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Strategies & Market Trends : Greater China Junior Stocks

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To: Julius Wong who wrote (1188)	3/30/2006 7:23:53 AM
From: Lynn	Read Replies (1) of 1992

I guess SI can tell who someone is the same way Yahoo! can via the IP address. I'm glad they give the boot to game players. Since you like SSL, too, here is a tiny bit from Citigroup's 16 page research report of 14 March. It does mention China, so it is not completely OT: Summary ? We expect Sasol’s growth drive in the next 10 years to focus primarily on the roll-out of its Fischer Tropsch expertise ? Sasol’s technologies could provide the answer to energy security issues in both the U.S. and China ? Fischer Tropsch processes compare favorably with other alternative fuels technologies ? Sasol’s ability to negotiate attractive fiscal terms for coal-to-liquids (CTL) ventures will be paramount to the growth of this technology ? We believe Sasol provides the most attractive entry into alternative fuel technologies; we maintain our Buy/ Low Risk (1L) rating and $40 target price [snip] Energy security has received increasing attention in both the media and political arenas. It is clear from the recently adopted U.S. Energy Bill and President Bush’s State of the Union address that the U.S. will actively seek to reduce its dependence on energy from other nations. We believe China has similar ambitions and in our view Sasol’s Fischer Tropsch technology could provide the answer to energy security issues in both the U.S. and China. GTL and CTL — driving growth in the next 15 years We believe the opportunities to grow the chemicals business from current Fischer Tropsch production is becoming more expensive and fewer. It is clear that the thrust of Sasol’s growth will come from new gas-to-liquids (GTL) and coal-to-liquids (CTL) projects. These projects could include production facilities in the Middle East, China, Australia and India. Sasol’s technology to provide energy security The drive to produce home-grown energy in both the U.S. and China provides Sasol with a growth opportunity as both these nations have vast coal reserves. The economics of CTL remains a challenge and Sasol will have to secure favorable fiscal terms to proceed with these projects. Sasol’s CTL should be value enhancing under the current fiscal regime in the U.S. (80% loan guarantees and $21/bbl tax incentive on production). Sasol’s Fischer Tropsch process compares favorable with other options Sasol’s GTL process in particular has favorable economics in the current commodity price environment. Other alternative fuel options with favorable economics are CTL, oil sands in Canada, extra heavy oil and ethanol. Options in the longer term would include oil share, biomass-to-liquids and bio-diesel. Each of these processes has specific challenges to overcome including energy efficiency, capital cost and environmental impact. Ethanol as a base fuel would require additional infrastructure. Sasol looks the most attractive entry into alternative fuel technologies Several companies could benefit from the drive to find alternative energy technologies and sources. These include the large oil companies, technology start-ups, the oil sand companies in Canada and companies involved in ethanol production. We believe Sasol provides the most attractive entry into pure alternative fuel technologies both from a growth and valuation perspective. We maintain our Buy/ Low Risk (1L) rating and $40 target price on Sasol. [snip to end] Lynn

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