Intrinsic value of Sasol ADR - SSL

Previous Close

$30.14

  Intrinsic Value

$39.90

stock screener

  Rating & Target

buy

+32%

  Value-price divergence*

0%

Previous close

$30.14

 
Intrinsic value

$39.90

 
Up/down potential

+32%

 
Rating

buy

 
Value-price divergence*

0%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of SSL stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 19.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -6.65
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  13,047
  13,308
  13,614
  13,964
  14,357
  14,792
  15,270
  15,790
  16,352
  16,959
  17,610
  18,306
  19,049
  19,840
  20,681
  21,573
  22,518
  23,519
  24,577
  25,695
  26,876
  28,122
  29,436
  30,820
  32,280
  33,816
  35,434
  37,137
  38,929
  40,815
  42,798
Variable operating expenses, $m
 
  10,114
  10,347
  10,612
  10,911
  11,241
  11,604
  11,999
  12,427
  12,888
  13,382
  13,908
  14,472
  15,073
  15,712
  16,390
  17,108
  17,868
  18,672
  19,522
  20,419
  21,365
  22,363
  23,415
  24,524
  25,691
  26,921
  28,214
  29,576
  31,008
  32,515
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  11,257
  10,114
  10,347
  10,612
  10,911
  11,241
  11,604
  11,999
  12,427
  12,888
  13,382
  13,908
  14,472
  15,073
  15,712
  16,390
  17,108
  17,868
  18,672
  19,522
  20,419
  21,365
  22,363
  23,415
  24,524
  25,691
  26,921
  28,214
  29,576
  31,008
  32,515
Operating income, $m
  1,790
  3,194
  3,268
  3,352
  3,446
  3,551
  3,665
  3,790
  3,925
  4,071
  4,228
  4,398
  4,577
  4,767
  4,969
  5,183
  5,410
  5,651
  5,905
  6,174
  6,457
  6,757
  7,072
  7,405
  7,756
  8,125
  8,514
  8,923
  9,353
  9,806
  10,283
EBITDA, $m
  1,790
  4,970
  5,084
  5,215
  5,362
  5,524
  5,703
  5,897
  6,107
  6,334
  6,577
  6,837
  7,114
  7,410
  7,724
  8,057
  8,410
  8,784
  9,179
  9,596
  10,037
  10,503
  10,993
  11,510
  12,055
  12,629
  13,234
  13,870
  14,539
  15,243
  15,984
Interest expense (income), $m
  -245
  214
  222
  233
  246
  261
  276
  294
  313
  333
  356
  379
  405
  432
  461
  491
  524
  559
  595
  634
  675
  718
  763
  811
  862
  915
  971
  1,030
  1,092
  1,158
  1,227
Earnings before tax, $m
  1,789
  2,980
  3,045
  3,118
  3,200
  3,290
  3,389
  3,496
  3,613
  3,738
  3,872
  4,019
  4,172
  4,335
  4,508
  4,692
  4,886
  5,092
  5,310
  5,540
  5,783
  6,039
  6,309
  6,594
  6,894
  7,210
  7,543
  7,893
  8,261
  8,649
  9,056
Tax expense, $m
  655
  805
  822
  842
  864
  888
  915
  944
  975
  1,009
  1,045
  1,085
  1,126
  1,170
  1,217
  1,267
  1,319
  1,375
  1,434
  1,496
  1,561
  1,631
  1,704
  1,780
  1,861
  1,947
  2,037
  2,131
  2,231
  2,335
  2,445
Net income, $m
  998
  2,176
  2,223
  2,276
  2,336
  2,402
  2,474
  2,552
  2,637
  2,729
  2,827
  2,934
  3,046
  3,165
  3,291
  3,425
  3,567
  3,717
  3,876
  4,044
  4,222
  4,409
  4,606
  4,814
  5,033
  5,263
  5,506
  5,762
  6,031
  6,314
  6,611

