Hong Leong Investment Bank Bhd (HLIB) Research maintained its BUY call on MCE Holdings Bhd with an unchanged target price of RM2.38, implying a potential total return of 66.4%, after the automotive electronics manufacturer announced the acquisition of a freehold industrial property in Pontian, Johor for RM9.99 million to expand its non-automotive business segment.
The acquisition will be undertaken by Eagle MCE, MCE’s 51%-owned joint venture with Hong Kong-based Sounding Industries. The property, located in Taman Perindustrian Pekan Nenas, will comprise a single-storey detached factory and office, with completion expected by the second quarter of FY2028.
HLIB said the move reflects a productive deployment of MCE’s sizeable net cash position of RM74.4 million into a growing business that could become earnings accretive over time. The research house noted that Eagle MCE has experienced encouraging demand since commencing operations in the first quarter of FY2026, resulting in space constraints at its current leased facility within MCE’s Johor automotive plant.
According to the research house, the expansion is closely linked to the ongoing China+1 supply chain diversification trend. Sounding Industries’ customers are increasingly seeking manufacturing alternatives outside China, positioning Eagle MCE as a beneficiary of shifting production strategies.
The latest acquisition follows Eagle MCE’s purchase of an 80% stake in a plastic injection moulding company for RM4.7 million announced in April, a move aimed at strengthening supply chain control and production capabilities.
HLIB believes the investments demonstrate MCE’s commitment to building a meaningful non-automotive revenue stream while leveraging its engineering expertise and strong balance sheet. The stock also offers a projected FY2026 dividend yield of 6.7%, supported by its healthy cash position and earnings outlook.
As of 9.58 am, the stock price dips 3.36% to RM1.44.
