Investment Rating - The report assigns a "Buy" rating for the company, with a target price of HKD 39.09, indicating a potential upside of 26.10% from the current price of HKD 31.00 [1]. Core Insights - The company reported a positive performance in the first half of 2024, achieving revenue of RMB 11.25 billion, a year-on-year increase of 22.0%, and a net profit of RMB 5.4 billion, with a gross margin of 21.5% [1]. - The recovery in the smartphone market, along with the strong product mix in acoustics, optics, and precision structural components, is expected to drive growth in the second half of 2024 [1]. - The optical business is projected to turn profitable by the end of 2024, with revenue reaching RMB 2.21 billion, a year-on-year increase of 24.9% [1]. - The acoustic business continues to expand, with revenue of RMB 3.46 billion, a growth of 4.1% year-on-year, benefiting from high-end product upgrades [1]. Financial Summary - The company achieved total revenue of RMB 20.63 billion in 2022, with a projected increase to RMB 26.03 billion in 2024 and RMB 29.24 billion in 2025 [2]. - Gross profit for 2022 was RMB 3.78 billion, with a gross margin of 18.3%, expected to improve to 22.5% by 2024 [2]. - Net profit for 2022 was RMB 821.3 million, with projections of RMB 1.68 billion in 2024 and RMB 2.13 billion in 2025 [2]. - The company’s total assets were RMB 40.33 billion in 2022, projected to grow to RMB 48.52 billion by 2026 [2].

Financial Performance - Revenue for the first half of 2024 increased by 22.0% year-on-year to RMB 11,246,971 thousand[7] - Net profit attributable to owners of the company surged by 257.3% to RMB 537,028 thousand in the first half of 2024[7] - EBITDA grew by 29.0% to RMB 2,397,859 thousand compared to the same period in 2023[7] - Gross margin improved by 7.4 percentage points to 21.5% in the first half of 2024[7] - Total revenue for the first half of 2024 reached RMB 11.25 billion, a year-on-year increase of 22.0%, with a gross margin of 21.5%, up 7.4 percentage points[8] - Net profit for the first half of 2024 was RMB 537 million, a significant year-on-year increase of 257.3%[8] - Gross profit surged 86.4% YoY to RMB 2.42 billion in H1 2024, with gross margin improving from 14.1% to 21.5%[20] - Net profit attributable to shareholders rose over 2.5x YoY to RMB 537 million in H1 2024[25] - EBITDA increased by 17.1% YoY to RMB 4.722 billion for the 12 months ending June 30, 2024[26] - Operating cash flow improved to RMB 2.651 billion in H1 2024, up from RMB 2.054 billion in H1 2023[27] - Revenue for the first half of 2024 reached RMB 11,246.971 million, a 22% increase compared to RMB 9,218.944 million in the same period of 2023[118] - Gross profit for the first half of 2024 was RMB 2,417.751 million, up 86% from RMB 1,297.038 million in the first half of 2023[118] - Net profit attributable to the company's owners for the first half of 2024 was RMB 537.028 million, a 257% increase from RMB 150.304 million in the same period of 2023[118] - Basic earnings per share for the first half of 2024 were RMB 0.46, compared to RMB 0.13 in the first half of 2023[118] - The company's comprehensive income for the first half of 2024 was RMB 490.860 million, compared to RMB 123.919 million in the same period of 2023[119] - Total comprehensive income for the first half of 2024 was RMB 513,552 thousand, a significant improvement from RMB 123,919 thousand in the same period of 2023[122] - Reported profit attributable to the company's owners for the first half of 2024 was RMB 537,028 thousand, up from RMB 150,304 thousand in 2023[199] - Adjusted recurring basic earnings per share for the first half of 2024 were RMB 0.45, up from RMB 0.13 in 2023[199] Business Segments Performance - Acoustic business revenue for the first half of 2024 was RMB 3.46 billion, a year-on-year increase of 4.1%, with a gross margin of 29.9%, up 4.4 percentage points[9] - SLS master-level speaker shipments exceeded 12 million units, a year-on-year increase of nearly 200%[9] - PSS-related business contributed revenue of RMB 1.52 billion with a gross margin of 25.0%[10] - Optical business revenue for the first half of 2024 was RMB 2.21 billion, a year-on-year increase of 24.9%, with a gross margin improvement to 4.7%, up 21.7 percentage points[11] - 1G6P glass-plastic hybrid lens shipments reached approximately 1.4 million units, a year-on-year increase of nearly 40%[11] - Electromagnetic transmission and precision components business revenue for the first half of 2024 was RMB 3.66 billion, a year-on-year increase of 1.1%, with a gross margin of 22.9%, up 3.6 percentage points[12] - Hinge product shipments reached nearly 500,000 units in the first half of 2024[14] - Heat dissipation product revenue increased by nearly 100% year-on-year to RMB 150 million in the first half of 2024[14] - Sensor and semiconductor business revenue decreased by 21.2% YoY to RMB 389 million in H1 2024, with gross margin improving by 5.1 percentage points to 16.4% due to