utility stocks
offset a slump in luxury goods companies, whose shares. . . Full story | | European shares turned positive
on Wednesday, led by defensive sectors and banks, and with U.S.
stock index futures pointing to a higher open,. . . Full story |
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SA Business | South Africa's business confidence improved marginally in June from a 10-year low the previous month, although big clouds remain on the economic horizon, the South African Chamber of Commerce and Industry (SACCI) said on Wednesday.. . . Full story | | South African government bonds hit fresh record highs early on Wednesday, supported by persistent foreign buying and local investors pricing in a dovish central bank statement at a monetary policy decision next week.. . . Full story |
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| South African public service unions declared a formal dispute with the government on Wednesday, raising the prospect of major industrial action. . . Full story | | Xstrata said
shareholders will vote on Sept. 7 on the miner's planned $26
billion takeover by Glencore, effectively giving the commodities
trader and rival. . . Full story | | Mauritius expects this year's foreign direct investments to at least match those of 2011 despite the global slowdown, with money flowing. . . Full story | | The following bids, mergers,
acquisitions and disposals involving European, U.S., Canadian
and Asian companies were reported by 2000 GMT on Tuesday:. . . Full story |
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Company News | On 21 June 2012, the board declared a final gross cash dividend of 180 cents per ordinary share payable out of. . . Full story | | Shareholders were advised that the company proposes, subject to obtaining the requisite shareholder approval, to amend the terms of the non-redeemable,. . . Full story | | Shareholders of Absa and Absa Bank Ltd. ("Absa Bank") were advised that the financial results for the six-month period ended 30. . . Full story | | Avusa Ltd. ("Avusa") and Mvela Group shareholders were referred to the joint announcement released on SENS on Tuesday, 12 June 2012. . . Full story |
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| Sanyati shareholders (shareholders) were informed in a SENS announcement on 10 July 2012 that Mr Trevor Murgatroyd, the appointed business rescue. . . Full story | | Ms Portia Molefe has resigned as an independent non-executive director with immediate effect.. . . Full story | | Nedbank looks to raise R4 billion from a green savings bond programme allowing clients to invest from just R1 000. Proceeds. . . Full story | | AMAPS has come up with a sound proposal to extend its business operations in Africa from 7 percent to 10 percent. . . Full story |
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Company Results | Investment income for the interim period ended 30 June 2012 increased to R45.6 million (2011: R42.8 million). Profit attributable to ordinary shareholders rose to R9.7 million (2011: R5.5 million), while earnings per ordinary share jumped to 110.2cps (2011: 62.5cps).
Interest payment
A debenture interest payment (number 50) of 30.0 cents per debenture in respect of the six months ended 30 June 2012 is payable to debenture holders recorded in the debenture register of the company on. . . Full story |
World Markets (Spot Prices)