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3,771
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  29,477
  26,197
  26,799
  27,488
  28,261
  29,118
  30,058
  31,082
  32,190
  33,384
  34,665
  36,036
  37,498
  39,055
  40,710
  42,466
  44,327
  46,297
  48,380
  50,582
  52,906
  55,358
  57,944
  60,670
  63,542
  66,568
  69,753
  73,105
  76,633
  80,344
  84,248
Adjusted assets (=assets-cash), $m
  25,706
  26,197
  26,799
  27,488
  28,261
  29,118
  30,058
  31,082
  32,190
  33,384
  34,665
  36,036
  37,498
  39,055
  40,710
  42,466
  44,327
  46,297
  48,380
  50,582
  52,906
  55,358
  57,944
  60,670
  63,542
  66,568
  69,753
  73,105
  76,633
  80,344
  84,248
Revenue / Adjusted assets
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
Average production assets, $m
  17,382
  17,726
  18,134
  18,600
  19,123
  19,703
  20,339
  21,032
  21,781
  22,589
  23,456
  24,384
  25,373
  26,427
  27,547
  28,735
  29,994
  31,327
  32,737
  34,226
  35,799
  37,458
  39,208
  41,053
  42,996
  45,043
  47,198
  49,467
  51,854
  54,365
  57,007
Working capital, $m
  5,019
  1,504
  1,538
  1,578
  1,622
  1,671
  1,725
  1,784
  1,848
  1,916
  1,990
  2,069
  2,153
  2,242
  2,337
  2,438
  2,545
  2,658
  2,777
  2,904
  3,037
  3,178
  3,326
  3,483
  3,648
  3,821
  4,004
  4,197
  4,399
  4,612
  4,836
Total debt, $m
  6,326
  6,349
  6,669
  7,034
  7,443
  7,898
  8,396
  8,938
  9,526
  10,158
  10,837
  11,564
  12,339
  13,164
  14,041
  14,972
  15,958
  17,003
  18,107
  19,273
  20,505
  21,805
  23,175
  24,620
  26,143
  27,746
  29,434
  31,211
  33,080
  35,047
  37,116
Total liabilities, $m
  13,860
  13,884
  14,204
  14,569
  14,978
  15,433
  15,931
  16,473
  17,061
  17,693
  18,372
  19,099
  19,874
  20,699
  21,576
  22,507
  23,493
  24,538
  25,642
  26,808
  28,040
  29,340
  30,710
  32,155
  33,678
  35,281
  36,969
  38,746
  40,615
  42,582
  44,651
Total equity, $m
  15,616
  12,312
  12,596
  12,919
  13,283
  13,685
  14,127
  14,608
  15,129
  15,690
  16,292
  16,937
  17,624
  18,356
  19,134
  19,959
  20,834
  21,760
  22,739
  23,773
  24,866
  26,018
  27,234
  28,515
  29,865
  31,287
  32,784
  34,359
  36,017
  37,762
  39,596
Total liabilities and equity, $m
  29,476
  26,196
  26,800
  27,488
  28,261
  29,118
  30,058
  31,081
  32,190
  33,383
  34,664
  36,036
  37,498
  39,055
  40,710
  42,466
  44,327
  46,298
  48,381
  50,581
  52,906
  55,358
  57,944
  60,670
  63,543
  66,568
  69,753
  73,105
  76,632
  80,344
  84,247
Debt-to-equity ratio
  0.405
  0.520
  0.530
  0.540
  0.560
  0.580
  0.590
  0.610
  0.630
  0.650
  0.670
  0.680
  0.700
  0.720
  0.730
  0.750
  0.770
  0.780
  0.800
  0.810
  0.820
  0.840
  0.850
  0.860
  0.880
  0.890
  0.900
  0.910
  0.920
  0.930
  0.940
Adjusted equity ratio
  0.467
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  998
  2,176
  2,223
  2,276
  2,336
  2,402
  2,474
  2,552
  2,637
  2,729
  2,827
  2,934
  3,046
  3,165
  3,291
  3,425
  3,567
  3,717
  3,876
  4,044
  4,222
  4,409
  4,606
  4,814
  5,033
  5,263
  5,506
  5,762
  6,031
  6,314
  6,611
Depreciation, amort., depletion, $m
  0
  1,776
  1,817
  1,863
  1,916
  1,974
  2,037
  2,107
  2,182
  2,262
  2,349
  2,438
  2,537
  2,643
  2,755
  2,874
  2,999
  3,133
  3,274
  3,423
  3,580
  3,746
  3,921
  4,105
  4,300
  4,504
  4,720
  4,947
  5,185
  5,437
  5,701
Funds from operations, $m
  1,944
  3,952
  4,040
  4,140
  4,252
  4,376
  4,511
  4,659
  4,819
  4,991
  5,176
  5,372
  5,583
  5,807
  6,046
  6,299
  6,567
  6,850
  7,150
  7,467
  7,801
  8,154
  8,527
  8,919
  9,332
  9,768
  10,226
  10,708
  11,216
  11,750
  12,312
Change in working capital, $m
  -616
  29
  35
  40
  44
  49
  54
  59
  64
  69
  74
  79
  84
  89
  95
  101
  107
  113
  120
  126
  133
  141
  148
  156
  165
  174
  183
  192
  203
  213
  224
Cash from operations, $m
  2,560
  3,922
  4,005
  4,100
  4,207
  4,326
  4,457
  4,600
  4,755
  4,922
  5,102
  5,294
  5,499
  5,718
  5,951
  6,198
  6,460
  6,737
  7,030
  7,341
  7,668
  8,014
  8,378
  8,762
  9,167
  9,594
  10,043
  10,516
  11,014
  11,537
  12,088
Maintenance CAPEX, $m
  0
  -1,738
  -1,773
  -1,813
  -1,860
  -1,912
  -1,970
  -2,034
  -2,103
  -2,178
  -2,259
  -2,346
  -2,438
  -2,537
  -2,643
  -2,755
  -2,874
  -2,999
  -3,133
  -3,274
  -3,423
  -3,580
  -3,746
  -3,921
  -4,105
  -4,300
  -4,504
  -4,720
  -4,947
  -5,185
  -5,437
New CAPEX, $m
  -5,312
  -345
  -408
  -466
  -523
  -580
  -636
  -693
  -750
  -808
  -867
  -927
  -990
  -1,054
  -1,120
  -1,188
  -1,259
  -1,333
  -1,410
  -1,489
  -1,573
  -1,659
  -1,750
  -1,845
  -1,943
  -2,047
  -2,155
  -2,268
  -2,387
  -2,511
  -2,641
Cash from investing activities, $m
  -5,359
  -2,083
  -2,181
  -2,279
  -2,383
  -2,492
  -2,606
  -2,727
  -2,853
  -2,986
  -3,126
  -3,273
  -3,428
  -3,591
  -3,763
  -3,943
  -4,133
  -4,332
  -4,543
  -4,763
  -4,996
  -5,239
  -5,496
  -5,766
  -6,048
  -6,347
  -6,659
  -6,988
  -7,334
  -7,696
  -8,078
Free cash flow, $m
  -2,799
  1,840
  1,825
  1,821
  1,824
  1,834
  1,851
  1,874
  1,902
  1,937
  1,976
  2,021
  2,071
  2,127
  2,188
  2,255
  2,327
  2,405
  2,488
  2,577
  2,673
  2,774
  2,882
  2,997
  3,119
  3,247
  3,384
  3,528
  3,680
  3,840
  4,010
Issuance/(repayment) of debt, $m
  2,295
  249
  319
  365
  410
  454
  498
  543
  587
  633
  679
  726
  775
  825
  877
  931
  986
  1,044
  1,104
  1,167
  1,232
  1,300
  1,371
  1,445
  1,522
  1,603
  1,688
  1,777
  1,870
  1,967
  2,069
Issuance/(repurchase) of shares, $m
  4
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2,201
  249
  319
  365
  410
  454
  498
  543
  587
  633
  679
  726
  775
  825
  877
  931
  986
  1,044
  1,104
  1,167
  1,232
  1,300
  1,371
  1,445
  1,522
  1,603
  1,688
  1,777
  1,870
  1,967
  2,069
Total cash flow (excl. dividends), $m
  -64
  2,089
  2,144
  2,186
  2,234
  2,288
  2,349
  2,416
  2,490
  2,569
  2,655
  2,747
  2,846
  2,952
  3,065
  3,186
  3,313
  3,449
  3,592
  3,744
  3,905
  4,074
  4,253
  4,442
  4,641
  4,851
  5,072
  5,304
  5,549
  5,807
  6,079
Retained Cash Flow (-), $m
  -1,160
  -241
  -283
  -324
  -363
  -403
  -442
  -481
  -521
  -561
  -602
  -644
  -687
  -732
  -778
  -825
  -875
  -926
  -979
  -1,035
  -1,092
  -1,153
  -1,216
  -1,281
  -1,350
  -1,422
  -1,497
  -1,576
  -1,658
  -1,744
  -1,835
Prev. year cash balance distribution, $m
 