higher-margin product mix[15] - The company shipped over 7 billion MEMS microphones globally, with high-value Android product shipments increasing by 15 percentage points to over 60% in H1 2024[15] - Revenue from the PSS - Automotive and Consumer Acoustic Products segment was RMB 1,522,050,000 for the six months ended June 30, 2024, compared to RMB 10,617,000 for the same period in 2023[131] - Revenue from the Greater China region (including Mainland China, Hong Kong, and Taiwan) was RMB 6,133,618,000 for the six months ended June 30, 2024, compared to RMB 4,509,060,000 for the same period in 2023[133] - Revenue from the Americas region was RMB 3,786,478,000 for the six months ended June 30, 2024, compared to RMB 4,139,844,000 for the same period in 2023[133] - Revenue from other Asian countries was RMB 729,847,000 for the six months ended June 30, 2024, compared to RMB 553,975,000 for the same period in 2023[133] - Revenue from Europe was RMB 572,152,000 for the six months ended June 30, 2024, compared to RMB 16,065,000 for the same period in 2023[133] R&D and Innovation - R&D expenses as a percentage of revenue increased by 1.1 percentage points to 8.4%[7] - R&D expenses increased by 40.6% YoY to RMB 949 million in H1 2024, driven by new project investments and PSS-related R&D[23] - R&D costs for the first half of 2024 were RMB 949.398 million, a 41% increase from RMB 675.179 million in the same period of 2023[118] - The company has allocated a significant portion of its annual budget to R&D investments to build a sustainable technology roadmap and intellectual property portfolio, prioritizing data security[43] - The company is committed to developing patented innovative technologies and integrating global R&D with its diversified manufacturing base to provide optimal solutions and reduce adverse business impacts from trade friction[48] Capital Expenditures and Investments - Capital expenditures rose by 48.8% to RMB 916,891 thousand in the first half of 2024[7] - Free cash flow reached RMB 1,930,813 thousand in the first half of 2024[7] - Net cash used in investing activities for the first half of 2024 was RMB 2,444.0 million, a significant increase from RMB 504.2 million in the same period of 2023, primarily due to the acquisition of subsidiaries (RMB 1,472.8 million) and capital expenditures (RMB 936.9 million)[31] - Capital expenditures in the first half of 2024 totaled RMB 916.8 million, up from RMB 616.1 million in the same period of 2023, focusing on sustainable capital expenditure plans to capture new market opportunities and support long-term business strategies[32] - Net cash inflow from financing activities in the first half of 2024 was RMB 729.8 million, driven by bank loan proceeds of RMB 2,260.1 million, partially offset by repayments of bank loans (RMB 1,126.7 million) and interest payments (RMB 179.8 million)[33] - The company made additional investments of USD 694,000 (approximately RMB 4,934,000) and GBP 355,000 (approximately RMB 3,234,000) into private equity funds during the six months ended June 30, 2024[153] - The company repurchased 60,176,387 and 35,102,892 shares of optical shares, representing approximately 0.8890% and 0.5186% of the total optical shares, for RMB 149 million and RMB 87 million respectively[96] - The company repurchased approximately 1.408% of Chenrui Optics shares for a total consideration of RMB 235,700,000[198] Sustainability and ESG Initiatives - The company has been a member of the FTSE4Good Index since 2020 and maintains an A rating in the MSCI ESG Ratings[113] - The company has been rated as "low ESG risk" by Sustainalytics since 2020[113] - The company has been purchasing green power certificates in China to support its commitment to sustainable energy[112] - The company's annual solar power generation capacity exceeded 18 million kWh as of June 30, 2024[112] - The company has formed a Sustainability Committee and implemented a comprehensive climate change policy, integrating climate-related issues into its sustainability management system, including ISO environmental and energy management standards[45] - Established a dedicated Sustainability Committee in 2024 to drive ESG initiatives[106] - Conducted a comprehensive climate risk assessment with third-party ESG consultants in 2024[106] - The Board of Directors will evaluate the company's sustainability standards, priorities, and goals, and refine the company's strategies, policies, and practices in environmental, social, and governance (ESG) aspects[59] - The Board of Directors will consider and approve the company's annual sustainability report[59] - The Sustainability Committee was established in May 2024 to oversee environmental, social, and governance (ESG) initiatives, climate risks, and opportunities, ensuring sustainable operations[71] - The Sustainability Committee evaluates emerging sustainability issues, assesses stakeholder impacts, and manages climate and environmental risks[71] Corporate Governance and Board