Name | Time | RP | Move | % Move | JSE Overall | 16:51 | 33722.00 | -275.00 | -0.81% | JSE Top 40 | 16:50 | 29574.00 | -273.00 | -0.91% | JSE Gold | 16:50 | 2243.00 | -61.00 | -2.66% | JSE Financial | 16:50 | 26086.00 | -61.00 | -0.24% | JSE Industrial | 16:51 | 38917.00 | -304.00 | -0.78% | JSE Indust 25 | 16:50 | 32927.00 | -262.00 | -0.79% | JSE Resource | 16:50 | 45717.00 | -573.00 | -1.24% | DJ Futures | 19:38 | 12550.00 | -121.00 | -0.95% | DJ Ind | 19:58 | 12618.45 | -278.22 | -2.16% | SP 500 | 19:58 | 1342.43 | -12.24 | -0.90% | Nasdaq | 19:58 | 2885.01 | -16.96 | -0.58% | FTSE 100 | 17:35 | 5664.48 | .41 | 0.01% | DAX | 18:08 | 6453.85 | 66.28 | 1.04% | CAC40 | 18:08 | 3157.25 | -18.16 | -0.57% | Nikkei | 08:28 | 8851.00 | -6.73 | -0.08% | Shanghai | 09:28 | 2175.38 | 10.95 | 0.51% | Hang-Seng | 10:28 | 19419.87 | 25.53 | 0.13% | All Ords | 08:43 | 4135.00 | -2.90 | -0.07% | NZSE 50 | 07:48 | 3478.84 | 14.12 | 0.41% |
| | Name | Time | RP | Move | % Move | Gold $ | 19:59 | 1576.20 | 9.21 | 0.59% | Gold R | 19:58 | 12991.12 | 120.51 | 0.94% | Gold R/kg | 19:58 | 417836 | -854 | -0.20% | Silver $ | 19:59 | 27.1000 | .3330 | 1.24% | Platinum $ | 19:58 | 1421.20 | .20 | 0.01% | Palladium $ | 19:58 | 579.00 | 6.00 | 1.05% | R157 | 13:08 | 5.87 | -.08 | -1.26% | R204 | 17:08 | 6.67 | -.10 | -1.48% | Brent Crude | 19:58 | 99.99 | .76 | 0.77% | Rand / Dollar | 19:59 | 8.2414 | 0.0264 | 0.32% | Rand / Pound | 19:55 | 12.7776 | 0.0644 | 0.51% | Rand / Euro | 19:55 | 10.1076 | 0.0465 | 0.46% | Rand / NZD | 19:58 | 6.5835 | 0.0590 | 0.90% | Rand / AUD | 19:55 | 8.4670 | 0.0890 | 1.06% | Yen / Dollar | 19:59 | 79.6300 | 0.2080 | 0.26% | Euro / Dollar | 19:55 | 0.8156 | -0.0003 | -0.04% | Dollar / Euro | 19:59 | 1.2263 | 0.0012 | 0.10% | Pound / Dollar | 19:55 | 0.6436 | -0.0006 | -0.09% |
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The JSE Today
Trading Statistics
Date | Adv. | Decl. | Unch. | Actives | Volume | Value | Trades | Orders |
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11/07/2012 | 92 | 131 | 66 | 289 | 71,961,026 | R378,380,180 | 83083 | 1421291 | 10/07/2012 | 108 | 97 | 64 | 269 | 48,785,173 | R238,314,317 | 87428 | 1414710 | 09/07/2012 | 88 | 118 | 56 | 262 | 55,257,919 | R265,944,470 | 78224 | 1422243 | 06/07/2012 | 113 | 102 | 74 | 289 | 64,672,690 | R313,791,814 | 85678 | 1217279 | 05/07/2012 | 114 | 78 | 67 | 259 | 53,787,228 | R366,465,707 | 104319 | 5912 |
* Includes all listed instruments on the JSE
Index Summary Index Name | RP | Move | % Move | Top 40 | 29,574.00 | -273.00 | -0.91% | Industrial | 38,917.00 | -304.00 | -0.78% | Mid Cap | 49,865.00 | -174.00 | -0.35% | Small Cap | 36,638.00 | -87.00 | -0.24% | Resource 20 | 45,717.00 | -573.00 | -1.24% | Industrial 25 | 32,927.00 | -262.00 | -0.79% | Financial 15 | 9,758.00 | -39.00 | -0.41% | Financial & Ind. 30 | 36,466.00 | -261.00 | -0.71% | All Share | 33,722.00 | -275.00 | -0.81% | Oil & Gas | 25,661.00 | -535.00 | -2.05% | Mining | 29,408.00 | -335.00 | -1.13% | Gold Mining | 2,243.00 | -61.00 | -2.66% | Platinum Mining | 46.00 | .00 | -0.17% | GENERAL MINING | 7,611.00 | -51.00 | -0.67% | Oil & Gas Producers | 13,797.00 | -288.00 | -2.05% | Basic Materials | 25,341.00 | -281.00 | -1.10% | Chemicals | 15,292.00 | 66.00 | 0.44% | Forestry & Paper | 13,799.00 | -281.00 | -2.00% | Industrial Metals | 29,543.00 | -103.00 | -0.35% | Industrials | 33,496.00 | -283.00 | -0.84% | General Industrials | 94.00 | .00 | -0.62% | Consumer Goods | 32,774.00 | -322.00 | -0.97% | Automobiles & Parts | 6,157.00 | -57.00 | -0.93% | Household Goods | 162.00 | 0 | -0.61% | Health Care | 44,744.00 | -282.00 | -0.63% | Beverages | 115.00 | .00 | 0.01% |
