Jump to content


Photo
- - - - -

sasol (SOL)


  • Please log in to reply
225 replies to this topic

#41 Spell Jammer

Spell Jammer

    Member

  • Junior Member
  • PipPip
  • 126 posts

Posted 20 April 2020 - 08:12 PM

$10 dollar WTI oil is officially here while Brent crude is approaching the $25 mark again. Sasol can potentially ride out low prices until the end of June 20 as they have hedged at $32/BBL. If the price continues to collapse beyond this date, a rights issue is inevitable and its potentially RIP Sasol.

 

Interesting day ahead tomorrow.


Edited by Spell Jammer, 20 April 2020 - 08:13 PM.

  • 0

#42 Spell Jammer

Spell Jammer

    Member

  • Junior Member
  • PipPip
  • 126 posts

Posted 17 April 2020 - 01:02 PM

 

You can't compare ASC's debt levels with that of Sasol. But agreed they need to reduce their debt. 

Agreed, but i am merely highlighting that you are using the same logic that others are applying with ASC in terms of their views around debt and the underlying value they see in the company, and the particular products that each company is pushing under these uncertain times.


  • 0

#43 andi222

andi222

    Little Master

  • Members
  • PipPipPipPip
  • 729 posts

Posted 17 April 2020 - 12:47 PM

Don't think that the market has overreacted. Sasol's handling of Lake Charles has been nothing short of diabolical which has both destroyed value and increased debt to unsustainable levels. There lack of a hedging strategy has also put them at the mercy of a weak rand and a $35 dollar oil price. If you think ASC's paltry R3Bil debt is bad, Sasol's is currently sitting at an eye watering R164 Billion rand with no demand, higher debt repayments as a result of credit downgrades and despite Opec artificially increases oil prices. Dont take my word for it. This is what Opec says:

 

"The Organization of the Petroleum Exporting Countries now expects global demand to contract by 6.9 million barrels per day, or 6.9%, in 2020, it said in a monthly report. Last month, OPEC expected a small increase in demand of 60,000 bpd.

 
“Downward risks remain significant, suggesting the possibility of further adjustments, especially in the second quarter,” OPEC said of the demand forecast.
 
“The oil market is currently undergoing historic shock that is abrupt, extreme and at global scale.”"

 

If we look at a U shaped post COVID economic recovery pattern, economists predict that it will take 6-18 months for the economy to recover. With oil prices dropping and a 6-18 month economic recovery path, a Sasol share rights issue is inevitable which will further decrease the share price. You have to be extremely brave with cash to burn to long this one. Fortune favors the brave however..

 

Hi Spell Jammer, thanks for your view. Agreed if a rights issue will happen I'm selling my shares as history has proven that a rights issue is poison for any share price. 

 

However I'm still convinced Sasol can navigate through this storm without a rights issue. I think management will try their best to avoid a rights issue. 

You can't compare ASC's debt levels with that of Sasol. But agreed they need to reduce their debt. 

 

Sasol is expecting that the LCCP project will contribute to a positive EBITDA towards the end of 2020. They have also declared no dividends for Dec 19. 

The new CEO Fleetwood Grobler for me can turn this one around. But let's wait and see. Only time will tell.


  • 0

#44 Spell Jammer

Spell Jammer

    Member

  • Junior Member
  • PipPip
  • 126 posts

Posted 17 April 2020 - 12:12 PM

Here's a good article summarizing the current situation.

https://www.business...eset-for-sasol/

 

I think market has overreacted badly on this one. Sasol is still a huge company generating between 150 and 200 Billion of revenue each year. The EBITDA is forecasted to be at between 30 and 40 billion rands. Current market value lies at 36 billion rands. 

 

For me sasol is heavy undervalued at the moment. There will be a nice increase in volumes once sasol is back into the JSE top 40. In my opinion there was a huge oversupply of shares due to it falling out of numerous indexes and as all shares falling badly it needs to find enough buyers. 

 

Keep an eye out for this one guys. Again just my own opinion.

 

Don't think that the market has overreacted. Sasol's handling of Lake Charles has been nothing short of diabolical which has both destroyed value and increased debt to unsustainable levels. There lack of a hedging strategy has also put them at the mercy of a weak rand and a $35 dollar oil price. If you think ASC's paltry R3Bil debt is bad, Sasol's is currently sitting at an eye watering R164 Billion rand with no demand, higher debt repayments as a result of credit downgrades and despite Opec artificially increases oil prices. Dont take my word for it. This is what Opec says:

 

"The Organization of the Petroleum Exporting Countries now expects global demand to contract by 6.9 million barrels per day, or 6.9%, in 2020, it said in a monthly report. Last month, OPEC expected a small increase in demand of 60,000 bpd.

