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City&Country: Cover Story-- Shifting up a gear

Dolomite Corp Bhd has been steering a steady but rather conservative path over the years. However, this is set to change as the low-profile group adopts a more aggressive stance to expand its property development and power businesses.

Managing director Lew Choong Keong admits that the conservative pace of the property arm has cost it several missed opportunities. “This year, we plan to focus and aggressively move into property development as well as the power business.”

The group is seeking to capitalise on its 830-acre landbank to develop residential projects in Selangor’s Rawang and Batu Caves, and in Kuantan, Pahang. It is also looking forward to new revenues from its maiden thermal power project in China, which comes onstream next year.

Currently, its revenue is derived from construction, industrial products and property development.
Dolomite’s roots can be traced back to 1959 when it was established as a mining and quarry company by four influential contractor families that owned the Bong Sin Rubber Estates Co Sdn Bhd, How Swee Construction Co Sdn Bhd, Lim Quee and Sons Sdn Bhd and Chong Lee and Company of Singapore.

Business picked up and by the 1970s and 80s, the group was handling the roadworks for housing projects in Petaling Jaya such as Section 16, Section 17, Taman Megah, Overseas Union Garden and Paramount Garden. Dolomite was also awarded the tender for three of the 12 parcels of roadworks for the Middle Ring Road 2 (MRR2).

During this period, Dolomite also ventured into industrial products and construction machinery, and eventually built its own premix plant. Up to the 1980s, the group continued to operate a quarry at its office and quarry plant beside the Batu Caves temple.

In 1980,the company was asked to stop quarrying there by the Selangor government as the blasting was causing disruption to the neighbouring areas. It was a very tricky period as increasing competition for its industrial products saw profit growth slowing.

As compensation for the halt of its Batu Cave quarrying operations, Selangor allocated 838 acres in Ulu Langat to Dolomite, and the group has been operating its business there ever since.

Today, the second and third generation of the founders are managing the company at the board level, while professionals handle the day-to-day operations. While Dolomite has ventured into various sectors including construction, building materials, biotechnological products and property, it continues to maintain its quarry business, although on a smaller scale, in Ulu Langat and Bentong in Pahang.

Property thrust
Dolomite ventured into property development in 1990 with Medan Batu Caves, a 12-acre mixed-use residential and commercial property development with a gross development value of RM38 million. Its maiden project comprised 44 units of 2-storey link houses and 59 units of 4½-storey shop apartments.

The 22x75ft link houses in Medan Batu Caves, which were priced at RM128,000 at their launch, are now fetching RM450,000 on the secondary market. The shop apartments have risen to RM700,000 from the initial selling price of RM255,000.

Dolomite then moved on to develop shops and terraced factories in Taman Sri Batu Caves. The project, spread over 128 acres, was launched in phases and sold over a period of 15 years, and had a GDV of RM1 billion.

In 3Q2008, the group launched the first phase of  Dolomite Park Avenue comprising shophouses on a 4.4-acre land parcel. The units were all sold and handed over in November 2011.

The management has decided to be more aggressive in its business strategies, and the group will be busy with developments on some 830 acres, with a total GDV of RM1.8 billion, over the next five years. Projects include Dolomite Templer in Rawang, Dolomite Park Avenue in Batu Caves and D’Marina in Kuantan.

Dolomite Templer is sandwiched between two green lungs — Bukit Lagong Forest Reserve and Commonwealth Park in Rawang. Spanning 80 acres of a former rubber estate, the project, with a GDV of RM604 million, is an upscale low-density residential project. Comprising 3-storey link houses, semi-detached homes and bungalows, the project is scheduled for completion by 2015.

Phases 1A and 1B were soft-launched last May, and 60% of 1A and 30% of 1B have been taken up. The units, measuring 1,088 sq ft to 1,238 sq ft, are priced from RM330 psf. The second phase, which comprises superlink homes, will be launched in 4Q2012.

The fully gated and guarded residential neighbourhood will have its own clubhouse and have access via a designated ramp from the LATAR Highway.

To ensure security, says Lew, there will be 24-hour security, CCTV and double fences along the perimeter, one layer of which will be electrified.

In addition, the bungalows and semidees will have their own swimming pools and be installed with screw lifts, which are safer than conventional lifts, he adds.

The group plans to launch the final phase of Dolomite Park Avenue in 1Q2013. Featuring a 29-storey freehold condominium project offering 474 units, with built-ups ranging from 1,177 to 1,450 sq ft, it is expected to be ready by 2015.

In Kuantan, the group is developing D’Marina, a 740-acre residential leasehold lifestyle township in Tanjung Lumpur in a joint venture with the land owner. D’Marina will be developed by Dolomite subsidiary D’Marina Sdn Bhd, in which Dolomite holds a 51% stake. The project, comprising terraced houses, semidees and bungalows, will take at least 10 years to develop and have a GDV of more than RM1 billion.

Lew explains that development has been spread out over a longer period as the “Kuantan property market is not as vibrant as the Klang Valley. We must slowly gear up and bring in the crowd.”

A man-made river will run through D’Marina, and flow into Sungai Kuantan and the South China Sea. Lew says each waterfront bungalow is designed with its own dock for owners to anchor their vessels.

Construction on the first phase of the D’Marina (Phase 1A), comprising 92 units of 1-storey terraced houses, was completed recently. Response has been encouraging for Phase 1D, comprising 184 units of 1-storey semidees, and the group is preparing to launch the third phase, 1E, which will offer 130 units of 1-storey terraced homes.

The group is aggressively scouting for landbank. Says Lew, “At the moment, we are targeting to acquire freehold land suitable for residential development within 20km of the Klang Valley vicinity. We don’t mind paying a bit more for land in an established area if we think it has potential for further growth.”

He says that while there has been a shift in interest from commercial to residential developments, it has always been Dolomite’s strategy to acquire freehold land. With the exception of the D’Marina project in Kuantan, all its developments are freehold.

“Why the shift from commercial to residential? Well, we believe there is still a larger capacity for growth in residential properties in the Klang Valley, especially those in freehold areas,” says Lew.

Power business
Going forward, the board plans to expand and boost income by focusing on property development as well as tapping into the power business. “Property has always been a stable investment choice as the Malaysian real estate scene has seen consistent appreciation over the years, especially for residential homes,” explains Lew.

Dolomite is in the midst of constructing a thermal power plant in China’s Shandong province. “The plant will be ready by mid-2013 and we hope the electricity and steam business will soon provide us with a good recurrent income,” says Lew. He adds that the company does not rule out property development in China if the opportunity presents itself.

Dolomite is currently in talks with the local authorities to supply electricity and steam to industries. Steam will provide 75%, and electricity 25% of revenue from the project.

Last year, performance fell short of expectations, with Dolomite posting a loss after tax of RM16.86 million. Up to 3Q2011, the group had suffered RM1.58 million in losses.

“For the past two years, the shares of Dolomite have not been performing, trading at 20 to 25 sen, which is below the par value of 50 sen and net assets per share of 48 sen as at 3Q2011,” says Lew.

He believes, however, that prospects “will be positive going forward”. “The implementation of the various mega projects under the Economic Transformation Programme augurs well for Dolomite, which is involved in construction and manufacturing of building materials. In addition, the commissioning of our thermal power plant in China expected in early 2013 will contribute substantially to the results of Dolomite.”

Lew remains upbeat about the property market. “The next few years will still be stable. However, it will not be as vibrant as earlier last year as the banks are tightening up on loans. There might be a slight dip, but eventually prices will still come back strong,” he says.

 

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 892, Jan 9-15, 2012

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