Bloody huge profits (BHP)

BHP Billiton (BHP) announced its first-half results this morning. They are quite a bit better than expected: net profit of $US6.14bn ($US5.7bn excluding significant items) compared to the $US5.1bn analysts expected. They also declared a US42c dividend, up from US41c.

The shares went from yesterday's closing price of $39.85 to $41.24 in early-morning trading but are currently around $40.15, up a mere 0.75% whereas its rival RIO put on over 2%. As Professor Julius Sumner Miller used to ask, "Why is it so?"

Big increases in production volumes combined with the sharp rebound in commodity prices and demand towards the end of last year will translate into a large increase in BHP’s profitability and cash flows this half-year and, despite its reservations about the health of developed economies and the maintenance of China’s demand in the near term, the group remains very confident about the longterm outlook.

BHP Billiton believes with a passion in the long-term China and India stories and that the slow-down in global mineral expansion projects which took place in 2007 will lead to supply shortages in the medium term. BHP Billiton has found that the diversity of its mineral sources insulates it from the worst of downturns because normally there are at least one or two products doing well. The company has virtually no debt with its nominal net debt of around $8 billion being well under 10 per cent of market capitalisation.

BHP closed the day at $39.88. My target price is $44.

Shit happens!

My good friend Cameron Menhenick is building a new house at # 1 Sproxton Lane. Everything is coming along nicely: the roof is on, the walls are in, the watertanks installed and the new 'youbeaut' biodegradable septic system connected.

And then the rains came! More than 100 mm of it! And up popped the septic tanks like mushrooms after the rain, floating on the rainwater that had filled the excavated holes.

Shit happens!

Travelling North

Ray in January 2007 sitting at the cash register in his Kuranda junk shop

Thinking back over my past trips to Cairns, Cooktown and the Atherton Tablelands, I emailed Regine Bergmann of Australian Property Connection in Cairns who during my first visit in 2003 (and on subsequent visits in 2005 and 2007) had shown me several properties in and around Kuranda.

We had a common acquaintance in Ray Mullins who ran a second-hand shop in Kuranda Village. Ray owned several properties in and around Kuranda and the Tablelands and planned to build a block of apartments in the Village. He had spent half a lifetime in New Guinea and we shared a common knowledge of many of the other expatriates and local identities. We used to talk and talk while he tended to his 10-cent sales and I spent time in his two-computer "Internet Café". That never stopped him from charging me every last cent of every last minute I spent on his computer but I didn't mind as in time I came to appreciate his dry sense of humour and his grumpy outlook on life and I asked Regine to give him my regards:

Hello Regine, looks like you haven't got many Kuranda properties for sale. Anyway, we are still down here at "Riverbend". I hope you are keeping well! if you see Ray in his junk shop in Kuranda, say hello to him from me. Has he built his units in Kuranda yet? He and I are both slowly running out of time so he'd better hurry!

I didn't have long to wait for her reply:

Hello Peter, Nice hearing from you and for as long as you enjoy yourself, that is all that counts. Prices are down here at the moment, but are already going up again. Ray Mullins ran out of time, he passed away a few months ago, only aged 62. Peter, it was nice to hear from you and maybe one of these days you will visit Cairns again.

How sad to hear of Ray's passing! And he was younger than me! Well, Ray, here's my last tribute to you. I've always enjoyed our little talks about everything and anything but especially the world's woes and wickedness. Kuranda won't be the same without you!