Sasol enters Buying Territory

Globally shares are deep in correction territory, offering patient investors opportunities to deliver returns in tough market. 

Sasol has corrected almost 30% from its September high to below R420 on a weaker oil price and weak global sentiment. The R400 support level should be the bottom ahead of a move higher. 

Last week Sasol released a positive trading update for the interim period to 31 December signalling HEPS increasing between 12% and 29%. And EBITDA to increase between 10% and 30%.  

 

With Lake Charles nearing completion after $9.8 billion of the $11.13 billion CAPEX, earnings should start to benefit from the 1.5mtpa ethane cracker and 6 downstream chemical units. It’s expected to contribute between $250m and $300m to EBITDA in full year 2019. 

Investors who accumulate below R420 will be rewarded as the share pushes back to the R500 level. 

Buy SOL below R420.00 with a longer-term target of R580.00 

 

The week ahead: 

  • Local Data:  Labour Market Dynamics, PPI, International Reserves and Foreign Currency Liquidity (29/11), Treasury ILB Bond Auction (30/11) 
  • Results Due AME, NPK, OMN, VVO, VKE (27/11); AWA, CKS (28/11); EXG, KAL, LON, QFH (29/11); ANA, ADW, CIL, EEL, ETO, NFP, HUG, NPN, NCS, SYG, THA (30/11) 
  • LDT (27/11) ANH, AFT, AYO, IAP, OAS, RPL, REB, REA, RDF, TKG, VOD, NAM 

 

Other Economic data releases of interest… 

 

  • Tuesday: CB Consumer Confidence (USA); RBNZ Financial Stability Report (NZL) 
  • Wednesday: RBNZ Gov Orr Speaks (NZL); Bank Stress Test Results (UK); Prelim GDP (USA), Fed Chair Powell Speaks (USA) 
  • Thursday: Private Capital Expenditure (AUS); FOMC Meeting Minutes (USA); ANZ Business Confidence (NZL); ECB President Draghi Speaks (EU) 
  • Friday: GDP (CAN) 

 

 Short Term Ideas 

  • Goldfields: 18.5% open gain, Target remains R45.25, stop loss remains a daily close below R38.25 

 

Long Term Ideas 

  • AB InBev:  Buy below R1,100 with a target of R1,500 
  • Richemont: Buy dips below R95. Target R130.00. 
  • Dischem: Up 15.4%, and target of R37.05 remains in place. 
  • Remgro: A break above R210 is needed to open up R230. Accumulate below R185.00 
  • Coronation: Buy dips below R50.00 for a move back to R80 
  • Shoprite: A break above R200 is on the cards. Hold. 
  • Aspen: Bottoming out. Add below R165.00, keep exposure appropriate. 
  • Sygnia: Results due Friday. Add below R8. 
  • MTN: Rally to R100 on the cards. Accumulate on dips below R75.  
  • Glencore: Pulled back with commodity prices. Hold 
  • Naspers: Results due Friday. Buy on dips below R2,500. 

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