SOL: Bio-Circular Surfactants Will Support A More Balanced Long-Term Outlook

Analysts have raised their price target on Sasol from approximately $70 to $107 per share, citing a higher assumed future earnings multiple that more than offsets adjusted expectations for revenue growth and profit margins.

What's in the News

• Sasol International Chemicals has launched LIVINEX IO 7, a patent-pending bio-circular surfactant derived from insect oils, positioned as a first of its kind in fabric, home care, industrial and institutional cleaning markets (Key Developments).
• The new surfactant is palm and deforestation free, addressing growing customer and regulatory pressures to reduce reliance on traditional oleochemicals linked to land use change (Key Developments).
• LIVINEX IO 7 utilizes insect oil obtained from black soldier fly larvae, converting organic waste streams into valuable chemical feedstock and improving the sustainability profile of detergent-grade alcohols (Key Developments).
• Because insect oil chemistry closely matches that of vegetable oil, Sasol can rely on mature technologies and existing production processes. This structure may lower scaling risk and capital requirements for the new product line (Key Developments).

Valuation Changes

• Fair value target was raised significantly from $70.00 to $107.00 per share, reflecting a materially higher implied equity valuation.
• The discount rate increased slightly from 23.20% to 23.56%, signaling a modestly higher required return for Sasol's equity risk profile.
• Revenue growth was reduced sharply from 4.24% to 1.10% annually, indicating more conservative assumptions for Sasol's top line expansion.
• The net profit margin was lowered meaningfully from 9.63% to 5.86%, embedding expectations for structurally tighter profitability.
• The future P/E was raised substantially from 3.1x to 8.9x, representing a major re-rating of Sasol's earnings multiple despite more muted operating forecasts.