Recorded Tuesday 27 October 2026 for release 28 October 2026. Topics: Brazil ETF crash after the election, Brent oil outlook, Sasol earnings, debt and dividends, 700 episodes — how the show started.

Note: auto-transcript with proper nouns corrected (Sasol, Shyft, Lula, Houthi, Hormuz, Bessent, Kpler, Saudi Aramco). Otherwise unedited.

**Simon Brown (00:01)**
Sasol at 300 is the oil windfill built to last, and when do shareholders get dividends?

WorldWideMarkets episode 700 for 28th October. This is being recorded early Tuesday afternoon. My name, of course, is Simon Brown. WorldWideMarkets, powered by Standard Bank Global Markets Retail, and Shyft, the global money app that puts travel, shopping, payments, and investments in the palm of your hand. Enjoy the cheapest forex rates anytime, anywhere. Shyft, powered by Standard Bank. thanks to Standard Bank, thanks to Shyft.

700 episodes. Giant, crazy, incomprehensible. I’m gonna give a history of the show, but I’ll do it at the end of the of the of the last minute of the of the of the podcast. if you’re interested, either jump forward or wait your time. Short answer: 700 episodes. I enjoy it, but of course, if there was no one on the other side, I wouldn’t be doing it. So thanks to you all, both those listening to audio, those watching on YouTube. the YouTube numbers have exploded this year. We appreciate that. The audio numbers.

Have held strong and continue to grow. So thank you to all of you for being here and making this the real McCoy. Anyway, on with the show. I want to touch on my chart of the week. and I’m going to Brazil for this. So the Brazilian elections on the weekend, we know all about those. And the incumbent one, Lula, and beat the the son of the previous one anyway. The market was down, so this is we the

There’s a a a US dollar ETF, which is a weird beast, right? Because it’s in dollars, so there’s currency impact, twenty percent down on Monday. Nineteen point eight two to be exact. That’s a crash. I to be clear, that’s a crash. Spell it any way you want. Now, it had jumped a few weeks ago when everyone thought that Lula would lose and would get the right wing guy in instead. But I to me the perspective is that broadly this is back where it started the year.

Fallen to where it was for January. So to be clear, not lacquer. You were making money, now you’re not. The bigger perspective is that this, you know, the worry about Lula is seems to be funny because you know what? He’s presided over a market which is up even after the fall, almost doubled in the period that he’s been in charge. So maybe less stress, less worry. In which case, let’s then get on to Sasol. And I we need to start the Sasol with a couple of points. And I suppose.

The the first key one. I mean, everyone was when was it? Well about two years ago or so. Everybody on the socials was all over Sasol. This was the stock. They were loving on it, but it just kept on falling. It just kept on falling. So that’s sort of 23, down in which point it was trading at 250, all the way down into early 2025, by which time it’s trading at 50 bucks. And by then, the vast majority of people had just moved on from Sasol.

I hadn’t traded it. I did pick up some at some point and I bailed them at about 100. I think I got in about 70, 75. I can’t even remember what the trigger was. And embarrassingly, I think that was just a year ago. But anyway, Sasol then closed 300 Rand and 56 cents on Friday. Came down a fair bit on Monday to close at 290 Rand. The question we have is where next? And that question is to a fair degree all about Brent. Of course it is. Brent

Trading at $115.45. That was Tuesday morning. That is, I mean, we we basically last week we had the highest weekly close since the attack on Ukraine, the Russian invasion on Ukraine. Even a higher close. So to be clear, oil price got to $120 back in March when the attack in Iran happened by the US, but we saw it come back. It never closed at those levels. And the close from this week was the worst. Scott percent.

US Treasury Secretary says, Hey, he tweeted this on Sunday. No worries because we are back to where we were before the war in terms of oil out of the Mid East. Ts and Cs apply. Yes, he’s right. But Ts and Cs apply. Firstly, it’s a little bit of a blip that takes it up there. This is data up to twenty one October, which is to what, Wednesday of last week?

