How will the EPS boost affect SASOL's valuation multiples compared to industry peers?

Fundamental impact

A >20 % lift in SASOL’s earnings per share (EPS) means the “E” in the P/E ratio will fall dramatically if the market price does not move in lock‑step. Assuming the current share price remains roughly unchanged, the P/E would compress from roughly 12× (based on FY‑2024 results) to about 9–10× after the 20 % earnings boost—well below the 11–13× range that most integrated‑energy peers are trading at. In other words, SASOL would look cheaper on a earnings basis than the sector, creating a “multiple‑compression” buying opportunity. If the market recognises the higher earnings and pushes the stock up by, say, 15 % to reflect the improved outlook, the P/E would settle around 11×, still in line with peers but now supported by a stronger earnings base. The same logic applies to EV/EBITDA: a 20 % EBITDA uplift would pull the EV/EBITDA down from ~6.5× to ~5.5×, again below the 6–7× multiples typical for comparable African integrated energy firms.

Technical and market dynamics

The price action to date has been flat‑lined, leaving the chart in a tight 10‑day consolidation zone around the 30‑day moving average. A breakout above the 20‑day SMA with volume above the 30‑day average would signal the market beginning to price‑in the earnings upgrade, potentially initiating a short‑term rally. Conversely, a breach below the 20‑day SMA could present a “buy‑the‑dip” entry at a discounted multiple before the re‑rating occurs.

Trading implication

Given the earnings lift and the resulting valuation head‑room, a long‑position at current levels offers a compelling risk‑reward profile: the upside comes from both a multiple compression (cheaper than peers) and the prospect of a price‑re‑rating as the market digests the stronger earnings. A prudent target is R 15 per share (≈12 % upside from today’s price) which would still leave the P/E near the sector median while preserving a margin of safety. Tight stop‑losses just below the 20‑day SMA (≈R 13.5) would protect against a breakdown in the consolidation pattern.