SASOL LIMITED
Investment Analysis: Sasol Limited (JSE: SOL)
Date: 9 January 2026 Share Price: ~R108.99 (10,899c) Analyst Role: Senior Equity Analyst, JSE
Step 1: Data Gathering & Source Verification
I have reviewed the most recent financial disclosures and relevant SENS announcements, prioritizing the full-year results released in August 2025 and the subsequent operational update.
- Operational Update: Reviewed the Business Performance Metrics for the three months ended 30 September 2025 (Released 23 October 2025).
- Annual Financial Statements: Reviewed the Audited Financial Results for the year ended 30 June 2025 (Released 25 August 2025).
- SENS Activity (L12M): Key announcements include the Prax SA Business Rescue notification (October 2025), the successful damages award against Transnet (June 2025), and the Standard Bank disposal of stake (August 2025).
Data Sources:
- Annual Results (Aug 2025):
https://www.sasol.com/sites/default/files/2025-08/Annual%20Financial%20Statements%20for%20the%20year%20ended%2030%20June%202025_Updated_0.pdf - Q1 FY26 Update (Oct 2025):
https://www.sasol.com/sasol-sens/business-performance-metrics-three-months-ended-30-september-2025
Step 2: Metric Extraction
| Metric | Value | Notes | | --- | --- | --- | | Market Cap | ~R70.2 Billion | Has contracted significantly over the last 24 months; now trading like a deep-value mid-cap. | | Dividend Yield (L12M) | 0.0% | Passed. Both the Interim (Feb 2025) and Final (Aug 2025) dividends were passed. While Net Debt dropped to $3.7bn (below the $4bn trigger), the Board prioritized balance sheet flexibility given volatile macro conditions. | | Liquidity Check | Highly Liquid | Average daily value traded consistently >R150m. Remains a top liquidity counter on the JSE. | | P/E Ratio | ~3.1x | Distressed/Deep Value. Based on FY2025 HEPS of 3,513 cents. The market is pricing in severe existential risk (ESG/Gas Cliff) rather than operational earnings. | | Net Asset Value (NAV) | ~24,400 cents | Critical Disconnect. The stock trades at a massive ~55% discount to NAV (Price/Book ~0.45x). The market is heavily discounting the book value of the Secunda assets due to future decarbonization liabilities. |
Step 3: Operational & Strategic Analysis
Business Overview Sasol is an integrated energy and chemicals company.
- Energy (Fuels): Secunda Synfuels (Coal-to-Liquids) and Natref (Crude refining).
- Chemicals: Base Chemicals and Performance Chemicals (US/Eurasia).
- Strategic Pivot: The company is currently fighting to "bridge the gap" to 2030, managing the decline of coal quality while attempting to transition to gas/renewables without destroying the balance sheet.
Performance Trend
- Earnings Recovery: FY2025 was a recovery year. HEPS bounced 93% to R35.13, aided by the non-recurring Transnet settlement and cost controls, despite a 9% drop in revenue.
- Operational Fixes: The Destoning Plant at Secunda (commissioned H1 FY26) is the critical operational highlight. The Q1 FY26 update confirms it is progressing to plan, improving coal quality and stabilizing production volumesâa major relief after years of mining woes.
- Chemicals Weakness: The Chemicals division remains under pressure. The "reset" of the International Chemicals business is ongoing, but pricing power remains weak due to global oversupply (China factor).
Sector Context
- Oil Price: Brent Crude hovering around $75/bbl provides a stable floor for the Energy division, but is insufficient to generate "super profits."
- Regulatory/ESG: The Air Quality Appeal (SO2 limits) and the looming Carbon Tax ramp-up are the primary reasons institutional capital is avoiding the stock.
Step 4: The Verdict
Bull Case (Why Buy): Deep Value & Operational Turnaround. You are buying a cash-generative asset for ~3x earnings and <0.5x Book Value. The "self-help" measures (Destoning plant) are finally working, fixing the mining volume issues that plagued them for three years. With Net Debt down to $3.7bn, the balance sheet is no longer in crisis. If oil spikes or the chemicals cycle turns, the operational leverage is massive.
Bear Case (Why Sell): The "Melting Ice Cube." Sasol faces an existential timeline. The "Gas Cliff" (running out of natural gas for industrial use by 2028) and the decarbonization CAPEX requirements are massive unfunded liabilities. The fact that they passed the dividend despite being below the debt trigger signals that management sees storm clouds ahead. The discount to NAV is not a bargain; it's a pricing of stranded asset risk.
Fair Value Estimate: R140.00 - R150.00 This assumes a rerating to a still-conservative ~4.5x P/E.
Final Rating: SPECULATIVE BUY For value investors with a high risk tolerance, the price is too cheap to ignore relative to near-term cash flow. However, this is a trade, not a "buy and hold" for the next 10 years.