s********h
发帖数: 158 | 1 i just saw this morning that the YTM for bp's 5.25% corp notes (AA rated
maturing in 2013) reached over 7.3%. is the firm priced for bankcruptcy or
what?
so i did a quick calculation using morningstar's estimates: (units in $
billion usd)
operating c/f: 30
capex: 20
acquisition: 2
fcf = 30 - 20 - 2 = 8
oil spill cleanup + liability (near term): 2 ~ 4
oil spill cleanup + liability (long term): 4 ~ 10
lawsuits + penality: 25
total near term cost:
year one: 2.5, year two: 1.5
total long term cost o |
K****D
发帖数: 30533 | 2 Without doing any calculation, I already like its curve...
Will consider doing a 2% of portfolio gamble sometime, just
as what I did one hour before Wamu bankrupted...
【在 s********h 的大作中提到】
: i just saw this morning that the YTM for bp's 5.25% corp notes (AA rated
: maturing in 2013) reached over 7.3%. is the firm priced for bankcruptcy or
: what?
: so i did a quick calculation using morningstar's estimates: (units in $
: billion usd)
: operating c/f: 30
: capex: 20
: acquisition: 2
: fcf = 30 - 20 - 2 = 8
: oil spill cleanup + liability (near term): 2 ~ 4
|
d*****z
发帖数: 114 | 3 the question is: how accurate are those estimations?
【在 s********h 的大作中提到】
: i just saw this morning that the YTM for bp's 5.25% corp notes (AA rated
: maturing in 2013) reached over 7.3%. is the firm priced for bankcruptcy or
: what?
: so i did a quick calculation using morningstar's estimates: (units in $
: billion usd)
: operating c/f: 30
: capex: 20
: acquisition: 2
: fcf = 30 - 20 - 2 = 8
: oil spill cleanup + liability (near term): 2 ~ 4
|
s********h
发帖数: 158 | 4 the data were obtained from morningstar, and for my calculation, i used the
worst case (or close to worst case).
【在 d*****z 的大作中提到】
: the question is: how accurate are those estimations?
|
b****e
发帖数: 460 | 5 A comment about dividend, I really don't understand the analyst suggestion o
f maintaining dividend and issuing more notes, plus the notes are not cheap
now. Maybe someone can explain it to me.
About BP's fate, I don't have a clue.
【在 s********h 的大作中提到】
: i just saw this morning that the YTM for bp's 5.25% corp notes (AA rated
: maturing in 2013) reached over 7.3%. is the firm priced for bankcruptcy or
: what?
: so i did a quick calculation using morningstar's estimates: (units in $
: billion usd)
: operating c/f: 30
: capex: 20
: acquisition: 2
: fcf = 30 - 20 - 2 = 8
: oil spill cleanup + liability (near term): 2 ~ 4
|
h*******y
发帖数: 864 | 6 Debt payment is tax deductible and equity is not free either. According to
the financial model, the cost of equity equals to dividend yield plus growth
rate of dividends. So to maintain the same risk exposure, when dividend is
cut, investor will require further drop of the stock price in order to
maintain the cost of the capital. So there is an optimal capital structure
for WACC. I too think BP could issue more debts without increasing WACC,
because at its current debt level, both the debt yield
【在 b****e 的大作中提到】
: A comment about dividend, I really don't understand the analyst suggestion o
: f maintaining dividend and issuing more notes, plus the notes are not cheap
: now. Maybe someone can explain it to me.
: About BP's fate, I don't have a clue.
|
m*****u
发帖数: 1342 | 7 It looks like the Dividend will get suspended for the moment, brother Obama
and a bunch guys at Capital Hill
don't like BP shareholders getting paid until their own jobs are safe.
The cost of cleanup and damage compensation is up to anyone's guess. BP has
spend $1 billion so far, the
current est. ranges from $5 b to $23 b. BP could take $23 b hit, but the
problem is nobody knows how much it
will cost at this time.
o
cheap
【在 b****e 的大作中提到】
: A comment about dividend, I really don't understand the analyst suggestion o
: f maintaining dividend and issuing more notes, plus the notes are not cheap
: now. Maybe someone can explain it to me.
