SPONSORED - This year has put a lot of companies to the test. Where there were businesses that were forced to close their doors either temporarily, or sadly, permanently, there were others that held their own.
Investors spent a great part of the year on the edge of their seats closely watching these companies and their shares, and Sasol shareholders were not exempted from this. The price collapse on crude oil happened at the worst time possible where Sasol is concerned.
However, shareholders cannot say that Sasol has kept them in the dark about where things stand, and what the recovery plan is.
Sasol company and share performance to date
When viewing Sasol shares (SOL) on the Johannesburg Stock Exchange holistically, it is clear to see why investors consistently waited with bated breath for investor updates.
Prices per share started the year off on a decline and plummeted during March to an all-year low of R218.80 per share. It is clear that share prices and performance are not where they were a year ago, but SOL has shown a stable increase in performance, especially from October 30.
SOL prices are currently on R136.67, at the time of writing, compared to R270.93 on December 11, 2019.
An investor update was announced early in December, following the formal announcement that conditions have been met where the sale of a 50% interest in a portion of the Lake Charles Chemical Project, or LCCP, is concerned.
This comes after a joint venture between Sasol and LyondellBassell pertaining to base chemical business at LCCP in which LyondellBassell was set to purchase 50% in the unit.
Shareholders approved this at a general meeting which resulted in the establishment of the Louisiana Integrated Polyethylene joint venture which will fall under LyondellBasell management.
This sale ensures that Sasol will soon receive $2 billion cash which will subsequently bolster the already stressed balance sheet. In addition, Sasol is aiming to position its business to remain resilient in an environment where oil prices remain around $45 per barrel.
The latest presentation which was provided by Sasol has created the impression that the company is more than happy to be within this environment. However, the long-term plan is to ensure that Sasol becomes more competitive and to ensure that the group can generate a strong cash flow.
Does Sasol show investment potential?
Despite the year that Sasol has had, there is clear indication of improvements along with a plan not only for recovery, but for a lot of growth going forward. Sasol plans to deliver $3.5 billion from asset disposals in addition to reducing capex by R20bn to around R25bn a year.
All of this forms part of the Sasol 2.0 project and despite the challenges, Sasol has made its targets for the 2021 financial year.
According to wide analyst coverage and the 1-year consensus forecast on SOL shares, the current consensus is that SOL shares be held. In addition, as result of recent updates and transparency that Sasol shows, SOL shares remain an attractive investment for prospective investors.