But be as it may, the key point is you can tell the Strait of Hormuz, which was about 14 million barrels, is now sitting at about 10. about two million barrels was coming from the Gulf of Oman. That is now sitting at about 2x that. And the Red Sea, which was really quite small, maybe a million barrels, is now sitting at two or three times that. The oil’s shifted. The straits, are they open or not? No one knows. Kpler will tell you, I mean, certainly.

There is oil flowing, but there’s a bigger story here. And that’s what we want to delve in today. So the questions we want to answer is how does this oil work for Sasol? When does Sasol start to pay dividends, if at all? And Ergo, where is the oil price going to be over the next one and two years? So we can feed that into Sasol. And then the big question, 300 bucks, what do we think about Sasol? So let’s get to some good old fashioned data. Bottom line.

Oil is higher for longer. Let’s put that right up front. Probably not $115. My call, probably about $90 over the next 12 months, to say to the end of 2027, and then about $75 through to sort of late 2028. Near term we might see spikes, 120, 130, particularly with Houthi and Iranian attacks. Trump is threatening to up the ante after the midterms. That is Tuesday. So who knows what we’re going to see? but the floor is set more by restocking.

Then buy flows. But let me go back to those averages. I’m looking for about 90 over the next year and 75 over the year thereafter. And as I said, Bessent is right about the flows, wrong about the market. fair enough. The big one is global observed inventories are about 500 million barrels below pre-war levels. That is a big number. These are the lowest on land stocks. They call them on land stocks because.

They’re not underground, I guess, or on ocean, since twenty sixteen. and you know, governments and China needs to re b need to refill those stocks, and that’s going to take eighteen to twenty-four months. And the point is, and we’ll go into the drawdowns of special reserves and everything, but the key point is that we need we governments need to restock supply because the those those inventories, those sort of reserves that they had, because the Middle East is now a riskier place than it was.

On before Trump invaded on the 28th of February. The risks have gone up, and the way to mitigate that is to have better reserves. Quick point: does South Africa have reserves? Not to speak of. Sasol’s pretty much unhedged. We’ve got they’ve got some puts at 59, that’s immaterial. And they’ve got about 5 million barrels between 77 and 87. But largely the upside is unrestrained. 2020 financial year 27 is going to be a bumpy year. 28 will normalize by their own sensitivities.

Brent at 100, put the cracks at nearly 30. What’s the crack spread? Crack spread is a difference between the price of the input Brent and the price of the product. diesel, petrol, aeroplane, whatever the case may be. That’s your crack spread. Financial year 27, HEPS looking at about 55 to 60. That’s versus 38 and FY26. and FY28 probably puts HEPS back in about the mid 30s, oil at about 75.

Let’s get to some numbers. Dividends. I think they come back in 27. Net debt 3.26 billion at June 26 against a 3 billion. The management and directors are saying dividends return when debt is substantially below 3 billion. Sorry, sustainably below 3 billion. Sustainably below. What does that mean? I suppose it means that they don’t risk going higher. I would argue the current price, that gap closes within months.

policy is to pay 30% off free cash flow. A plausible financial year 27, which will be to December next year, eight to fifteen bucks a share. That’s about a three to five dividend yield at the 290 closing price on Monday. The shares pricing the good news at 290, it’s five times twenty seven base case HEPS, nine times normalized 2028 HEPS. No longer cheap and through the cycle.

Only cheap if all stays above that 90 into 2028. I would say it’s stretched. I would say look for it in the at 210, 230. I like it. Unless there’s massive piece in our time. We’ll get to that. So the balance sheet will be fixed, dividends will return. A good business year is pretty much locked in, but the share is pretty much pricing that at the 290 for the next little bit. But let’s get to Brent above 110. If supplies back to normal, as Bessent said.

Why? What’s happening? So we’re getting that 17 to 18 million, which was about the Jan to Feb average from this year. In fact, it’s a little bit higher. But as I said, it’s not coming through the straits, it’s coming through other different parts of the market, and that really, really matters. So, five reasons why Brent is still $115. the inventory hole, the energy IEA, International Energy Agency says that global observed stocks of 509 million barrels.