Activities - The company's Board of Directors is responsible for overseeing the overall operations, including business performance, risk management, and internal control system effectiveness[52] - The Board of Directors approves major investments and financing activities on a quarterly basis, evaluating management implementation progress and supervising business operations to align with plans and budgets[57] - The Board of Directors approves the company's annual budget, interim and annual financial statements, and recommends the reappointment of external auditors[58] - The company's corporate governance framework includes high standards of disclosure and excellent corporate governance, with a focus on continuous adaptation and improvement[50] - The company's core values include customer experience, talent excellence, innovation, agility, and professionalism, integrated into various measures and tools such as employee engagement and retention[52] - The company's Board of Directors is composed of independent non-executive directors and executive directors, with no changes in the composition during the first half of 2024[53][55] - The company's Board of Directors reviews and approves annual operating and capital budgets, and approves additional items/amounts beyond the approved budget when necessary[52] - The company's Board of Directors ensures that the corporate culture is deeply embedded in operational management, workplace policies, and stakeholder relationships[52] - The company's Board of Directors is committed to high standards of corporate governance, including transparency, accountability, and independence[50] - The company's Board of Directors evaluates the effectiveness of the Board and its committees annually, ensuring sufficient resources are provided for their duties[58] - The Audit and Risk Committee reviewed the unaudited condensed consolidated financial statements for the first half of 2024 and agreed with the accounting treatments adopted in preparing the condensed consolidated financial statements[64] - The company has adopted a Board Diversity Policy, aiming for gender parity in both the Board and senior management leadership[65] - The Board consists of one female director and five male directors, with the senior management team including one female and two males[66] - The company has adopted a formal, transparent nomination policy to identify and nominate director candidates, ensuring their qualifications align with the company's business needs[69] - The Nomination Committee reviews the composition, structure, and diversity of the Board, ensuring transparent procedures for director appointments and re-appointments[68] - The Remuneration Committee is responsible for recommending overall compensation policies and structures for executive directors and senior management[70] Employee and Talent Management - The company's total number of full-time employees increased by 23.1% to 36,833 as of June 30, 2024, compared to 29,922 on December 31, 2023, with 60% of the increase attributed to the acquisition of PSS[72] - The company's human capital efficiency continues to improve through advanced production methods and automation processes[72] - The company's 2016 Share Award Plan, effective for 10 years from March 23, 2016, aims to incentivize selected employees and attract talent for further development[73] - The company participates in mandatory pension and social insurance programs for employees in multiple countries, including new regions due to the PSS acquisition[72] - The company's employee compensation is determined based on individual performance, professional qualifications, industry experience, and market trends[72] - The maximum number of shares that can be awarded under the 2016 Share Award Scheme is limited to 1.65% of the company's issued share capital, which amounts to 19,775,250 shares as of August 22, 2024[74] - No new shares were issued to the 2016 Scheme Trustee for the 2016 Share Award Scheme from the adoption date until June 30, 2024[74] - A total of 10,230,593 shares were awarded to 340 employees under the 2016 Share Award Scheme, with 2,722,799 shares and 2,627,518 shares vested on March 24, 2023, and March 24, 2024, respectively[74] - As of June 30, 2024, the 2016 Scheme Trustee held a total of 14,752,257 unvested shares, with 11,698,367 shares remaining available for further awards under the 2016 Share Award Scheme[75] - The performance targets for the 2016 Share Award Scheme include organizational-level financial performance indicators and individual-level performance assessments[78] - The company has set a minimum annual revenue target of RMB 30 billion and a pre-tax profit margin requirement for the 2016 Share Award Scheme, although these conditions have been waived by the board[78] - The fair value of shares awarded under the 2016 Share Award Scheme is determined based on the market value (closing price) of the shares on the grant date[78] - The 2023 Share Award Plan allows for a maximum of 