Sasol share price breaks support after production update
Sasol broker ratings, price target, client sentiment and technical analysis view.
Sasol’s business update for the quarter ending September 2024 in brief:
Impact of Market Conditions
Sasol's performance was affected by a stronger rand, oil price volatility, and lower refining margins, leading to downward revisions for Natref and anticipated lower fuel sales volumes for the three months ending September 30, 2024.
Production Challenges
Saleable mining production decreased by 1% from the previous quarter due to coal quality and operational challenges, causing higher external coal purchases and leading to reduced production volumes at Secunda.
Natref and Secunda Operations
Natref's production increased by 24% from the previous quarter but was 27% lower compared to Q1 FY2024 due to planned shutdowns and start-up delays. Secunda's production dropped 11% quarter-over-quarter, primarily due to shutdowns and equipment issues.
Gas and Chemical Sales
In Mozambique, gas production rose by 1% sequentially and 3% year-over-year despite facility shutdowns. South African chemical sales revenue declined 9% due to lower volumes, despite a 6% increase compared to FY2024 driven by higher sales prices.
Strategic Response
CEO Simon Baloyi highlighted the company's focus on cost and capital management and operational improvements to address macroeconomic volatility, with progress on sustainability initiatives.
Broker ratings
A Reuters poll of analysts as of the 23rd of October 2024 suggest Sasol to be a buy with a long-term price target of 22650c.
Sasol ltd – Technical View
The share price of Sasol has now broken support following the recent production update. Range traders who were long hoping for a rebound from oversold territory might consider the break of support as a failure or stop loss indication for the trade.
The majority of IG clients with open positions on Sasol expect the price to rise in the near term.
Sasol ltd – Technical View (previous)
The share price of Sasol continues to trade in a broad rangebound price environment.
The price is currently rebounding off support of this range at 11050 and from oversold territory.
12790 becomes the initial resistance target from the move.
Range traders who are long into the move might consider using a close slightly below support (111050) at roughly 10800 as a stop loss consideration.
The 10800 level is considered rather than the 11050 level to provide sufficient breathing room for the setup whilst still maintaining a relatively favourable risk relative to reward scenario.
This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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