| Black gold's gains pushes Sasol | ^ TOP |
Black gold heads higher and higher. Today it touched $115. George Soros was quoted as saying that commodities are in a bubble, but the bubble is still growing. Does this mean that Sasol, one of South Africa’s foremost technology companies is a good investment?
On the 8 April the company had a comprehensive investor day in New York. Timing of these investor "show and tell" days are always important and with crude prices at new highs, Sasol times this to perfection.
The date also coincided with Sasol’s 5 year anniversary of its listing on the New York stock exchange main board.
The investor day was designed to update analysts of the company’s strategic, operations and financial progress as well as an update to opportunities.
Sasol is the world’s leading provider of synthetic fuels and chemicals. As the price of fuel trends sharply up, Sasol’s technology taps into coal and natural gas in order to convert this to clean diesel, petrol and jet fuel.
Sasol has a powerful business model with 50 years of technological innovation, operating and continuously improving its large synfuels and chemical plants all using its proprietary technology to the Fischer Tropsch process.
They have 206 PhD’s on their staff.
Sasol’s SA operations remain the biggest contributor to earnings at 86%.
Internationally the business units are Sasol Synfuels International (SSI), Sasol Chevron and 50/50 Joint venture and Sasol Petroleum International (SPI)
Their presentation revealed some interesting statistics:
o 80% of world oil in 9 countries, representing just 5% of world population and 5% of GDP.
o 80% of world coal in 6 countries representing 45% of world population and 46% of GDP
o 80% of world gas in 13 countries, representing 12% of world population and 26% of GDP.
Sasol has a large pipeline of projects at various stages. Shorter term is the Oryx operation in Qatar, gas to liquid (GTL) in Nigeria.
Medium term is China coal to liquid (CTL), an increase of the Qatar footprint
Longer term is possible projects in US and India (CTL) and Australia (GTL)
Sasol Technology is at the heart of Sasol. Its here where Sasol employs 100 PhD’s, 2000 technical and support personnel and has filed about 590 patentable innovations of which more than 300 are in force in many countries around the world.
Staffing up is a big project in it own right, given in the war for talent.
In addition Sasol has recently announced the Sasol Inzalo black economic empowerment deal, which will effectively see 10% of Sasol owned by various groupings, in a total transaction valued at R25,9 billion.
4% will be at the employee share ownership level, where in the broad scheme 24 500 staff will benefit with an indicative value of R310 000 per person. 235 senior black management will receive 0,3% of Sasol with an indicative value per participant of between R2m and R9,8m.
The company’s year capex plan is R50 billion with financial 2008 estimated at R12 billion.
The cash generated by operations in the first half was up just 4% to R14,1 billion.
Sasol has indicated some sensitivities, which are useful to note:
o Should crude oil price increase by US$1/bbl then Sasol’s earnings before interest and tax (EBIT) will improve by R300m
o Should the rand weaken by 10c against the US$, then Sasol’s EBIT will improve by R600m.
The price tracked largely sideway for 2 years from 2003 – 2005. Then up
sharply to around R250 at the end of 2005. Then sideways until 3rd
quarter 2007 before shooting up again sharply to around R450. Should it
get to targeted R500, it would have been in a relatively short space of
time.
A great SA success story.
Kind regards
Ian de Lange
ian@seedinvestments.co.za
www.seedinvestments.co.za
No comments:
Post a Comment