KUALA LUMPUR, Dec 20, 2025 — MCE Holdings Bhd (Bursa Malaysia: MCEHLDG) is back on investors’ radar this weekend after a softer start to FY2026 collided with a more upbeat analyst narrative: Hong Leong Investment Bank (HLIB) is keeping its BUY call and RM2.38 target price, arguing that new revenue streams and fresh model launches should lift sequential performance — even as market attention turns to whether Perodua’s battery leasing model slows early demand for its first homegrown EV. [1]
The mixed backdrop is clear in the latest numbers: MCE’s first-quarter performance was dragged by temporary production disruptions at a major customer and higher staff and administrative costs tied to readiness work for a new manufacturing facility. Yet both the company and analysts are positioning FY2026 as an “inflection year,” with catalysts ranging from exports to the US aftermarket to new programs linked to Proton and Perodua launches. [2]
What happened: MCE’s 1QFY2026 profit dipped as transition costs rose
MCE reported that net profit for 1QFY2026 fell 13.62% year-on-year to RM4.19 million, while revenue slipped 4.59% to RM39.52 million (three months ended Oct 31, 2025). The company attributed the softer top line largely to reduced orders tied to a major customer’s plant relocation and the end of production for a legacy vehicle model, while costs were pressured by recruitment and preparatory activities ahead of its MCE Auto Hub in Serendah. [3]
No dividend was recommended for the quarter, and management emphasised margin resilience and operational discipline despite the transition. In the same update, the group highlighted that new export initiatives are coming on stream and that the Auto Hub — built to support advanced automotive electronics production — is intended to underpin longer-term growth beyond FY2026. [4]
Market pricing around the update reflected the push-and-pull: MCEHLDG last traded around RM1.54 (updated Dec 19, 2025), after opening at RM1.56 and touching a low of RM1.50 in the session, according to The Star’s market watch data. [5]
Why analysts still see a stronger quarter ahead: “new revenue streams” begin to kick in
HLIB’s thesis — echoed across multiple reports published around the results — is that the first quarter represents a temporary dip, not a new baseline. Business Today reported that HLIB maintained its BUY call with a RM2.38 target price, projecting a total return of 58.4%, which includes an estimated dividend yield of 5.8%. [6]
Crucially, HLIB described MCE’s 1QFY26 core PATAMI as RM3.9 million, framing it as “within expectations,” and said sequentially stronger quarters are anticipated as ramp-ups take hold — particularly from a new US customer (Dorman) and contributions from the non-auto segment. [7]
The bank did trim near-term forecasts — a modest -1.7% for FY26 and -0.3% for FY27 — but still pointed to a FY28 core profit forecast of RM30.9 million (+14.6% YoY, as cited by Business Today). [8]
Another support point: HLIB highlighted MCE’s balance sheet strength, reporting net cash of RM79.1 million (about 52.6 sen per share) as a source of flexibility for growth investments. [9]
The near-term cloud: battery leasing and Perodua EV adoption risk
The most debated variable right now isn’t MCE’s product capability — it’s consumer behaviour.
HLIB flagged that MCE’s share price had retraced from a recent high (cited as RM1.91 on Oct 21) to around RM1.56, amid market concerns about take-up of Perodua’s new EV model after Perodua adopted a battery leasing structure — still relatively new for Malaysian buyers. [10]
Analysts noted the logic of battery leasing: it is intended to lower the vehicle’s upfront purchase price and protect resale value by separating battery degradation risk from vehicle ownership. But, because the structure is unfamiliar locally, they also warned of possible initial buyer hesitation while Perodua educates consumers on how it works and what it costs. [11]
Perodua itself has been explicit about the intent behind the model. In announcing the QV-E, the automaker said it is introducing battery leasing as “Battery as a Service,” where the vehicle body is sold separately from the battery, and described it as an approach to reduce ownership anxiety — including the promise of a lifetime guarantee on the battery for customers’ peace of mind. [12]
Independent reporting has also surfaced granular details that help explain why the concept is attracting attention. SoyaCincau reported that the Perodua QV-E is priced at RM80,000 and that buyers must sign up for a battery leasing plan; the publication described a monthly fee structure (including a 9-year duration and tax considerations), battery replacement conditions tied to State of Health thresholds, and resale constraints via Perodua’s own pre-owned platform. [13]
HLIB’s central expectation, however, is that acceptance improves gradually as early adopters validate the model — and that MCE’s inclusion in Perodua’s EV platform remains strategically significant regardless of early-market friction. [14]
The growth setup: new vehicle launches should translate into higher order flows
Where the story becomes more constructive for MCE is in the calendar of launches that could convert into higher parts demand.
