MORE than two years into a commodities boom, it is easy to get blasé about big numbers. The prospect of record annual profits from BHP Billiton tomorrow – in the region of £13 billion, close to a British corporate record – has done little to lift shares in the miner lately.

They have slid 29% in the past three months and declined 18% against the FTSE All-Share on fears that demand for base metals is weakening across the board.

For chief executive Marius Kloppers the challenge is to paint an upbeat picture of BHP’s prospects, even if it does not snare rival Rio Tinto.

In the short term, at least, its contested £76 billiontakeover should not overshadow BHP stock. Before the war of words between Kloppers and Tom Albanese, his counterpart at Rio, can resume, that will be mired in a competition probe until at least the turn of the year. Until then, the only people profiting will be Brussels lawyers.

Heading into 2009, BHP stock is trading on an earnings multiple of just seven times. That looks conservative, and fails to recognise the hefty price rises of 80% negotiated with contracted iron-ore customers in Asia.

Merrill Lynch pointed out last week that the flow of cash from miners into banks was overdone. After another round of write-downs from UBS, it is hard to believe there is no more dirty laundry to be aired by UK banks that would stop a revival in its tracks. The smart money is beginning to head back into mining, but there is further to go.

Kloppers will also play down BHP’s interest in platinum, allaying talk that it could wade into a battle with Xstrata for control of Lonmin. The company has enough on its plate pursuing Rio Tinto.

If it succeeds in capturing Rio, BHP has an exemplary record of integration. If it fails, shareholders will press Kloppers to hand back more of his cash mountain. Analysts say all those price rises could leave BHP with surplus cash of £20 billion over the next three years – giving Kloppers an ideal opportunity to ramp up the yield. The final dividend is expected to increase by 15% to 31 cents a share this time.

Fresh from supplying the metal for the medals handed out in Beijing, BHP can surely convince the City that its golden years are not behind it.

Cineworld

A DELAY in the release date of the next Harry Potter film from November to July 2009 is a timely reminder that cinema operators can never be totally in control of their destiny.

Warner Brothers’ decision takes the sheen off a strong release slate in the run-up to Christmas, although there is still James Bond to look forward to.

Just like the relationship between record labels and music radio, cinemas rely on Hollywood to produce the entertainment that will keep their customers’ attention.

As Guy Hands says, that leaves Odeon, the cinema chain he owns, in the popcorn business, not a branch of the showbiz world.

Cineworld, its smaller listed rival, is in the same boat. Its shares are typically pegged to box-office data and have risen 8% in the past month while The Dark Knight has been playing.

However, over the course of 12 months the company has underperformed the All-Share by 40%. The stock stands 37% lower than at its 170p flotation 16 months ago. The fear that cash-strapped moviegoers will stay home is unfounded, though. Admissions regularly rise in a recession as cinema is a relatively cheap treat.

Also on the upside, chief executive Steve Wiener has invested heavily in digital screens. Research suggests that 3D films bring in bigger revenues. Then there is the hope Cineworld can earn more from advertising after taking control of sales from ITV.

At 9%, the dividend yield is healthy. However, the stock hangover of a 47% stake held by private-equity firm Blackstone suggests that the company, which reports half-year results on Thursday, will not be an Oscar winner soon.

james.ashton@sunday-times.co.uk

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