| Mon 1 Aug 2005, 10:34 | | JPMorgan buffs BHP Billiton profit outlook |
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JPMorgan buffs BHP Billiton profit outlook
Tan Hwee Ann
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Bloomberg
BHP Billiton, the worldÆs largest mining company, had its profit estimates for 2006 to 2008 raised by JPMorgan Securities on expectations of higher thermal coal prices and a weaker rand.
On Friday, JPMorgan Securities raised its 2006 profit estimate for Melbourne-based BHP Billiton by 7,7% to $9,1bn, said a report by David George, Matthew Whittall and Ross Gardiner.
The report said BHP BillitonÆs fourth-quarter output report released on Thursday met expectations and did not affect 2005 earnings estimates.
Brokers including Merrill Lynch and Goldman Sachs JBWere also said the report met expectations, making 2005 estimate revisions of 1% or less.
In the report, BHP Billiton said it set annual production records for nine commodities including iron ore, coal and gas, to meet rising demand from China.
ôThere were no major surprises against forecasts,ö JPMorgan Securities said. ôHowever, our earnings forecasts beyond 2005 have changed due to adjustments to the JPMorgan rand/dollar forecasts and the thermal coal price forecasts. This has raised the upper end of our share price target for BHP Billiton to A$21 ($15,89) from A$20.ö
BHP BillitonÆs share price rose 21c, or 1,1%, to a record A$19,36 on the Australian Stock Exchange.
ôRaw materials prices still look like theyÆve got something left in them, so very few investors are prepared to bet against miners at this stage,ö said Michael Birch at Wallace Funds Management in Sydney. JPMorgan said prices of thermal coal, used in power stations, may stay at a record $54 a ton next year, compared with previous estimates of a drop to $50.
It also said that the rand may fall more against the dollar, making it cheaper for mining operations based in SA.
The brokerage raised its BHP Billiton profit estimates for 2007 by 4,7% to $8,8bn, and for 2008 by 2,4% to $7,9bn.
BHP Billiton last week said fourth-quarter iron-ore output rose 23% to 25,3-million tons from a year ago. Coking coal production rose 3% for that period
