The equities market is still looking good to remain in an upbeat manner, however, sentiment still remain cautious in this fragile state of stability with the Europe financial worries as well as on going tension between the US and Iraq. However, the global outlook still remain bright as most of the leaders of the world are still pushing towards a greater economy recovery and activities.
The 2H of 2014 will be possibly seeing a higher focus on building material supplier for both public infrastructure, properties and Oil & Gas industry as developers and contractor will be pushing for more orders and delivery before the GST that will be kicking in 2015, resulting in a higher cost of goods.
One of the core component in the construction segment - limestone, will be a heavily demanded ingredient in the robust outlook for the construction segment in Malaysia. Below is an example on LaFarge Malaysia Berhad on it's up trending price since January 2014, signalling the bullish demand on the cement industry.
While the industry will be looking to be handsomely rewarded in the coming days due to their overloaded demand, Dolomite Corporation Berhad (Dolmite 5835) had came to my great attention on their coming bright prospect that might put a diamond knot in their coming up financial year.
Let's have a quick look at Dolomite share price.
Dolomite - A Prospect Brighter than Stars
Dolomite Corporation Berhad mainly operates in two segments
- Manufacturing, which include the manufacture and sale of hot mixes, concrete piles and ready-mixed concrete.
- Construction and property development, which include the piling and precast concrete construction contracts, earthworks, buildings and expressways contracts.
Dolomite prospectus for the 2H of 2014 will be very great which is back by the strong robust demand in the cement,
fueled by the hot rolling infrastructural projects and mega mixed
development around the Klang Valley. Dolomite favorable quarry location
is one of the prime factor for any reason for a contractor to get
supplies from them.Dolomite quarry in Hulu Langat is one of the single largest granite quarries in Malaysia, with a span of 838 acres of land, covering bountiful of rock reserves for the Klang Valley demand.
According to internal sources, Dolomite book order for the natural resources had been seeing a stunning growth over the past 1 year, underlining the huge demand in the resources.
The huge demand in the cement had been fueling up the quarrying sector which had been displayed by other bigger players like IJM, MFCB, HapSeng and recent rising star, WZSATU.
Dolomite, compared to it's peer which had displayed huge upside, is carrying a huge amount of explosive which could possibly see it's share price sky rockets towards the ceiling once this beautiful gem is uncovered.
The Huge Catalyst
The recent quarry license issues in Selangor had been playing a role of an angel and a devil. A total of 8 quarry operator out of the 28 operator in Selangor had been facing short term operating license issues, which had saw their operation being suspended due to the non renewal of their short term operating license. This had lead to a higher demand squeeze towards those remainder operators in the Selangor state, putting them to work almost non stop over the clock to cater for the huge demand. Amongst them had saw Dolomite in the line up for the beneficial of the suspension of license for those affected 8 quarry operators.
While hot stuffs usually go rampage and overheat further, one of the substantial shareholder of Dolomite Corporation Holding is Tan Sri Abu Sahid Bin Mohamed, the recent limit up factor behind IPMUDA Berhad surge from RM 1.10 to RM 1.43 on 3rd July 2014. Tan Sri Abu Sahid is commanding a notable stake in Dolomite, with a total of 15,725,500 of shares, or 5.97% in hand. Dolomite could be on a hot rail to see it's share price on a possible route of hitting limit up as market hype had been strong on the recent action on Tan Sri Abu Sahid Bin Mohamed open market purchase on IPMUDA.
Dolomite will be a very attractive company to be traded and invested into based on their involvement in the quarry industry, and the huge demand of limestone which is fueled up by the robust demand in the mega infrastructure development in the nation.
A summary outlook for Dolomite Corporation Berhad
- Huge demand for limestone/cement back by the robust huge infrastructural and mixed residential and commercial development in Klang valley.
- Suspension of short term quarry operating license in 8 of the 28 operators in Selangor since January 2014, putting Dolomite in a bright position to see a higher order in it's product.
- Prime location of the quarry site which is situated in Hulu Langat, making them favorable for contractor to order because of lower logistic cost
- Increasing order throughout the 2H of 2014 to avoid higher cost after the implementation of GST in 2015.
- Trading at 25% discount based on the NTA of RM 0.572. However, RNAV could be hitting more than RM 2.00 after the 838 acre of quarry land in Hulu Langat can be turned into a land for development.
- Tan Sri Abu Sahid as a substantial share holder with 6% holding in Dolomite. Tan Sri Abu Sahid is the recent person behind the limit up of IPMUDA. Tan Sri Abu Sahid had been increasing his stake in Dolomite in a gradual manner as of recent.
Dolomite will be looking to challenge above RM 0.50 in the short term outlook. A strong penetration above RM 0.50 will see Dolomite moving towards the uncharted territory, which could possibly see a visit at RM 0.60, and subsequently RM 0.70 to RM 1.00. A long term outlook will put Dolomite at RM 1.00.
Bone's short term TP: RM 0.65
Cheers and have a nice day.
Regards,
Bone
