Sasol | Slowly settling in
Sasol's (SOL) H1 '20 production update provided additional detail on the explosion and fire that occurred at Lake Charles Chemicals Project's (LCCP) low density polyethylene (LDPE) unit. Although SOL offered no clear guidance on when and how much the repairs to the LDPE unit would be, the Group suggested damage was isolated to smaller LDPE sections, leaving major components unaffected. SOL's commentary was calming in our view, accordingly, we believe the 12.9% YTD decline in the counter's share price is likely unjustified. We upgrade our recommendation to an OUTPERFORM from market perform.Sasol is engaged in manufacturing and marketing of liquid fuels, gas and chemicals. Co. adds value to coal, oil and gas reserves, using these feedstocks to produce liquid fuels, fuel components and chemicals. Co. mines coal and refines imported crude oil and retails liquid fuel products in South Africa, and produces gas and condensate in Mozambique and oil in Gabon. Co. also supplies fuels to oil companies in South Africa and others in South Africa and sub-Saharan Africa. Co. maintains its chemical manufacturing and marketing operations worldwide. Co. divides its operations into three focused business clusters: South African Energy Cluster, International Energy Cluster and Chemical Cluster.
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