Shares in petrochemical group Sasol returned to their pre-pandemic levels this week, briefly breaking through R300, after falling to as low as R22 on March 23 last year, when President Cyril Ramaphosa put the country into its first hard Covid-19 lockdown.
At the time of the lockdown, the company had gone from one of the darlings to one of the dogs of the SA investment landscape as crippling debt and low oil prices pushed it to the point that it seemed a certainty it would have to tap shareholders for cash just to keep going.
The past month has been particularly good for the stock, which is up more than 30% in the period, while Brent crude has gained about 12%.
IG SA senior market analyst Shaun Murison credited self-help measures, which Sasol adopted in 2020 to reduce debt by selling some of its assets.
“Sasol has had quite a bit to cheer about recently as a marked improvement in its chemicals business met a vastly improved balance sheet. Relatively recent efforts, which include the $3.8bn in asset sales, to reduce group debt and deleverage the business have been met with investor favour,” Murison said.
Sasol has also sold half of its stake in its Lake Charles project in the US, the construction of which suffered a number of setbacks and cost overruns.
CEO Fleetwood Grobler is overseeing the Sasol 2.0 initiative, a new operating model aimed at cushioning the company against the vagaries of the oil market.
The recent rise in Brent crude has come on tighter global energy supplies, with the commodity scaling a three–year high, above $80 a barrel this week. With growth-throttling lockdown restrictions easing in line with abating Covid-19 cases, oil demand has ratcheted up, raising concerns of a supply crunch if producers such as Saudi Arabia and Russia do not timeously intervene to balance the market.
Sasol’s shares closed 1.66% lower at R293.04, giving it a market value of more than R184bn, a far cry from when it plumbed the depths of pandemic despair at a little under R14bn.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.