: About BP's fate, I don't have a clue.
|
n******n
发帖数: 12088 | 8 the price already half-cut. why u think dividend should be kept @ the same
level @ b/4?
growth
is
premium
【在 h*******y 的大作中提到】
: Debt payment is tax deductible and equity is not free either. According to
: the financial model, the cost of equity equals to dividend yield plus growth
: rate of dividends. So to maintain the same risk exposure, when dividend is
: cut, investor will require further drop of the stock price in order to
: maintain the cost of the capital. So there is an optimal capital structure
: for WACC. I too think BP could issue more debts without increasing WACC,
: because at its current debt level, both the debt yield
|
h*******y
发帖数: 864 | 9 Did I say anywhere that I think divident should be kept at the same level as
before?
I'm just saying that it has debt capacity (if the liability is truly less
than 30B as OP calculated, BP can deal all of it with debt easily) and the
debt market seems to price its future more optimistically than the equity
market. So it is good to take advantage of it. But I think they should long-
time ago talk about cutting dividend because of the apparent political
pressure rather than financial reality.
Poli
【在 n******n 的大作中提到】
: the price already half-cut. why u think dividend should be kept @ the same
: level @ b/4?
:
: growth
: is
: premium
|
h*******y
发帖数: 864 | 10 I think market probably has priced in about $40b hit (including the
reduction in business due to limits on offshore drilling, etc) at the moment
. I have no idea though if it is enough.
Obama
has
【在 m*****u 的大作中提到】
: It looks like the Dividend will get suspended for the moment, brother Obama
: and a bunch guys at Capital Hill
: don't like BP shareholders getting paid until their own jobs are safe.
: The cost of cleanup and damage compensation is up to anyone's guess. BP has
: spend $1 billion so far, the
: current est. ranges from $5 b to $23 b. BP could take $23 b hit, but the
: problem is nobody knows how much it
: will cost at this time.
:
: o
|
|
|
s********h
发帖数: 158 | 11 running a good business does not imply that the firm has to maintain the
wacc, although it may be accustomed to operating under that wacc in the past
.
you are right that issuing equity is more expensive compared to debt for bp.
but in bp's case, it has strong cash flow and does not need to issue any
equity to fund its operations.
i can think of one reason why bp's mgmt is hesitant to cut the dividend.
with a dividend cut, the share price will likely fall further. consequently,
either sharehold
【在 h*******y 的大作中提到】
: Debt payment is tax deductible and equity is not free either. According to
: the financial model, the cost of equity equals to dividend yield plus growth
: rate of dividends. So to maintain the same risk exposure, when dividend is
: cut, investor will require further drop of the stock price in order to
: maintain the cost of the capital. So there is an optimal capital structure
: for WACC. I too think BP could issue more debts without increasing WACC,
: because at its current debt level, both the debt yield
|
d*****z
发帖数: 114 | 12 honestly i wouldn't put too much confidence on that estimation from
morningstar. 1 month ago, numbers of respectable analysts put worst case
scenario to 5-10 billion. their reasoning was that the largest leak in
history cost exxon 3 billion, and using that as a bench mark for worst case
(given inflation) you get 5-10 billion. but you see, now it turns out it is
far bigger than that.
the problem is, you don't know. and they don't know either, morningstar or
GS. how much oil has been leaked and wi
【在 s********h 的大作中提到】
: the data were obtained from morningstar, and for my calculation, i used the
: worst case (or close to worst case).
|
S**C
发帖数: 2964 | 13 BP will also trade at discount against its peers for a long time. |
s********h
发帖数: 158 | 14 did you mean $40 from its high of $62?
moment
【在 h*******y 的大作中提到】
: I think market probably has priced in about $40b hit (including the
: reduction in business due to limits on offshore drilling, etc) at the moment
: . I have no idea though if it is enough.