Below the pre- war levels. This is at the end of September, as I said, lowest since 2016. Draws are expected to accelerate in October. Seasonal demand, and also we’ve got some refinery maintenance happening in some of the big refineries. Flesh supply risks, there’s risks. Houthis strikes on Saudi infrastructure. We have seen that happening. There’s definitely a risk there. That East-West pipeline, which is getting oil out of sort of the back door in a sense, being knocked off line in September.

and we’re seeing that October has been actually the worst month for attacks on ships in and around the Hormuz Strait, hence Brent 117 on Friday last week. The diesel squeeze, middle distillate tightness set to persist for a long time. Right refining capacity is maxed, and this is what pushes Sasol’s crack spreads. They’re making as much from crack spreads as they are from oil prices. Restocking. The US strategic reserve is 283 million barrels.

That’s the lowest since 1982. It was 415 pre-war. China’s taken down about 147 million barrels, that down to about just over a billion barrels. And the G7 another hundred million, released another 100 million in October. All of those need to be refilled. That’s the key point. That oil needs to go back. So Goldman Sachs says it’s a $25 dollar barrel war risk premium. That kind of makes sense.

Because that would then put all at about 90. So I think that’s not un unrealistic. And then the CEO of Saudi Aramco, Amin Nasser, early in the month, I think first week of October, talked about 3 billion barrels of supply lost, a billion drawn from stocks, 6 billion barrels still in storage, but he’s talking around practically available stocks, perhaps 6 million barrels. He also says that the process of restocking.

It’s going to take 18 to 24 months. That’s why, if there was peace today, there’s still a lot to go. So it’s where is that that that, you know, as I said, global levels down. So pre war, about 8.2 billion complete stocks. That’s down a fair bunch. China’s the biggie in that regard. So Nasser says we need an extra. That’s Saudi Aramco, CEO. We need an extra two million barrels a day for about 18 months to two years to restock. Now,

How do we get that? Well, Saudi Arabia could turn the pipes on or taps, except they can’t go, they can’t send it anywhere. that is gonna keep the high the prices a little bit higher. I mean, the US alone needs 250 million barrels. So it’s gonna take time, and that’s the floor for Brent in 2027 and into 2028, even I mean, I’m assuming the war has ended. China has been the big one here. China has saved us a proper.

they cut import imports from twelve million to under four sorry eight million in the second quarter. They basically cut over four million barrels per day, and they’ve been going through their stockpile. and and and that was basically three-quarters of the adjustment. Thank you, China. They that they helped the prices. That destocking at some point needs to reverse and they need to sort of restock at this point by accounts that they are not.

but also Kpler estimates EV is an alternative fuel trucks to play the place. they reckon 1.3 million barrels of Chinese roadfall in 2026 has been just replaced by electric vehicles. Chinese diesel demand down 250,000 barrels a day this year. Electric trucks hit 27% of new vehicle sales in Q1.

The EV demand in developed markets is going to be slow, but everyone I speak to in sorry in emerging markets, everyone I speak to in a developed market around EVs is about buying a new car. They’re looking at EV. They’re looking exclusively at EV. Now they were already. They just now absolutely are already. So that’s what we’re going to see in in that regard. I think we’re going to see a lot more EVs. And the emerging markets, lower, but certainly happening. I’ve spoken before.

You can get a BYD dolphin surf, the extended one with almost 300Ks of range for under 400k. there’s charges on on the on the N3, they’re coming onto the N1. We can start to travel. EVs are going to be the future, and this is gonna take some pressure off. Not so much in the short term. So, what are current forecasts on the table? The EIA is looking at $105 for Q4. They look at $74 by Q4 of next year.

That’s aggressive. I’m not sure. Goldman Sachs is looking at ninety dollars for December and averaging eighty for next year. I think even that’s perhaps aggressive. HSBC looking at ninety dollars in the short term and eighty-five dollars again next year. I think these targets all and then Sasol’s own guidance is seventy to a hundred for next year, which is well, wide, right? Seventy to a hundred. Sasol, where where where where where are we? So three scenarios I think that we can look at.

