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SG Securities rate Sasol as buy
SG Securities recommended Sasol shares as a long-term buy yesterday (23 Jan 02), with a target price of R120ps. HEPS for last year were R12.36 and SG Securities analyst Pierre Ranwell said he believed that, with the expected rand-dollar exchange rate at R10 and an average oil price of $22.80 a barrel, earnings a share for this year would be R15. "By far the largest contributor to earnings a share is the Secunda Synfuels operation," said Ranwell. "The effect of the decrease in the Brent oil price (from $26.50 a barrel to our estimated $22.80) is significantly overshadowed by the weaker rand (from R7.64 to the dollar to our estimated R10) for Sasol's 2002 financial year resulting in a net increase in earnings a share."
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Sasol port surcharge could increase export costs
The surcharge on container goods moving through the Durban port would add between R15m and R17m to the annual export costs of Sasol. The congestion surcharge was proposed in response to excessive delays at the harbour, and shipping lines are threatening to implement it from 15 Feb 02. Sasol exports between 9 600 and 10 000, 6m containers of polymers a year, and between 7 800 and 10 000 containers of other products, including waxes and solvents. With the surcharge set at $75 a container, it would add significantly to the group's base cost. The department of trade and industry said it was closely monitoring the surcharge issues and was consulting all parties in an attempt to assess the implications.
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Sasol a favourite of international fund managers
Leading international fund managers have recently joined local equity analysts in recommending the Sasol share as a bargain buy. Boston-based value investment guru Bernard Horn, who runs the $20m Polaris Global Value Fund, has included Sasol among his favourites for 2002 because he says it fits his philosophy of buying 'undervalued streams of cash flow, no matter where they are, to generate better-than-market returns with lower-than-market risk'. The weakening of the rand has been an important factor in Horn's endorsement, although he also likes the fact that the group has '50-plus years of coal on hand', which means increasing production will not necessarily require capital-draining exploration.
SA is still the top emerging market investment destination of Mark Mobius, manager of Franklin Templeton's Emerging Markets Fund. Sasol is also among his favourite shares.
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| Closing price data source: JSE Ltd. All other statistics calculated by ProfileData. |
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