Our View: Consolidating above the breakout level is deemed as healthy since that confirms that buyers and sellers are willing to transact at higher share prices. Also, after DMC pulled back last week, the counter is not currently trading at overbought levels anymore, further signaling that accumulating at current levels is a favorable risk to reward trade. As for the DMC’s growth prospects, we reiterate our bullish view on the earnings trajectory of both its power and mining segments.

For DMCI Mining Corp., the reopening of its nickel mine in Zambales bodes well for the company given the favourable outlook in demand. Management also said that should all pending mineral production sharing agreements be approved, available reserves for the company could rise by 276m wet metric tons. Moreover, the Department of Energy’s (DOE) expectation of more red alerts until Jul-21 should result to upward pressure on WESM prices, which benefits Semirara Mining and Power Corp.’s (SCC) power generation segment. As mentioned in our report entitled “Power outages expected as Luzon grid experiences limited power reserves”, in 1Q21, Southwest Luzon Power Generation Corp. (SLPGC), one of SCC’s power companies, sold 21% of its output to WESM.

Analysis: Despite pulling back from its recent year-to-date highs, DMC is still trading
above the breakout level of P6.20. Consolidating above the breakout level is deemed as
healthy since that confirms that buyers and sellers are willing to transact at higher share
prices. Also, after DMC pulled back last week, the counter is not currently trading at
overbought levels anymore, further signaling that accumulating at current levels is a
favorable risk to reward trade.

Trading Plan: Accumulating DMC on current levels until P6.20 is advisable. Set cut loss
below P5.90 and begin taking profits at around P7.10/ P7.20.

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