Metal Component Engineering

Metal Component Engineering (MCE): 2H12 results in line. Net profit at $0.3m, vs net loss of $0.9m yoy, mainly attributable to tax credits received by MCE Singapore in FY12 but mostly off-set by forex losses. The group extended its turnaround from 1H12, post the restructuring and streamlining undertaken in FY11. 2H12 sales was flat at $35.2m, driven by its Precision Components (PC) business as it grew on stronger customer demand. However, the growth was tempered by its HDD business as it faced intense competition from tablets and smartphones last year. Its Mechanical Integration (MI) segment also declined. The group declared a 0.15 cts dividend (first dividend payment in four years) which was slightly lower than estimates but still represents a decent 3.3% yield MCT’s Thailand plant is expected to begin operations in 2HFY13 to support the stamping requirements of one its major shareholders, Cal-Comp Electronics (Thailand). Mgt expects revenue contribution to be marginal ($4-5m) this year and will only contribute meaningfully in FY14. Going forward, Malaysia will continue to be the growth driver for the group. NRA maintains at Overweight, raises TP to $0.058 from $0.051, after rolling over its 0.7x P/NTA valuation from FY12 to FY13. MCE has been amongst the plays of late to emerge in the top volume and 52 wk high lists.