Episode Details

Sasol Limited (SSL) FY2026 — SSL closed at $12.45, +3.6% against the $12.02 prior close, on 1.99m shares - about 2.4x the prior session. The ADR has risen 79% in twelve months and is still 12.9% below the $14.29 it reached on 5 May. Secunda - the coal-to-liquids complex behind almost all of Sasol's profit - had its highest annual output in five years and beat guidance. Sasol wrote it down anyway: R7.7bn, the third consecutive impairment of the same refinery, R27.3bn in three years. The company's own explanation is that management actions did improve the recoverable amount, and 'these benefits were offset by the stronger forecast Rand/US$ exchange rate'. THE CALL: HOLD (3/5, MODERATE) — base-case value ~$11.65 vs ~$12.45 today. KEY METRICS: - PERIOD: the year ended 30 June 2026. Form 20-F accession 0001104659-26-104048, filed 1 September 2026; KPMG unmodified opinion. Sasol reports in SOUTH AFRICAN RAND - TURNOVER R272.1bn (+9.2%) - ADJUSTED EBITDA R60.7bn (+17%) - OPERATING PROFIT BEFORE WRITE-DOWNS R43.0bn - EBIT R25.7bn (+37%) - gross margin 46% - HEADLINE EPS R38.31 (+9%) vs BASIC EPS R18.99 (+79%). Attributable earnings rose R5.4bn; R3.3bn of that is only a smaller impairment charge. 61% of the increase is the write-down shrinking - IMPAIRMENTS R16.8bn: Secunda refinery R7.7bn, Mozambique gas R3.8bn, polyethylene R3.7bn. Secunda impaired R7.8bn / R11.8bn / R7.7bn in three straight years = R27.3bn; R112.4bn group-wide - SASOL'S OWN WORDS: management actions improved the recoverable amount and 'these benefits were offset by the stronger forecast Rand/US$ exchange rate'. The test assumed R17.09; spot R16.18 - EVERYTHING ELSE IN THAT MODEL HELPED: Brent raised to $76.80/bbl from $72.16, refining margin to $9.81, SA discount rate CUT 14.50% to 11.50%. It impaired anyway - CASH: cash generated by operating activities R42.0bn, DOWN 12%, in the year profit rose 79%. Net working capital 18.3% of turnover vs a 15.5-16.5% tatarget - the only miss - FREE CASH FLOW R11.9bn (-5%), capex down 18% to R20.9bn. SEGMENTS: Fuels EBIT R19.9bn from R5.2bn; Chemicals Africa swung to a R3.3bn LOSS from R5.0bn of profit - NO DIVIDEND FOR A THIRD YEAR: policy pays 30% of free cash flow only below $3.0bn net debt. It is $3.3bn, about $300m short, and FY2027 guidance is 'lower than $3.3 billion' - FY2027 GUIDANCE: capex R23-26bn (UP from R20.9bn), SA break-even $53-58/bbl (UP from $49), International Chemicals EBITDA $450-600m (DOWN from $604m), net debt below $3.3bn - AT $12.45: market cap $7.97bn on 640.1m shares; EV R199.8bn = 3.29x EBITDA; 5.3x headline earnings; 0.79x book; 9.2% FCF yield. One ADS = ONE ordinary share What to watch: A rand back through R18 to the dollar - which lifts rand earnings, lifts the recoverable amount in the impairment test and shrinks the dollar net debt against the dividend gate at once. Against that: a fourth Secunda write-down next September, or International Chemicals at the $450m floor. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.