The press release highlighted that its wholly owned subsidiary (Multi-Code Electronics Industries (M) Bhd) secured  contracts from Proton worth RM52.13m. 

The contract, spans over 60 months, involves supplying parts of the Front Reading Lamp, Rear Reflector, and Pull Cup Handle Assembly to Proton. This will take off in 1QFY26.

This newly secured contract will help to fill the expanded capacity of Serendah plant, operating in CY25 onwards. 

We are positive on the latest development as it showed case its ability to entrench itself as parts supplier to national car like Proton

To recap, the co has also recently announced the EV part supply contract to Perodua. 

Understand the co is progressing well in establishing business on parts related to  replacement markets. 

Separately, it wil announce full yr FY24 results on 25 Sept. 

With delay in launching of new models by its customers, coupled with continued writedown in its inventories for some models phasing put by its key customers, we expect 4Q to report flattish sequential and softer YoY growth in earnings

If 4Q were to report similar results as 3Q, we estimate full yr net profit to be closer to RM14m versus RM15.393m in FY23 or - 9% YoY. 
This will translate into net EPS of 11.3 sen in FY24. 

Moving forward, we expect the co to register decent earnings growth of 10 to 15% into F25 onwards. 

Personally deem the company as a good proxy on auto sector given its well established relationship in supplying parts to Proton, Perodua and Toyota.

Given its healthy balance sheet, will not discount the co to pay out higher dividend in coming results reporting.

Source: Hong Leong Investment Bank Research - 21 Aug 2024