Singapore’s Big Winner for the Week

Metal Component Engineering Limited (SGX: 5DX) has surged by 9.4% since last Friday to close at S$0.07 yesterday. With the Straits Times Index (SGX: ^STI) losing 1.4% in the same time frame, Metal Component Engineering is actually a big winner in Singapore’s share market this week.

According to its website, MCE is a “mechanical manufacturing solutions provider offering services such as design, prototyping, tool and die fabrication, stamping production and value-added assembly”.

On 16 September 2014, a total of 750,000 new ordinary shares were allotted and issued under the firm’s share option scheme. This brought the total number of ordinary shares in the company to 366.162 million.

Two days later, on 18 September 2014, the company announced that it had signed a non-binding Memorandum of Understanding (MOU) with Hangzhou Honghua Digital Technology Stock Co. Ltd. (also known as Atexco) to join forces to develop and manufacture a new model of digital textile printers.

Atexco is one of the leading manufacturers of digital textile printing equipment in China. The company designs and manufactures the VEGA range of digital textile printers and also works on carpet printers and graphic printers.

MCE and Atexco will be co-developing and manufacturing the new printer model which would be known as the64” series and 74” series. The scope of collaboration comprises of metal parts fabrication, supply chain management, modules and assembly testing, and the full assembly of the finished product. Mr. Chua Kheng Choon, Chairman and Chief Executive Officer of MCE, commented on the signing of the MOU:

“We are pleased to be working closely with Atexco on this turnkey project. This collaboration elevates MCE from a traditional precision engineering firm to a company capable of co-developing products and the assembly of highly complex electro-mechanical products. Digital textile printing is on the rise and this MOU demonstrates our ability to innovate, enhance our value added services, grow into manufacturing of new equipment, and keep pace with industry trends. Atexco will become our highly valuable partner. Barring any unforeseen circumstances, the growth potential of digital textile printers will positively impact MCE’s performance over the next few years. We are committed to putting our best foot forward for this project and have confidence that this MOU will pave the way for more collaborations between our two companies.”

The mechanical manufacturing solutions provider is trading at 76 times its 2013 earnings.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.