 
“Downward risks remain significant, suggesting the possibility of further adjustments, especially in the second quarter,” OPEC said of the demand forecast.
 
“The oil market is currently undergoing historic shock that is abrupt, extreme and at global scale.”"

 

If we look at a U shaped post COVID economic recovery pattern, economists predict that it will take 6-18 months for the economy to recover. With oil prices dropping and a 6-18 month economic recovery path, a Sasol share rights issue is inevitable which will further decrease the share price. You have to be extremely brave with cash to burn to long this one. Fortune favors the brave however..


Edited by Spell Jammer, 17 April 2020 - 12:14 PM.

  • 0

#45 andi222

andi222

    Little Master

  • Members
  • PipPipPipPip
  • 729 posts

Posted 17 April 2020 - 11:18 AM

The fact that they have had to shut down 25% of production explains the challenges, (lack of the demand on Oil and their fuel with lockdown), and the fact that they didn't hedge the oil price which is still dropping like a stone and looks to be testing $20-25 again. If the rand strengthens and these levels of demand are maintained for more than a year, Sasol is toast.

 

This isn't a phenomenon exclusive to Sasol at the moment, the entire Oil industry is feeling it. Theirs is just magnified by their cost overruns in America during these lean times and the debt which they have incurred as result, ratings downgrades aside.

 

Here's a good article summarizing the current situation.

https://www.business...eset-for-sasol/

 

I think market has overreacted badly on this one. Sasol is still a huge company generating between 150 and 200 Billion of revenue each year. The EBITDA is forecasted to be at between 30 and 40 billion rands. Current market value lies at 36 billion rands. 

 

For me sasol is heavy undervalued at the moment. There will be a nice increase in volumes once sasol is back into the JSE top 40. In my opinion there was a huge oversupply of shares due to it falling out of numerous indexes and as all shares falling badly it needs to find enough buyers. 

 

Keep an eye out for this one guys. Again just my own opinion.


  • 0

#46 Spell Jammer

Spell Jammer

    Member

  • Junior Member
  • PipPip
  • 126 posts

Posted 15 April 2020 - 04:26 PM

So did my research over the weekend and I do not understand why the share price has plunged 90% over the last 3 months. Yes oil, dollar etc had a negative impact and debt levels are high but if u look at latest financials its still a profitable company and for me there is great potential here for the long run. Rights issue might be a pain tho. But let's see.

The fact that they have had to shut down 25% of production explains the challenges, (lack of the demand on Oil and their fuel with lockdown), and the fact that they didn't hedge the oil price which is still dropping like a stone and looks to be testing $20-25 again. If the rand strengthens and these levels of demand are maintained for more than a year, Sasol is toast.

 

This isn't a phenomenon exclusive to Sasol at the moment, the entire Oil industry is feeling it. Theirs is just magnified by their cost overruns in America during these lean times and the debt which they have incurred as result, ratings downgrades aside.


Edited by Spell Jammer, 15 April 2020 - 04:28 PM.

  • 0

#47 andi222

andi222

    Little Master

  • Members
  • PipPipPipPip
  • 729 posts

Posted 15 April 2020 - 04:19 PM

So did my research over the weekend and I do not understand why the share price has plunged 90% over the last 3 months. Yes oil, dollar etc had a negative impact and debt levels are high but if u look at latest financials its still a profitable company and for me there is great potential here for the long run. Rights issue might be a pain tho. But let's see.


  • 0

#48 Spell Jammer

Spell Jammer

    Member

  • Junior Member
  • PipPip
  • 126 posts

Posted 12 April 2020 - 10:35 PM

Historic OPEC deal done. We wait to see how this impacts the share price does on Tuesday.
  • 0

#49 Lionelza1

Lionelza1

    Sage

  • Members
  • PipPipPipPipPipPip
  • 1,788 posts

Posted 09 April 2020 - 09:56 PM

Nothing official yet but market not happy it seems. There’s a follow-up meeting tomorrow with G20 energy ministers to discuss non-OPEC countries contribution to supply reduction:

Oil Falls Into the Red as Deal Surrounds a 23% Cut

Oil slid into the red with WTI initially taking a bigger hit than Brent after OPEC+ cut production, but apparently not enough for the market’s liking. The group is discussing a 23% cut in May and June. For the Russians and Saudis, that would bring their output to 8.5 million barrels a day should this deal go through. Investors clearly think that isn’t enough to make up for the demand destruction.
Something to keep in mind, though, as we see these numbers roll out is that while the underlying economy continues to deal with the virus threat, these cuts may be putting a floor on how far oil can drop. Avoiding crude in the teens may be more important now than restoring prices to where they had been.


