PETALING JAYA: MCE Holdings Bhd
’s latest US automotive contract win is expected to support higher utilisation at its new Serendah plant and strengthen the company’s foothold in overseas markets, according to Hong Leong Investment Bank (HLIB) Research.
On the production front, the newly secured products will be manufactured at MCE’s new Serendah plant as they require cleanroom facilities and an electrostatic discharge-protected environment, supporting a progressive increase in the plant’s utilisation.
“Higher volumes would help spread fixed manufacturing costs over a larger revenue base, improving operating leverage and supporting margins over time,” said HLIB Research in a note.
Meanwhile, HLIB Research said the US contract win – which follows an earlier award in India last month – adds momentum to MCE’s overseas expansion and demonstrates the company’s competitiveness beyond the domestic market.
According to HLIB Research, MCE’s growing overseas presence reflects its technological and engineering capabilities, as well as its ability to meet the demanding requirements of international automotive customers.
This strengthens MCE’s credentials to pursue further export opportunities and supports its longer-term efforts to diversify beyond the domestic market.
HLIB Research estimated an annualised revenue contribution of RM4.7mil, equivalent to around 2.1% of MCE’s group revenue forecast, for the financial year ending July 31, 2027 (FY27).
Given the functional capabilities of the Display Electronic Control Unit, HLIB Research expects the project to command higher content value per vehicle compared with MCE’s traditional offerings.
Overall, it has maintained a “buy” call on the stock with an unchanged target price of RM2.31.
