Sasol Limited (SSL): A Bull Case Theory

Core Thesis - Sasol Limited (SSL) is viewed as a contrarian standout in the chemical sector, demonstrating resilience and disciplined execution following a multi-year restructuring [2][5] Financial Performance - As of November 28th, Sasol's share price was $6.50, with trailing and forward P/E ratios of 10.58 and 7.81 respectively [1] - Free cash flow surged 75% year-over-year to R12.6 billion, driven by margin discipline, asset divestitures, and one-off windfalls such as the $4.3 billion Transnet settlement and R2.9 billion environmental liability reduction [2] - Turnover slightly declined to R249 billion, while net debt improved to $3.7 billion, alleviating long-standing investor concerns [3] Valuation Metrics - Sasol trades at an EV/EBITDA of 3.1x and a price/book ratio of 0.4x, with an implied upside of 55% to the median analyst price target of $9.73, and aggressive scenarios projecting up to $25.43 per ADR [4] - Forecasted free cash flow is robust, with projections reaching R15.4–19.4 billion by 2028, supporting potential re-rating and shareholder returns through debt reduction and dividends [4] Strategic Positioning - The company's approach to ESG includes R723 million in carbon credits and expanding renewable capacity, illustrating a pragmatic strategy that allows it to remain cash-generative while positioning for the energy transition [3] - Despite short-term volatility from ESG and regulatory headlines, disciplined capital allocation, margin expansion, and operational improvements position Sasol as a cash machine poised for recovery [5]