Sasol won't be in buying territory for long!
by Gavin McCarter, Senior Portfolio Manager, Prodigy Asset Management, 08 January 2019
2018 was a wild year for investors as almost everything except cash produced negative returns. Brent crude was down 19.5% for the year, sending Sasol back to where it started the year after staging a spectacular rally above R580.
The R400 support level has proven to be a strong support level, which buyers have defended.
Take a look at the chart below.
The Oil price has stabilised with renewed optimism around Trade Talks and OPEC signalling supply cuts to curtail price weakness we should see a strong rebound in crude and this will support a rally in Sasol’s share price.
The company fundamentals are also getting stronger. On 21 November2018, Sasol released a positive trading update for the interim period until 31 December signalling HEPS increasing between 12% and 29%. And EBITDA to increase between 10% and 30%.
With Lake Charles nearing completion after $9.8 billion of the $11.13 billion CAPEX, earnings should start to benefit from the 1.5mtpa ethane cracker and 6 downstream chemical units. It’s expected to contribute between $250m and $300m to EBITDA in full year 2019.
Investors who accumulate below R430 will be rewarded as the share pushes back to R460 and ultimately back above the R500 level.
Buy SOL below R430.00 with an interim target of R460 and longer-term target of R580.00. Investors looking to enhance returns should consider derivatives to gear up returns.
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Note that FSP Invest, a division of Fleet Street Publications (Pty) Ltd, is a research house and not a registered broker, financial advisor or financial service provider. Our editors and customer services teams also do not give personal investment advice. The advice in this website is general advice only and may not be appropriate to your particular investment objectives, financial situation or particular needs, so before investing or if in any doubt about your personal situation, you should seek professional advice from a stockbroker or independent financial adviser authorised by the Financial Services Board.
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Remember: Never invest more than you can afford to spare and that the value of any investment, and the income derived from it, can go down as well as up. The past is not necessarily a guide to future performance.
Editors or contributors may have an interest in investments commented on in this newsletter. However they have signed restraints to prevent the abuse of their position as contributors to this publication.
© Copyright 2019 Fleet Street Publications (Pty) Ltd. Registered in SA No: 1999/019170/07, Vat No: 4430185282
Note that FSP Invest, a division of Fleet Street Publications (Pty) Ltd, is a research house and not a registered broker, financial advisor or financial service provider. Our editors and customer services teams also do not give personal investment advice. The advice in this website is general advice only and may not be appropriate to your particular investment objectives, financial situation or particular needs, so before investing or if in any doubt about your personal situation, you should seek professional advice from a stockbroker or independent financial adviser authorised by the Financial Services Board.
We research our recommendations and articles thoroughly, but disclaim all liability for any inaccuracies or omissions found in this publication.
Remember: Never invest more than you can afford to spare and that the value of any investment, and the income derived from it, can go down as well as up. The past is not necessarily a guide to future performance.
Editors or contributors may have an interest in investments commented on in this newsletter. However they have signed restraints to prevent the abuse of their position as contributors to this publication.
© Copyright 2019 Fleet Street Publications (Pty) Ltd. Registered in SA No: 1999/019170/07, Vat No: 4430185282
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