it’s anyone’s guess
Why it is still too early to make a call on Sasol
Earnings are going to fall between 11% and 21%, as the company doubles down on its Louisiana project
Getting a grip on Sasol’s investment case seems to require a balancing act worthy of Solomon. You have to weigh up the US dollar oil price and the rand/dollar exchange rate, and then make a call on its controversial US$11bn Lake Charles Chemicals Project in the US. Sasol’s results for the year to June are a perfect example. In dollars, the oil price moved in Sasol’s favour, with the average Brent crude oil price rising 15% to $49.77/bbl. But the strengthening rand meant the rand oil price fell 15%, from R707/bbl in 2016 to R598/bbl by July 2017. This means Sasol’s headline earnings will fall between 11% and 22%. Even at the bottom of this range, it would mean earnings have tumbled nearly 40% over the past three years. It’s a grim trajectory, especially as it comes while Sasol is building its hugely ambitious Lake Charles development in the US state of Louisiana. JPMorgan analysts say the trading update was exactly as the market expected. "The Lake Charles Project was also bang in li...
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