Sasol 'may not mirror oil trend'

Johannesburg - The uptick in the oil price bodes well for the earnings prospects of petrochemical giant Sasol, but analysts have cautioned that correlations drawn between oil and the company's share price may be disjointed in the short term.

According to an array of analysts surveyed by Fin24.com, Sasol's share price doesn't track the rand oil price as closely or efficiently over three to six months as over a longer period, for instance a year.

David Lerche, an analyst at Avior Research, said: "Looking at Sasol's share price (R295.02/share) the market doesn't expect the net effect of the rand movement and oil to change substantially now."

However, Justin Louw of BJM Private Client Services said: "Investors will look to keep buying into the stock." This will typically be with a long- to medium-term investment horizon in mind.

In another development, investment banking firm Goldman Sachs lowered its 12-month share price forecast on Sasol from R438/share to R403/share, due to lower earnings expectations on the back of the rand's stronger showing against the dollar.

Sasol last traded around the R400/share mark in October 2008, reaching a high earlier that year of R514/share on May 21. In contrast, Lerche said: "R400/share 12 months from now is a little bit heavy but feasible."

On Wednesday, the stock traded 0.87% higher at R294.27.

Fin24.com found the market's 12-month price consensus of the stock to vary anywhere from R280/share up to R420/share.

Broker consensus, according to data supplier McGregor BFA, has the stock on a hold, while Goldman Sachs lists the company as a buy.

- Fin24.com