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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