Sasol Limited (SSL) Cut to Equal-weight Amid Cash Flow Concerns

Core Viewpoint - Sasol Limited (NYSE:SSL) has seen recent share gains, but these gains are masking weak free cash flow forecasts and long-term risks, leading Morgan Stanley to downgrade its rating from Overweight to Equal-weight [1][2]. Group 1: Financial Performance - Improved cash flow in the second half of the fiscal year, along with advancements in cost-cutting initiatives and optimism regarding potential policy changes in China, contributed to the stock's recent increase [2]. - A significant portion of the debt reduction anticipated in fiscal 2025 is attributed to short-term factors such as dividend revenues, working capital unwind, and a payment from Transnet [2]. - Refining margins provided some support, but longer-term risks are expected to negate some of Sasol's recent gains [2]. Group 2: Company Overview - Sasol Limited is a global integrated energy and chemical company operating in 33 countries, with its activities divided into two primary divisions: Energy and Chemical [3].