Business Today reported that MCE expects a sequential lift in 2QFY2026 driven by new programs, including supply tied to:
- the A-segment Proton Saga AMA01 (launched in November),
- Perodua’s QV-E EV (launched in December), and
- the B-segment Perodua D66B (also launched in December). [15]
Perodua’s December launch cadence has been unusually busy. Paul Tan’s Automotive News reported that the QV-E launched on Dec 1, and that the Perodua Traz — described in the same report as “D66B” — followed later in the month, with on-the-road pricing for its variants cited in the report. [16]
On the Proton side, the carmaker announced on Nov 10, 2025 that bookings for the All-New Saga were officially open, signalling the commercial ramp leading into its rollout. [17]
The implication for MCE is straightforward: if model refreshes and new launches see strong showroom traction, suppliers across key electronics and mechatronics categories tend to see better order flow — especially once production stabilises following customer plant moves and legacy program sunsets. [18]
Strategic shift: from traditional auto parts to higher-value auto electronics, ADAS and “smart cockpit”
MCE’s longer-term valuation argument is increasingly tied to moving up the value chain — from conventional components into higher-margin electronics and systems that will be standard in next-generation vehicles.
A central element is the MCE Auto Hub in Serendah, which the company and The Edge described as scheduled for commissioning in 2HFY2026 and positioned to support production of more technologically advanced products to stringent manufacturing standards. [19]
Alongside the facility, Business Today reported that MCE is advancing into next-generation automotive technologies through:
- a joint venture formalised with Nanjing Chuhang Technology to develop millimetre-wave (mmWave) radar for ADAS applications,
- an MoU with ADAYO for smart cockpit and smart driving solutions, and
- collaboration with MIDA to integrate locally designed semiconductor ICs. [20]
HLIB’s broader framing is that MCE is positioned to benefit from structural tailwinds, including the “localisation” trend and the China+1 supply-chain shift, which can favour established regional manufacturing partners with proven engineering and design capabilities. [21]
US exports and “new revenue streams”: why the market is watching the aftermarket angle
One of the most quietly important lines in the latest corporate updates is MCE’s move beyond Malaysia’s domestic OEM cycle.
The Edge reported that exports of automotive parts to the United States have recently commenced, marking entry into a higher-potential international aftermarket segment — a development that can diversify revenue away from any single model cycle or domestic OEM production schedule. [22]
Business Today further linked the near-term earnings bridge to early contributions from a new US customer (Dorman), framing it as part of the “new revenue streams” expected to support stronger sequential quarters. [23]
What investors will watch next
With Dec 20’s news flow, the narrative around MCE now hinges on execution and adoption:
1) Evidence that the Q1 softness is truly temporary
Investors will look for sequential improvement as customer production cycles normalise and new programs scale. [24]
2) Real-world response to Perodua’s battery leasing
If consumer education and early adopter feedback reduce friction, EV-related parts volumes should become more dependable — which matters because MCE’s Perodua EV inclusion is being positioned as a milestone for future EV-related wins. [25]
3) Auto Hub commissioning progress
With the Auto Hub scheduled for 2HFY2026 commissioning, updates on readiness, ramp planning, and program migration could become key catalysts. [26]
4) Sustained traction in US exports and non-auto contributions
Markets will want confirmation that the US aftermarket entry and non-auto segment contributions are durable, scalable lines — not one-off boosts. [27]
Bottom line
As of Dec 20, 2025, MCE Holdings is being priced by the market as a company in transition — facing near-term uncertainty from customer production shifts and a consumer-facing experiment in EV battery leasing — but with analysts arguing that its next leg of growth is already forming through new launches, US exports, and a step-up into higher-value vehicle electronics. [28]
If the coming quarters show that new programs (Proton and Perodua), the US aftermarket push, and the Serendah Auto Hub investments translate into visible earnings momentum, Dec 20’s “stronger quarter expected” call may become less a forecast — and more a turning point in how investors value Malaysia’s auto-electronics supply chain winners. [29]
References
1. www.businesstoday.com.my, 2. theedgemalaysia.com, 3. theedgemalaysia.com, 4. theedgemalaysia.com, 5. www.thestar.com.my, 6. www.businesstoday.com.my, 7. www.businesstoday.com.my, 8. www.businesstoday.com.my, 9. www.businesstoday.com.my, 10. www.klsescreener.com, 11. www.klsescreener.com, 12. www.perodua.com.my, 13. soyacincau.com, 14. www.klsescreener.com, 15. www.businesstoday.com.my, 16. paultan.org, 17. www.proton.com, 18. www.businesstoday.com.my, 19. theedgemalaysia.com, 20. www.businesstoday.com.my, 21. www.klsescreener.com, 22. theedgemalaysia.com, 23. www.businesstoday.com.my, 24. theedgemalaysia.com, 25. www.klsescreener.com, 26. theedgemalaysia.com, 27. theedgemalaysia.com, 28. theedgemalaysia.com, 29. www.businesstoday.com.my
