MCE hits new high with Brahmal’s entry, should see more upside

There were already signals of upward trend when MCE Holdings Bhd rose to RM1.71 on May 9.

The counter surged as much as 26% or 44 sen to RM2.15 in the early morning session the next day.

However, it pared some gains to close at RM1.94 on May 10.  Year to date, the counter is up 37.35%.

It was trading at a low of 83 sen in January but amazingly, the counter has jumped 113.2% in the past year.

What propelled the shares of MCE to their highest level in at least two decades was the emergence of Brahmal Vasudevan as its substantial shareholder.

Brahmal is the founder & CEO of Creador, a private equity firm he founded in 2011.

MCE, an automotive parts manufacturer, announced that Brahmal Vasudevan raised his stake to 5.02% by adding another 100,000 shares to his 6.2 million shares

The group's largest shareholder is Dulcet One Holdings Sdn Bhd with a 19.1% stake, followed by Woo Chiew Loong (8.9%), based on MCE’s latest annual report.

MCE should be heading for its third consecutive profitable year, rebounding from four years in the red from the financial year ended July 31, 2018 to FY2021.

Its net profit rose 21.26% to RM9.4 million In 1HFY2024 from RM7.75 million on the back of  4.7% increase in revenue to RM81.33 million from RM77.68 million.

MCE's net profit in 2QFY2024 rose marginally by 6.4% to RM4.52 million from RM4.25 million in the previous year, mainly due to an increase in demand for the group’s products from its customers.

Quarterly revenue rose 2.3% to RM40.05 million from RM39.13 million.

The group has 2 manufacturing of automotive parts facilities in Johor Bahru and Klang.

It is currently planning to diversify into the healthcare sector, but details are not finalised amid the subdued economic environment, the company said in its annual report.

More excitingly, MCE has commenced the construction for its MCE Auto Hub, the company’s new manufacturing facility in Serendah, Selangor, with an initial investment of RM50 million for the first phase of the development.
MCE group managing director Dr Goh Kar Chun said upon completion, the hub will serve as MCE's primary production facility, bolstering its capacity to meet the growing demand for electronic components and systems in both internal combustion engine (ICE) vehicles and electric vehicles (EVs).

He added that MCE is committing a further investment of RM150 million to RM200 million over the next 10 years in the new manufacturing facility.

There is certainly much going for the company to convince savvy investor Brahmal to up his stake, which should subsequently attract more investors to have a piece of MCE.