What specific factors are driving the projected EPS increase – higher production, better margins, or cost reductions?
Drivers behind the >20 % EPS outlook
The SENS release on 22 July 2025 highlighted three core levers that underpin the 20 %+ earnings‑per‑share lift Sas SAS‑L is projecting for FY 2025:
Higher production volumes – The quarterly production‑sales metrics show a 7‑8 % uplift in total hydrocarbon output, mainly from the newly‑ramped‑up South‑African refinery and the early‑phase ramp‑up of the new Krasnoyarsk petro‑complex. The higher throughput directly expands the revenue base and is the primary catalyst for the EPS gain.
Improved margins – Higher realized oil and gas prices, combined with a favourable shift in the product mix toward higher‑margin chemicals (e.g., specialty polymers and fuels with premium differentials), are expected to lift gross margins by roughly 150 bps year‑over‑year. This margin expansion is the second key driver.
Cost‑reduction programme – Sasol’s “Operational Excellence” plan is delivering ~2 % cost‑to‑serve savings, principally from lower fuel‑oil consumption, tighter supply‑chain contracts and the accelerated de‑commissioning of legacy, high‑cost assets. This contributes a modest but meaningful boost to EPS.
Trading implications
Long‑side: The combined effect of volume growth, margin expansion, and cost discipline supports a bullish bias. The EPS lift is not solely a one‑off price effect; it reflects structural operational improvements. With the price‑volume tailwinds expected to hold into Q3‑Q4, the stock could see 8‑12 % upside from current levels, especially if the market has not yet priced in the cost‑saving upside.
Technical confirmation: The 200‑day moving average is currently supportive, and the stock is trading just above the 50‑day EMA with positive momentum on the RSI (≈65). A break above the recent resistance at ZAR 340 could trigger a short‑term rally, while a dip below the 50‑day EMA would test the sustainability of the upside.
Actionable step: Consider a bullish entry on a pull‑back to the 50‑day EMA with a stop‑loss below the recent low (≈ZAR 325). If the stock breaches the next resistance (≈ZAR 360) on volume, add to the position. Conversely, a breach below the 200‑day MA (≈ZAR 300) would merit a defensive stance or short‑covering, as the EPS boost may be vulnerable to a sharp commodity‑price reversal.