What are the potential upside and downside risks to the EPS guidance, such as commodity price volatility or operational disruptions?

Upside scenarios

Sasol’s FY‑2025 EPS guidance (+20% YoY) rests heavily on a “high‑margin” commodity mix and the company’s ongoing cost‑optimisation programme. If crude oil and natural‑gas prices stay on the upside of their 5‑year averages, the uplift in realised margins could push earnings well beyond the 20% target, especially as the firm continues to monetize its downstream integration assets (e.g., the new petrochemical complex in Secunda). A sustained rally in the US $‑R $ exchange also improves the conversion of its export‑oriented sales, adding further upside to the bottom line. From a technical standpoint, Sasol’s shares have broken above the 200‑day moving average and are holding near the $12.50 USD resistance level, a price that historically coincides with a 15‑20% earnings beat. A breakout above $12.50 on strong volume would be a bullish signal and could justify a long position with a 3‑4 % target (≈$13.00) and a stop just below the 200‑day MA (~$11.80).

Downside scenarios

The same commodity exposure creates a mirror‑image risk. A 10‑15% slide in oil or gas prices—driven by a global demand softening, OPEC‑ish production hikes, or a stronger US $—would compress Sasol’s margin and could erode the EPS upside, pulling the guidance back toward the lower end of the 20% range. More acute, however, are operational headwinds: unplanned plant outages at the Secunda refinery, maintenance‑driven turnarounds, or supply‑chain bottlenecks (e.g., catalyst shortages) could shave 2‑3 % off FY‑2025 net income. Geopolitical sanctions on key export routes (e.g., the Red Sea) or tightening ESG regulations in Europe could also force temporary curtailments, adding a “black‑swans” element to the risk set. On the chart, the stock is still above its 50‑day EMA but is testing a short‑term trough around $11.30; a breach of that level with accompanying high‑sell volume would trigger a short‑side trigger and a protective stop at $12.00, with a modest 5‑6 % downside target (≈$10.70).

Trading implication

Overall, the consensus view is still bullish, but the trade‑off hinges on commodity price direction and the likelihood of operational disruptions. A core “core‑plus” approach would be to stay long at current levels, set a trailing stop at $11.80 (just below the 200‑day MA) to guard against a downside swing, and keep a short‑side watchlist for any breach of $11.30 accompanied by negative news on plant reliability or a sustained oil‑price decline. This risk‑managed stance captures upside from a favorable commodity backdrop while limiting exposure to the downside risks inherent in Sasol’s heavy‑industry profile.