I think the most probable scenario, and I’m putting it at a base scenario at about 55%, is a grinding normalization. Trump is get bored of the war, he kind of walks away, nothing really happens. Iran is kind of waiting until January 2020, 2029, when we get somebody else in the White House. and that to me puts Brent at about the $90 over the next year and around the $75 into year two, so 2028.

That to me is my 55% probability. my 20% probability is things escalate between Iran and the US, perhaps trying to bring other players in. Saudi infrastructure is getting attacked by the Houthis, Hormuz gets reclosed. That puts the short-term oil price probably north of 120, and 2028 probably around 95 a hundred. fast peace, which is my 25% probability and demand weakness and China EV drag.

Next 12 months, $75. 2028, $65. You will note none of these are amazingly epic. Probability rate weighted $93 over the next 12 months, $78 a barrel in year two. That is still good news for Sasol. So we’ve seen some, we saw the numbers to June, and and that was looking fairly good. adjusted EBITDA was up 17%, HEPS was 38%, Rand up 9%.

Secunda production at a five-year high. Above guidance, that was helped by the stoning plant, better coal quality. cash costs were largely flat. for the third year running, CapEx was down 18%. Free cash flow, just almost 12 billion Rand, held back by working capital build. That’s higher prices for inventories for shutdowns. Net debt 3.26. As I said, they want that sustainably below three billion dollars. And there Brent.

Break-even was about 49 US dollars per barrel. Although their Q4 said, hang on, that that that was flattered by no Secunda shutdowns, etc. Maybe it’s closer to 55. So H2 versus H1 tells the story, right? $92 Brent versus $66 Brent, EBITDA, $40 billion versus $21 billion. That $6 to 92 and a half almost doubled EBITDA. The the update of just last week.

where from Sasol, higher prices, supportive refining margins, Secunda lower after planned phase shutdown, Natref down and planned and unplanned outages restarting end of the month. fuel sales up as stock build in June is sold down. international chemicals favorable, but they’re not changing their guidance. some red flags for Secunda liquid fuel fuels refinery, fully impaired. credit ratings they’re still junk.

you know, they’ve got a lot of debt maturing November next year. so you know it it it came on 750 million dollars. It came on at eighty eighteen eighty. So they’re doing it at a lower price. So earnings, debt, and dividends, some math for us. Sasol’s 2027, 2027 sensitivities financial year. One move dollar in Brett is 600 Brent is 650 million to Sasol.

one dollar fuel crack spread is 840 million to Sasol and ten cents in the currency is eight hundred and ten. So how did we run it? About ten dollars in Brent is about seven seven rand forty on HEPS, and one rand on cracks is about 96 cents on HEPS. The cracks matter, they absolutely do matter, and and the thing with Sasol.

Is their input is not oil. Usually your crack is the spread between the oil and the the the base, the the the the the price. Their spread is their their input is is coal, so they’re doing way way better. So they’ve got some put spreads. Here are is my scenarios for for Sasol. My bear case, Brent 85, cracks 20, Rand dollars 1680, HEPS 38 Rand Sasol. Yeah, nice. My base case, 100 Rand Brent, 30, so $100 Brent, $30 cracks, $16.50 currency.

EBITDA about $77,057,000. That’s a 6-ish PE. And my bull case is 115 Brent, 38 cracks, 1650 on the currency. That is a $78. Sorry, $78 Rand HEPS. I think we’re looking at about 60 bucks HEPS for next financial year. Put Sasol on a five times PE. But when do we get the dividend? So policies 30% of free cash flow once net debt X leases.

Sustainably below 3 billion. I think we’re gonna get there. I think that the free cash flow likely to be 25 to 30 billion next year. That’s helped in part by working capital unwinding. So net debt drops by in the December interims. Sustainability, sustainability is the big one. But I think that we’ve got a dividend next year of 12 to 14 rand. I think the bear case is an eight rand dividend.

