DOLMITE - THIS TRAIN MITE LEAVE THE STATION VERY SOON!!!

Hello to all readers out there. In the recent week, I saw that some momentum had started building in CONSTRUCTION stocks.

Having said the above, the stock which I'd like to talk about today is DOLOMITE CORPORATION BERHAD (DOLMITE - Stock Code 5835, Main Market, Industrial Products & Svcs - Building Materials)

BASIC INFORMATION ABOUT DOLMITE

DOLMITE was incorporated in 1950s, and listed in BSKL in 2003,  with core businesses in a few fields:

i) Building Materials

ii) Property Development 

iii) Construction

Market Capitalization : RM 45.45 million

Shares Float : 313.45 million

Website : http://www.dolomite.com.my/

1. DISPOSAL OF ASSETS TO SUNWAY TO BE COMPLETED BY FIRST

QUARTER NEXT FINANCIAL YEAR (DELAYED BY COVID19)

Below is snapshot taken from latest QR by DOLMITE, and also the news clip from last year on the surge in DOLMITE share price after the disposal was announced.

DOLMITE surged to a high of 28c on the news of this disposal, however price started to downtrend as whilst the progress of asset sale was delayed by COVID19 pandemic. 

Therefore, as commented by the company, the disposal is expected to be completed in first quarter of 2021, which would net a gain of RM 61.01 million to the group and enhance its financial position.

https://www.thestar.com.my/business/business-news/2019/06/04/quick-take-dolomite-jumps-175pc-on-disposal-of-quarry-unit-to-sunway/

2. DISPOSAL OF LOSS MAKING THERMAL POWER GENERATION

BUSINESS IN SHANDONG, CHINA TO IMPROVE THE BOOKS

Refer below snapshot taken from latest QR DOLMITE.

Majority of the losses are made in its Thermal Power Generation business in Shandong, China, which the company has decided to dispose and currently pending for investors to take over the operation.

With this disposal, the overall books of DOLMITE would be significantly improved with less loss reported in future quarters.

3. TECHNICAL ANALYSIS - BREAKOUT OF ALL KEY EMAs, WITH BULLISH

VOLUME INTEREST

Refer below the basic price and volume chart with key EMAs for DOLMITE daily chart :

A few observations on the daily chart:

i. Refer Circle 1 & 2, DOLMITE hit a peak of 28c when the announcement of its quarry business to SUNWAY was announced in June 2019. The stock then went on a downtrend until March 2020 low

ii. Refer Circle 3 & 4, volumes of buyers interest had started picking up in DOLMITE since June 2020 

iii. Refer Circle 5, DOLMITE share price had broken above support range of 10-12 cents which is also broke up above all key EMAs, indicating a bullish movement in this stock

iv. Next Resistances R1 at 18-19 cents, followed by R2 25-28 cents, before venture into new highs

CONCLUSION

Considering all the above, I opine that current price for DOLMITE is attractive due to below:

i) Disposal of quarry business was delayed by COVID19, but will be completed by Q1 2021, which will greatly improve its financial health

ii) Disposal of thermal power business in China will reduce its losses for future quarters

iii) Chart showing a breakout above all key EMAs, with significant volume interest

LET’S SEE HOW THE SHARE PRICE MOVEMENT IN THE NEAR FUTURE FORBEARING ANY GOOD CORPORATE NEWS.

Disclaimer : The above opinion is never intended to be a BUY CALL whatsoever. I am sharing my observations ONLY based on fundamental; past history; current trading pattern; charts etc. Please make your own informed decision before buying this share or whatever share for that matter.

BURSAMASTER