Next-gen vehicles drive MCE

THE government’s decision to end excise-duty exemptions on completely built-up (CBU) electric vehicles (EVs) and the RM4,000 trade-in incentive for old cars under Budget 2026 is expected to stimulate new-car sales, particularly for national marques like Proton and Perodua.

Demand is also expected to pick up as major manufacturers, including Proton and Perodua, roll out new models, driving higher production volumes across the supply chain.

This is good news for MCE Holdings Bhd, which is banking on the country’s “encouraging” automotive industry to continue to expand in terms of products, markets and plants.

The automotive electronics and mechatronics solutions provider currently has a pipeline of new supply contracts with national carmakers and international partners, valued at over RM270mil, commencing progressively from financial year ending July 31, 2026 (FY26) to FY27.

Group managing director Goh Kar Chun says these multi-year agreements, spanning 36 to 72 months, cover both internal combustion engine (ICE) and EV programmes, including the company’s core products such as functional switches, lighting systems, parking sensors, cameras and power windows, as well as new categories such as infotainment systems and other advanced electronics.

“The outlook for Malaysia’s automotive industry remains encouraging, supported by strong total industry volume (TIV) and the policy direction set in Budget 2026,” Goh tells StarBiz 7.

“These developments play directly to our strengths. The automotive industry is becoming increasingly electronics-driven, with rising demand for smart cockpit solutions, infotainment systems, electronic control modules and advanced driver-assistance technologies.

“We have continued investing in our R&D and manufacturing capabilities to deliver more sophisticated automotive electronic systems and move further up the value chain,” Goh says.

MCE made a net profit of RM23.9mil on sales of RM152.6mil in FY25, compared with a net profit of RM15.6mil on sales of RM155.7mil in FY24.

Goh says that while MCE continues to work closely with national automakers, it is also expanding its collaborations with international brands from Japan, China, South Korea and Europe.

“Our margins have remained resilient, supported by our design-to-manufacture approach, where we develop, engineer and produce most components in-house. This gives us better control over cost, quality and development and delivery lead times,” he says.

Goh says the company aims to sustain its margins with potential for improvement as the company scales up higher-value electronic products and leverage efficiencies from its MCE Auto Hub once it becomes operational.

“With more electronics being integrated into vehicles, we hope the overall value of our content per vehicle will also increase.”

Next-gen vehicles

While the transition toward next-generation vehicles and EVs brings fresh opportunities, it also poses new challenges for companies such as MCE.

“First, producing components for these models requires significant investment in R&D to meet higher performance, safety and reliability standards, as well as stringent manufacturing environment requirements. This is why we are establishing the MCE Auto Hub. It will enable us to meet the higher manufacturing standards demanded by EV and next-generation vehicle programmes,” Goh says.

Upskilling the workforce is also critical, as advanced automotive electronics require a higher level of technical and engineering expertise.

He says the company has a team of more than 80 engineers, with over half dedicated to R&D, but the demand for specialised talent continues to grow.

“We need to both attract and nurture these capabilities to stay ahead.”

Goh says scalability is also vital to ensure that the group’s suppliers and partners can deliver the right technology, quality and cost efficiency to support its manufacturing activities and volumes.

“As we scale up the value chain, we aim to attract and retain skilled engineers by providing opportunities to work on cutting-edge, high-impact automotive technologies.

“By doing so, we show that innovation can be designed, developed and produced locally by Malaysian talent which are able to compete globally.”

Goh says EVs and the next-generation vehicle trend, as a whole, represents a fundamental shift in the automotive industry, not just in how vehicles are powered, but also in how they are designed, built and experienced.

“Beyond electrification and clean energy, vehicles today (EVs or ICE) are software-defined, connected and increasingly intelligent, requiring higher levels of electronic content and system integration.”

Nearly one in five new vehicles sold globally is now electric, he says, boosting adoption of power management, infotainment, advanced driver-assistance systems or Adas, smart cockpit systems and many other electronic systems, some of which align with MCE’s growing expertise and expanding portfolio.

“We are constantly exploring partnerships with leading global players to develop and localise advanced automotive electronics and smart systems for automakers in Malaysia and abroad,” Goh says.

As to what shareholders can look forward to from the company, he says the first is the commissioning of the MCE Auto Hub by end-2025, which will strengthen the company’s R&D integration and manufacturing capabilities.

“Financially, our balance sheet remains healthy with a net cash position, and we have a healthy pipeline of supply contracts commencing in FY26 and FY27 that will support sustainable earnings visibility.

“This financial strength allows us to invest in capability building while remaining committed to a disciplined approach in delivering shareholder returns.”

At last look, shares in MCE were at RM1.78 apiece.

In a report on the company, Hong Leong Investment Bank’s research unit says it is maintaining its “buy” call on MCE with a target price of RM2.40, based on 15 times price earnings on mid-FY27 partially diluted earnings per share of 16 sen.

“MCE is entering a pivotal growth phase. Years of investment in engineering and technology have positioned the group to capitalise on structural shifts in Malaysia’s auto industry from rising localisation, greater demand for high-value electronics, and accelerating EV adoption.”

Anchored by resilient demand from Proton and Perodua, and expanding through high-margin electronics, exports and strategic JVs, MCE offers a resilient and scalable proxy to the sector’s long-term transformation, it tells clients.