MCE eyes growth on Perodua EV, US expansion: HLIB
HLIB Research has initiated coverage on MCE with a "Buy" call and a target price of RM2.40, valuing the stock at 15 times its mid-FY27 partially diluted earnings per share of 16 sen.
The firm described the auto parts supplier as a resilient, scalable play on Malaysia's shift towards high-value automotive electronics and the global 'China + N' supply chain realignment.
MCE's entry into the EV segment comes through a high-value contract with Perodua to supply infotainment and advanced driver assistance system (ADAS) components, with revenue per vehicle at around RM3,000, about ten times its typical value.
"With Perodua targeting an affordable launch price, we estimate MCE's annual revenue from this programme could amount to between RM39.8 million and RM59.7 million annually, or 26 per cent to 38 per cent of FY24 revenue, making it a powerful earnings catalyst," HLIB Research said.
HLIB Research added that the company is accelerating its global expansion with two US wins for Nasdaq-listed Dorman in the automotive aftermarket and Michigan-based JVIS, a supplier to major original equipment manufacturers.
The firm said the JVIS deal involves two multi-year mechatronics supply contracts worth RM91.7 million over five years, adding about RM18.3 million annually.
Beyond automotive, MCE is expanding into new growth areas via multiple joint ventures, including a tie-up with Hong Kong's Sounding Industries to produce non-automotive products at its Johor facilities.
The company also partnered with China's Nanjing Chuhang to produce ADAS mmWave radars at its upcoming Serendah plant, along with Chery-linked suppliers Cheling and Atech for participation in Chery's Malaysian localisation programme.
MCE also formed a joint venture with India's Abhishek Electronics to tap into the fast-growing Indian automotive market.
HLIB Research projects MCE's core earnings to grow at a compound annual growth rate of 15.8 per cent with estimated earnings for FY25, FY26 and FY27 reaching RM20.2 million, RM21.4 million and RM27 million, respectively.
"FY26 growth will be driven by contribution from Dorman and the non-auto segment starting in the first half of FY26, with a stronger lift in the second half from Perodua's EV supply.
"FY27 will see the full-year EV impact, maiden JVIS contribution and scaling of Dorman and non-auto orders.MCE has a robust balance sheet with a net cash position of RM83.6 million, equivalent to 59.8 sen a share, around 42 per cent of market capitalisation," the firm added.
HLIB Research said years of investment in engineering and technology now position MCE to ride structural shifts in Malaysia's automotive industry towards localisation, high-value electronics and EV adoption, while benefiting from global supply chain diversification.
It added that the company offers a resilient, scalable play on the sector's long-term transformation, anchored by stable demand from Proton and Perodua, as well as expansion via high-margin electronics, exports and strategic JVs.
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