Indeed, thank you for that info, just checked it out on CNN

scarey and uncertain times indeed
  • 0

#50 Burnt as well

Burnt as well

    Member

  • Members
  • PipPip
  • 59 posts

Posted 09 April 2020 - 08:13 PM

Decent afyernoon run up.... Any news on that meeting?


Nothing official yet but market not happy it seems. There’s a follow-up meeting tomorrow with G20 energy ministers to discuss non-OPEC countries contribution to supply reduction:

Oil Falls Into the Red as Deal Surrounds a 23% Cut

Oil slid into the red with WTI initially taking a bigger hit than Brent after OPEC+ cut production, but apparently not enough for the market’s liking. The group is discussing a 23% cut in May and June. For the Russians and Saudis, that would bring their output to 8.5 million barrels a day should this deal go through. Investors clearly think that isn’t enough to make up for the demand destruction.
Something to keep in mind, though, as we see these numbers roll out is that while the underlying economy continues to deal with the virus threat, these cuts may be putting a floor on how far oil can drop. Avoiding crude in the teens may be more important now than restoring prices to where they had been.
  • 0

#51 andi222

andi222

    Little Master

  • Members
  • PipPipPipPip
  • 729 posts

Posted 09 April 2020 - 05:27 PM

Took my first bite today. Will read up over the weekend on Financials and then might top up next week.

Sent from my SM-G973F using Sharenet Sharechat mobile app
  • 0

#52 Lionelza1

Lionelza1

    Sage

  • Members
  • PipPipPipPipPipPip
  • 1,788 posts

Posted 09 April 2020 - 05:11 PM

Decent afyernoon run up.... Any news on that meeting?
  • 0

#53 soutie

soutie

    Sage

  • Senior Member
  • PipPipPipPipPipPip
  • 1,744 posts

Posted 08 April 2020 - 03:06 PM

You got a lot of followers there. That was a big rug that got pulled. 

 

Where's all the followers my stops about to get hit.... :(


  • 0

Anyone need a heads up...!


#54 soutie

soutie

    Sage

  • Senior Member
  • PipPipPipPipPipPip
  • 1,744 posts

Posted 08 April 2020 - 02:33 PM

Cool Goodluck...im still bystander but the itch is getting ever so strong to jump on.... I'm waiting for R30 bucks again hahaha

 

"F" I hope that boat has really sailed & never to return....


  • 0

Anyone need a heads up...!


#55 Lionelza1

Lionelza1

    Sage

  • Members
  • PipPipPipPipPipPip
  • 1,788 posts

Posted 08 April 2020 - 02:27 PM

Hi Lionel I've just a small short position based on the outcome of the meeting being a negative/no result/concensus...


Cool Goodluck...im still bystander but the itch is getting ever so strong to jump on.... I'm waiting for R30 bucks again hahaha
  • 0

#56 soutie

soutie

    Sage

  • Senior Member
  • PipPipPipPipPipPip
  • 1,744 posts

Posted 08 April 2020 - 02:18 PM

Hi Lionel I've just a small  short position based on the outcome of the meeting being a negative/no result/concensus...


  • 0

Anyone need a heads up...!


#57 Lionelza1

Lionelza1

    Sage

  • Members
  • PipPipPipPipPipPip
  • 1,788 posts

Posted 08 April 2020 - 02:10 PM

All this volatility surrounding a meeting that may take place & the largest oil producer isn't in attendance...Yip crazy...

I'm back in but short now from R68+ change...


What price r u waiting on?
  • 0

#58 Lionelza1

Lionelza1

    Sage

  • Members
  • PipPipPipPipPipPip
  • 1,788 posts

Posted 08 April 2020 - 02:10 PM

All this volatility surrounding a meeting that may take place & the largest oil producer isn't in attendance...Yip crazy...

I'm back in but short now from R68+ change...


What price r u waiting in?
  • 0

#59 Spell Jammer

Spell Jammer

    Member

  • Junior Member
  • PipPip
  • 126 posts

Posted 08 April 2020 - 02:01 PM

Guys that bought on the low just made a quick 30% return in the space of an hour. 


Edited by Spell Jammer, 08 April 2020 - 02:02 PM.

  • 0

#60 Shi

Shi

    Master

  • Senior Member
  • PipPipPipPipPip
  • 753 posts
  • LocationCape Town

Posted 08 April 2020 - 01:59 PM

I was thinking (when the drop happened) "what did Trump say"  :D


  • 0
“One day Alice came to a fork in the road and saw a Cheshire cat in a tree. Which road do I take? she asked. Where do you want to go? was his response. I don't know, Alice answered. Then, said the cat, it doesn't matter.” - Lewis Carroll





Sponsored by Sharenet and VPSNine Linux VPS Hosting