  3,545
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  5,392
  1,861
  1,862
  1,870
  1,886
  1,907
  1,935
  1,969
  2,008
  2,053
  2,103
  2,159
  2,220
  2,287
  2,360
  2,439
  2,523
  2,613
  2,709
  2,812
  2,921
  3,038
  3,161
  3,291
  3,429
  3,575
  3,729
  3,891
  4,063
  4,244
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  5,170
  1,704
  1,621
  1,540
  1,462
  1,384
  1,307
  1,231
  1,154
  1,076
  999
  921
  844
  768
  693
  620
  549
  481
  417
  357
  302
  252
  207
  168
  133
  104
  80
  60
  44
  32
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Sasol Limited operates as an integrated chemicals and energy company. It operates through Mining, Exploration and Production International, Energy, Base Chemicals, and Performance Chemicals segments. The company operates coal mines; develops and manages upstream interests in oil and gas exploration and production in Mozambique, South Africa, Canada, and Gabon; and markets commodity and various performance chemicals, such as organics, inorganics and wax value chains, as well as polymers, solvents, and ammonia-based fertilizers. It also sells liquid fuel products to retail and commercial customers and other oil companies; markets, distributes, and transports pipeline gas, as well as maintains pipelines that are used to transport gas; and sells electricity to the national grid in Mozambique. In addition, the company provides engineering, research and development, and technology transfer services; manages cash resources; invests and procures loans; markets lubricants; develops lower-carbon energy solutions; produces, markets, and distributes chemical products; and trades and transports oil products, petrochemicals, and chemical products and derivatives. Sasol Limited was founded in 1950 and is based in Johannesburg, South Africa.

