PETALING JAYA: MCE Holdings Bhd
will be well-positioned to capitalise on growing China Plus One diversification demand, following its proposed acquisition of a Johor industrial property via a joint venture (JV) to grow its non-automotive business.
The firm announced that its 51%-owned subsidiary, Eagle MCE Technologies (M) Sdn Bhd, entered into a sale and purchase agreement on June 3 to acquire a freehold industrial property in Taman Perindustrian Pekan Nenas, Pontian for RM9.99mil.
The property, which spans 57,572 sq ft, will comprise a single-storey detached factory with an office. The acquisition is expected to be completed by the second quarter of the financial year ending July 31, 2028 (2Q28).
Hong Leong Investment Bank (HLIB) Research said it viewed the acquisition positively, as it represents a productive deployment of capital into a growing and potentially earnings-accretive business.
Eagle MCE is a 51:49 JV between MCE and its Hong Kong-based partner, Sounding Industries Ltd. Focusing on non-automotive contract manufacturing, such as die-cutting machines, cosmetic packaging and related tooling, the JV has commenced production since 1Q26.
Eagle MCE currently operates in a leased floor in MCE’s Johor automotive factory.
MCE’s venture into the non-auto segment was initially a way to improve utilisation of its existing factory. The segment’s strong performance has resulted in insufficient space to cater for additional demand.
“The acquisition will provide Eagle MCE with a new dedicated production base to support the expansion of its non-automotive business,” HLIB Research said.
It noted that MCE is poised to benefit from structural tailwinds, such as the accelerating trend towards localisation, and the China Plus One supply-chain shift as more customers seek reduced reliance on China-based production.
Eagle MCE’s acquisition of an 80% stake in a plastic injection company in April enables it to internalise a critical part of its supply chain, improving supply security and operational control.
“Together with the new factory acquisition, Eagle MCE is doubling down on the expansion of this new revenue stream.”
HLIB Research has maintained a “buy” call on MCE with an unchanged target price of RM2.38. It said its balance sheet remains robust with a net cash position of RM74.4mil, providing flexibility for growth investments and shareholder returns.
The stock also offers an attractive projected dividend yield of 6.7% for FY26.
“We like MCE for its strong competitive moat in engineering and design capabilities, which has enabled the group to move up the value chain, broaden its customer base and expand its product mix,” it said.
