SHARES of Metal Component Engineering (MCE) surged shortly after the market opened on Thursday. The counter jumped 69.2 per cent or 1.4 Singapore cents to an intraday high of 4.4 cents as at 9.44am. Shares closed at 3.8 Singapore cents, up 1.2 cents or 46.15 per cent on Thursday.

 

According to Shareinvestor data, no married deals were recorded in early trade.

 

MCE announced its full-year results for the financial year ended Dec 31 2020 on Feb 26. The Catalist-listed metal stamping company posted a net loss of S$2 million for the full year, sinking into the red from a net profit of S$202,000 for the same period a year earlier. This resulted in a loss per share of 0.52 cent for FY2020, compared with earnings per share of 0.05 cent a year ago.

 

However, the company generated a positive cash flow for FY2020 from its operating and investing activities, including the receipt of the first tranche of payment from its sale of MCE Industries (Shanghai).

 

It recorded S$4.2 million worth of cash and cash equivalents at the end of the financial year. However, the company had a debt of S$5.8 million in the same period.

 

Its market capitalisation is S$14.2 million.

 

On Jan 28, 2020, the board announced that the company had entered into a conditional sale and purchase agreement for MCE Industries (Shanghai) with Hong Sheng Holding (Singapore) for a sale consideration of 75.5 million yuan (S$14.8 million).

 

The payment would take place in three tranches. MCE announced the receipt of the first tranche of 25 million yuan (S$5 million) on Mar 13, 2020, and the receipt of the second tranche of 37 million yuan on Feb 1, 2021. MCE has yet to announce the receipt of the third tranche of 13.5 million yuan.

 

Originally, the first tranche and second tranche was to be paid 30 days and 60 days after the signing of the agreement respectively. The third tranche was due after the receipt of the equity transfer change registration certificate of MCE Industries within 105 days after signing the agreement.

 

The payment schedule was later delayed due to the unprecedented circumstances due to the Covid-10 outbreak, with the deadline of the first tranche shifted to before March 20, 2020. 

 

The second tranche was delayed as well, and was due 30 days from the lifting of the 14-day quarantine and travel bans to Chinese residents from entering Hong Kong and Singapore due to the pandemic.

 

Subsequently, payment terms were revised again as the buyer, who was based in China was unable to make the second tranche of payment due to affected travel. Upon signing the revised payment agreement, both the second tranche and third tranche were due in full before Sept 30, 2021. Shanghai Shunsheng Construction Group was the guarantor for the buyer.

 

No dividends were declared for the year under review, in view of the company' s current loss-making position as at Dec 31, 2020.