FINANCIAL RATIOS  of  Sasol ADR (SSL)

Valuation Ratios
P/E Ratio 0.1
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow -0
Growth Rates
Sales Growth Rate -6.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 56.1%
Cap. Spend. - 3 Yr. Gr. Rate 18.3%
Financial Strength
Quick Ratio 17
Current Ratio 0.1
LT Debt to Equity 39.1%
Total Debt to Equity 40.5%
Interest Coverage -6
Management Effectiveness
Return On Assets 3.1%
Ret/ On Assets - 3 Yr. Avg. 7.9%
Return On Total Capital 5%
Ret/ On T. Cap. - 3 Yr. Avg. 11.6%
Return On Equity 6.6%
Return On Equity - 3 Yr. Avg. 13.8%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 58.8%
Gross Margin - 3 Yr. Avg. 57.2%
EBITDA Margin 11.8%
EBITDA Margin - 3 Yr. Avg. 19.1%
Operating Margin 13.7%
Oper. Margin - 3 Yr. Avg. 19.4%
Pre-Tax Margin 13.7%
Pre-Tax Margin - 3 Yr. Avg. 20.2%
Net Profit Margin 7.6%
Net Profit Margin - 3 Yr. Avg. 12.8%
Effective Tax Rate 36.6%
Eff/ Tax Rate - 3 Yr. Avg. 33.6%
Payout Ratio 0%