I think the the base case is a 12 to 14 Rand dividend. on the current price, that is, let’s be generous, call it a four percent dividend yield. so I think that Sasol at current price, I think it’s fair. I think the the the market is saying, let’s see, but I would like it on any weakness. On any weakness down into the low 200s, absolutely I’m interested in Sasol. And let’s see what we have got in terms of the

expectations for Sasol. What are folks looking for in terms of the what’s the word I’m looking for? Yeah, sometimes my brain is dead. I’m looking at price targets, and there they are. So, what are the price targets coming through from Sasol? I expect a fair wide range here. Let’s get what we are looking at. price targets on Sasol. So the average is 228, the highs 316, the lows 175. I am going to take the average on.

I’m gonna the 228. We got two soles, five holds, and three buys. At current price, I would have Sasol as a hold. At 210, 230, I have Sasol as a buy. Let’s see how it plays out. We all hope that all goes back down and we can start actually saving some money. But in the meantime, we will see how that goes. It is, I think, the the the word we’re looking for, a mess right now. Worldwide markets, powered by Standard Bank Global Markets, Retail, and Shyft, the global money app that puts travel.

shopping payments and investments in the palm of your hand. Enjoy the cheapest forex rates anytime, anywhere. Shyft, powered by Standard Bank. Thanks to Shyft. Thanks to Standard Bank. Thanks to you all for 700 shows. So how did we get here? 2008, early sometime in early 2000. Maybe I think I want to say it’s around April, around Easter. the I’m at Standard Bank. I’m working at online share trading. My director is a gentleman called TJ Masena. and we get a message from group

comms Eric Larson I think saying that Dominique Sele wants to have a lunch with us. Can he set it up? We’re like, sure, we do lots of these. The name kind of rings a bell. we we had Dr Justice had writes the weekly column in Financial Mail, and he had the week before written about Dominique Sele, who had been playing Gershwin piano music with Brett Cabell the day the night he was killed. Yeah, so this Dominique Sale. Anyway, he also

Owns a chunk, owns a a Classic FM. At that point, it’s still in process, but essentially he owns it. We go, we meet somewhere in Sandton, we have a great lunch, we drink whiskey. Turns out Dominique and I can both do a bit of Irish whiskey on ice. So we drink, and he’s got this weekly radio show. He owns Classic, he wants to do, he’s got John Fraser doing the business show every evening, six to seven. And then seven to eight, Monday to Friday, he wants a one night attack show, one night at this show, and one night he wants a small cup, JC Durant.

He’s looking for us to sponsor. We’re not so sure, but I say to him, but gent, who’s your host? He hasn’t got a host. I’m like, well, then I’m your host. I convince him that actually forget sponsoring. I’m his host. July that year, 2008, in the middle of the crisis, boom, we’re off to the races. I now have a weekly show. I think it was Tuesdays, 7 to 8 p.m. I’ve never done anything like this. I’ve always wanted a radio show, but I’ve never done anything like this. Anyway, there we are. And we are rocking along and having loads of amount of fun. the world is ending. I’m focusing on small caps.

The CEOs who don’t get interviewed by Bruce Whitfield. I would have CEOs fly up from Gqeberha, from Durban, come down from Pretoria, come up from Cape Town. You’ve got to understand the classic studio, because I was in Braamfontein, they would get excellent cheese from the cheese shop in Linden. They’d have the best wines. It became a melting pot of things happening every night. And on Tuesdays, I was in as well. And then there’ll be more melt, you know, literally CEOs flying up from all over the country for their ten or fifteen minute interview. Had a great time.

I think it was February twenty eleven, I’d left Standard Bank. Dominique is like, nope, shutting it down, not doing the numbers he needs. Cool. I started as a podcast of in April of twenty eleven, weekly, and here we are, 700 shows. It’s gone through iterations. Initially it was an hour long, it was exactly like it was on air. And then I’m like, but hang on, it doesn’t have to. At one point I took a six month sabbatical. Here we are, I’m loving it. You’re having fun, I imagine, because you’re here all the way to the end. And for that, we thank you.

As always, my name is Simon, look after yourself and if you can, look after somebody else as well. And thank you for 700. Cheers all.