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SOL: Lower Margins And Sales Guidance Will Pressure Future P/E

Growing Climate Regulations And Stranded Assets Will Crush Prospects

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SOL
AnalystLowTarget
Not Invested
Published 06 Jul 2025
18 viewsusers have viewed this narrative update

Update shared on 16 May 2026

Fair value Increased 2.22%
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03 Jun
R225.50
AnalystLowTarget's Fair Value
R155.00
45.5% overvalued intrinsic discount
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1Y
159.0%
7D
5.1%

Analysts have lifted their Sasol price target from ZAR151.63 to ZAR155.00, citing updated assumptions around discount rates, revenue trends, profit margins and a higher future P/E multiple.

What's in the News

  • Sasol confirmed guidance for fiscal 2026 sales volumes, with most metrics unchanged compared with fiscal 2025 levels (company guidance).
  • Fuel sales volumes for fiscal 2026 are now guided to be 10% to 15% higher than fiscal 2025, supported by stable Secunda Operations production, higher Natref volumes and increased demand (company guidance).
  • Gas production guidance for fiscal 2026 has been revised to 5% to 10% below fiscal 2025, reflecting the impact of Mozambican flooding and well availability constraints at the Petroleum Production Agreement asset (company guidance).

Valuation Changes

  • Fair Value: ZAR151.63 to ZAR155.00, a small uplift in the valuation estimate.
  • Discount Rate: reduced slightly from 19.07% to 18.64%, implying a modestly lower required return in the model.
  • Revenue Growth: trimmed from a 3.11% decline to a 3.01% decline, reflecting a slightly less negative ZAR revenue trend assumption.
  • Net Profit Margin: adjusted down from 10.67% to 6.20%, a sizeable reduction in assumed profitability.
  • Future P/E: increased from 6.37x to 11.07x, a substantial step up in the earnings multiple applied to Sasol.

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