| | Index Name | RP | Move | % Move | Food Producers | 61,240.00 | -292.00 | -0.48% | Personal Goods | 424.00 | -11.00 | -2.71% | Consumer Services | 70,161.00 | 54.00 | 0.08% | General Retailers | 59,666.00 | -320.00 | -0.53% | Travel & Leisure | 4,065.00 | -66.00 | -1.62% | Media | 98.00 | 1.00 | 1.32% | Support Services | 2,333.00 | 5.00 | 0.23% | Telecommunications | 69,430.00 | -1147.00 | -1.63% | Financials | 26,086.00 | -61.00 | -0.24% | Banks | 48,425.00 | -148.00 | -0.31% | Non-life Insurance | 41,981.00 | -2.00 | -0.01% | Life Insurance | 20,676.00 | -213.00 | -1.02% | General Financial | 2,446.00 | -9.00 | -0.38% | Technology | 29,991.00 | -95.00 | -0.32% | SHARIAH TOP40 | 2,874.00 | -41 | -1.41% | FTSE/JSE SHARIAH ALL | 3,012.00 | -38 | -1.26% | COAL MINING | 22,683.00 | -755 | -3.22% | FTSE JSE Fledgling | 5,453.00 | -8 | -0.16% | FTSE/JSE Alt X | 1,107.00 | 10 | 0.92% | SA LISTED PROPERTY | 464.00 | | 0.87% | CAPPED PROPERTY | 370.00 | | 0.88% | RESOURCE | 25,211.00 | -323 | -1.27% | DIVIDEND PLUS | 192.00 | -1 | -0.53% | FTSE/JSE RAFI 40 | 6,923.00 | -66 | -0.95% | Capped Top 40 | 15,625.00 | -144 | -0.92% | Capped All Share | 17,060.00 | -139 | -0.81% | JSE TABACO | 5,485.00 | -23 | -0.42% |
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Click here for the Sharenet Index Summary page
Latest Consensus Changes** Code | Company Name | Status | Updated | KIO | KUMBA IRON ORE LTD | HOLD | 09 Jul | SLM | SANLAM LIMITED | HOLD | 06 Jul | MST | MUSTEK LIMITED | BUY | 05 Jul | IPL | IMPERIAL HOLDINGS LTD | HOLD | 05 Jul | RLO | REUNERT LIMITED | SELL | 05 Jul |
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Results Expected** Expected | Company Name | Fin. Date | 18 Jul 2012 | FORBES | May 2012 (Q) | 18 Jul 2012 | LONRHO | June 2012 (Interim) | 19 Jul 2012 | AFROX | June 2012 (Interim) | 19 Jul 2012 | MICROMEGA | June 2012 (Interim) | 19 Jul 2012 | ROCKWELL | May 2012 (Q) |
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Recent Dividends** Share Name | Dec-Date | LDT | Pay-Date | Amount | FOORDCMPS | 12-07-10 | 12-07-27 | 12-08-06 | R 0.3000 | PSV | 12-07-05 | 12-07-20 | 12-07-30 | R 0.0360 | REUNERT5.5 | 12-06-29 | 12-07-20 | 12-07-30 | R 0.0550 | HUDACO | 12-06-29 | 12-08-10 | 12-08-20 | R 1.5500 | NICTUS | 12-06-28 | 12-07-13 | 12-07-23 | R 0.1425 |
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Ex Div** Share Name | Dec-Date | LDT | Pay-Date | Amount | TONGAAT | 12-05-28 | 12-07-06 | 12-07-19 | R 1.7000 | CROOKES | 12-05-29 | 12-07-06 | 12-07-16 | R 1.3500 | FAMBRANDS | 12-05-21 | 12-07-06 | 12-07-16 | R 1.2000 | DATATEC | 12-05-16 | 12-07-06 | 12-07-16 | R 0.0900 |
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Upcoming AGMs** Code | Company Name | Date | Status | ATNP | Allied Electronics Corporation Ltd. | 11/07/2012 | Unconfirmed | ATN | Allied Electronics Corporation Ltd. | 11/07/2012 | Unconfirmed | ESR | Esorfranki Ltd. | 13/07/2012 | Confirmed | ALT | Allied Technologies Ltd. | 17/07/2012 | Confirmed | ILV | Illovo Sugar Ltd. | 18/07/2012 | Confirmed |
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