Neelash Hansjee, portfolio manager: Old Mutual Investment Group
BUY: Sasol
Sasol will benefit from the oil price, which is expected to firm as demand from China grows, its economy reopens and activity there improves. In addition, Sasol issued an encouraging update on January 24 reflecting sufficient coal stockpiles to support the stability of South African production levels despite operational issues plaguing the business in 2022. Yet Sasol’s share price reflects a fair amount of pessimism as these positive drivers begin to bear fruit. Management has navigated the debt concerns over the past two years, and the benefits of a degeared balance sheet and the ability to pay dividends also add to support.
SELL: Investec
The share price has had a tremendous run! The group delivered on its ambitions as it resuscitated its UK bank, with strong revenue performance aided by rising interest rates in the UK on the back of a growing loan book. The group also surprised the market by announcing a share buyback programme, which gave shareholders reasons to cheer. Balancing this, Investec’s bad debts are very low and should normalise in time as both the UK and South African economies are still tough environments. It’s time to take some profits here.
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