SSL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SSL stock intrinsic value calculation we used $13047 million for the last fiscal year's total revenue generated by Sasol ADR. The default revenue input number comes from 2016 income statement of Sasol ADR. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our SSL stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for SSL is calculated based on our internal credit rating of Sasol ADR, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Sasol ADR.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of SSL stock the variable cost ratio is equal to 76%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for SSL stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Sasol ADR.

Corporate tax rate of 27% is the nominal tax rate for Sasol ADR. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the SSL stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for SSL are equal to 133.2%.

Life of production assets of 10 years is the average useful life of capital assets used in Sasol ADR operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for SSL is equal to 11.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $15616 million for Sasol ADR - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 645.351 million for Sasol ADR is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Sasol ADR at the current share price and the inputted number of shares is $19.5 billion.

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COMPANY NEWS

▶ Which Stocks Are Showing Rising Relative Strength?   [May-22-17 12:12PM  Investor's Business Daily]
▶ South African Chemical Maker Looks To Fuel New Rebound   [12:03PM  Investor's Business Daily]
▶ Is This Country Africas Qatar Of Natural Gas?   [May-11-17 10:55AM  Oilprice.com]
▶ Sasol Sees Mixed Sales to Start 2017   [May-06-17 06:58PM  Motley Fool]
▶ Sasol: The Benefits Of A Weak Rand   [Apr-17-17 12:44PM  Barrons.com]
▶ Sasol Looks to North America for Growth   [Mar-13-17 09:52AM  Motley Fool]
▶ Sasol Looks to North America for Growth   [09:52AM  at Motley Fool]
▶ Why energy execs are suddenly pumped up on Trump   [Mar-06-17 08:58AM  at CNBC]
▶ These 4 Stocks Could Be Turning 'Toxic' in March   [Mar-03-17 07:00AM  TheStreet.com]
▶ South Africa's Sasol Energy Rises On Earnings   [Feb-27-17 10:30AM  Barrons.com]
▶ South Africa's Sasol Energy Rises On Earnings   [10:30AM  at Barrons.com]
▶ Hedge Fund Sentiment Is Stagnant On Ecopetrol S.A. (ADR) (EC)   [Dec-12-16 03:53PM  at Insider Monkey]
▶ Do Hedge Funds Love Dr Pepper Snapple Group Inc. (DPS)?   [Dec-11-16 09:24AM  at Insider Monkey]
▶ SOL: Sasol Limited - Hedging of Financial Risks   [Dec-08-16 03:04AM  PR Newswire]
▶ Is DTE Energy Co (DTE) Worthy of Your Portfolio?   [05:48PM  at Insider Monkey]
▶ Is Clorox Co (CLX) A Good Stock To Buy?   [Nov-30-16 09:45AM  at Insider Monkey]
▶ Are Hedge Fund Short Sellers, Not OPEC, Driving Oil Price?   [Nov-22-16 10:53AM  at Barrons.com]
▶ Sasol's Energy Production Remains Under Pressure   [Nov-14-16 09:44AM  at Motley Fool]
▶ Business Watch   [Sep-13-16 12:09AM  at The Wall Street Journal]
▶ [$$] South Africa's Sasol Vows More Savings to Combat Crude Slump   [Sep-12-16 04:42AM  at The Wall Street Journal]
▶ 10 Oil & Gas Stocks Analysts Want You to Buy Now   [Aug-21-16 10:58AM  at 24/7 Wall St.]
▶ Low Oil Prices Keep Sasol on the Defensive   [11:09AM  at Motley Fool]
▶ Sasol Says Mulling Bid for Chevrons South African Assets   [Jun-30-16 11:19AM  at Bloomberg]
Stock chart of SSL Financial statements of SSL
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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