:
: Obama
: has
|
m*****u
发帖数: 1342 | 15 The key for BP is stop bleeding (the spill or leak) first. For damages, BP
can always drag on the lawsuit (just
like Exxon). BP can not get away from clean up cost though, brother Obama
will hand them the bill and BP has
to pay.
moment
【在 h*******y 的大作中提到】
: I think market probably has priced in about $40b hit (including the
: reduction in business due to limits on offshore drilling, etc) at the moment
: . I have no idea though if it is enough.
:
: Obama
: has
|
d*****z
发帖数: 114 | 16 I would give a rough thought of mine-
if the current estimation on leak and recovery cost turns out to be close to
reality (still big question mark), i would buy at $23.
1. net earning: 6.5/share, so fair value is 65/share given pe 10 which is
normal for oil company
2. bp should bear a less pe because its very bad internal control (3 major
incidents in the past 5 years). i would trim 20%, giving it a 8 PE for its
bad management and inconsistent performance.
3. bp's earning power will likelyb be
【在 s********h 的大作中提到】
: i just saw this morning that the YTM for bp's 5.25% corp notes (AA rated
: maturing in 2013) reached over 7.3%. is the firm priced for bankcruptcy or
: what?
: so i did a quick calculation using morningstar's estimates: (units in $
: billion usd)
: operating c/f: 30
: capex: 20
: acquisition: 2
: fcf = 30 - 20 - 2 = 8
: oil spill cleanup + liability (near term): 2 ~ 4
|
h*******y
发帖数: 864 | 17 No, I meant $40B. The BP lost about $90B market spill since the oil rig
blow up. But, first, you need to adjust that for the overall market
condition. Then I remember reading some research sometime ago that the
market cap drop is one to one for external one-time events. However, if
it is internal reputation-related (which applies to BP), the drop is
about two to one. I didn't spend time in analyzing the number in details
(since I consider myself disadvantaged in evaluating the potential risks
fa
【在 s********h 的大作中提到】
: did you mean $40 from its high of $62?
:
: moment
|
j*****h
发帖数: 3292 | 18 what is the gulf coast offshore drilling ban effect on earning forecast?
how much percentage revenue & profit is from gulf coast offshore drilling
right now?
3. bp's earning power will likelyb be damaged permanently from external (bad
reputation, loss of business, higher legal/safety/royalty cost for future
projects...). I would trim another 10%. so bp's fair value is $45-50.
【在 d*****z 的大作中提到】
: I would give a rough thought of mine-
: if the current estimation on leak and recovery cost turns out to be close to
: reality (still big question mark), i would buy at $23.
: 1. net earning: 6.5/share, so fair value is 65/share given pe 10 which is
: normal for oil company
: 2. bp should bear a less pe because its very bad internal control (3 major
: incidents in the past 5 years). i would trim 20%, giving it a 8 PE for its
: bad management and inconsistent performance.
: 3. bp's earning power will likelyb be
|
b****e
发帖数: 460 | 19 I understand WACC consideration. I just don't understand to issue debt at 7.
3% just to maintain dividend level. For BP, normally their debt component of
WACC is just 5%.
growth
is
premium
【在 h*******y 的大作中提到】
: Debt payment is tax deductible and equity is not free either. According to
: the financial model, the cost of equity equals to dividend yield plus growth
: rate of dividends. So to maintain the same risk exposure, when dividend is
: cut, investor will require further drop of the stock price in order to
: maintain the cost of the capital. So there is an optimal capital structure
: for WACC. I too think BP could issue more debts without increasing WACC,
: because at its current debt level, both the debt yield
|
p******a
发帖数: 41 | |
a****e
发帖数: 2 | 21 Without going into too much details, I think BP is in a good business with
stable and growing earning prospect. Normalized fcf at around 10b would
suggest a 150b market cap as more than reasonable in normal times.
Over the long term, tens of billions of extra debt is going to be ok as
inflation builds up and with appreciation of oil price. Actually this event
put a brake on oil exploration and supply for years to come.
Most importantly, survival of BP is in line with every party's interest.
Vict |