45,000,000 shares to be awarded, representing approximately 3.75% of the company's issued share capital as of August 22, 2024[79] - The 2023 Share Award Plan permits a maximum of 0.5% of the company's issued share capital (5,992,500 shares as of August 22, 2024) to be awarded to any single selected employee[79] - As of June 30, 2024, the 2023 Plan Trustee held a total of 11,819,000 shares for the 2023 Share Award Plan[80] - No shares have been awarded to selected employees under the 2023 Share Award Plan since its adoption until June 30, 2024[80] - The company's subsidiary, Chenrui Optics, has a subsidiary equity incentive plan aimed at attracting top talent and rewarding contributions to business development[82] - The subsidiary equity incentive plan granted eligible employees the right to subscribe to approximately 2.0% of the enlarged share capital of Chenrui Optics, totaling 135,377,918 shares at a price of RMB 1 per share, amounting to RMB 135,377,918[171] - As of June 30, 2024, the company repurchased 21,984,364 restricted shares from eligible participants at RMB 1 per share, with no shares granted during the period[171] - The company repurchased 1,866,630 vested shares for RMB 1,867,000, recorded as other payables as of June 30, 2024[171] - The fair value of restricted shares not yet exercised as of June 30, 2024, was RMB 40,520,000, based on transaction prices[173] - The company allocated RMB 27,215,000 for share-based payment expenses related to the subsidiary equity incentive plan for the six months ended June 30, 2024[174] Acquisitions and Strategic Moves - The company aims to diversify into smart cars, AR/VR, industrial, and semiconductor sectors[5] - The company is diversifying its revenue streams by expanding into the automotive market, including a major acquisition, to reduce reliance on the smartphone market[39] - PSS acquisition constitutes a major transaction under Chapter 14 of the Hong Kong Listing Rules, with the first batch completed on February 9, 2024, making the target company an 80% indirect subsidiary of the company[94] - The second batch of the PSS acquisition is expected to be completed by mid-2025, or mid-2026/mid-2027 if extended[94] - The PSS acquisition is a strategic move to accelerate the company's diversification in the automotive industry and enhance its audio solutions portfolio[94] - The company completed the first batch acquisition of 80% of the issued shares of PSS Group, a company specializing in automotive acoustic components and sound systems, on February 9, 2024, as part of a strategic move to diversify and enhance its acoustic solutions portfolio[125] - The acquisition of PSS Group positively impacted the company's revenue and profitability during the interim period[125] - The company completed the first tranche of the acquisition of PSS Group on February 9, 2024, with a cash consideration of RMB 1,924,223,000[176] - The total consideration for the first tranche of the PSS Group acquisition, including deferred consideration, was RMB 3,445,370,000[177] - The first batch of the transaction was priced at $320 million (equivalent to RMB 2.273 billion), with an interest of $18.641 million (equivalent to RMB 132.424 million) calculated at an annual rate of 6.75% from April 1, 2023, to February 9, 2024, and a price adjustment loss of $27.773 million (equivalent to RMB 197.297 million)[178] - The second batch of the transaction could be

Investment Rating - The report upgrades the investment rating of AAC Technologies from NEUTRAL to BUY with a target price of HK$ 37.24, representing an upside of 19.2% from the current price of HK$ 31.25 [1]. Core Insights - AAC Technologies reported a net profit of RMB 537 million for 1H24, a significant increase of 257% year-on-year, driven by a recovery in gross margin across all segments [1][2]. - The company achieved a blended gross margin of 20% for the first time since 1H21, with expectations of continued growth in automotive-related business and optics segments [1][2]. - Management expressed a more optimistic outlook for business segments compared to FY23, indicating a clearer vision for mid-term growth [1][2]. Revenue Breakdown - **Acoustics Segment**: Contributed approximately 31% of 1H24 revenue, with sales rising 4.1% year-on-year to RMB 3,466 million and gross margin increasing to 29.9% [1][2]. - **Haptics and Precision Mechanics**: Accounted for around 33% of 1H24 revenue, with a revenue growth of 1.1% year-on-year to RMB 3,660 million and gross margin rising to 22.9% [2]. - **Optics Segment**: Represented about 20% of 1H24 revenue, with a 25% year-on-year increase in revenue to RMB 2,210 million and a gross margin improvement to 4.7% [4][5]. Future Projections - The report anticipates a compound annual growth rate (CAGR) of 10.5% for sales and 17.0% for net profit from FY24E to FY26E, supported by higher sales forecasts and improved gross margins [5][6]. - Management expects optics segment revenue to grow by 20% and shipment by 40% in FY24E, indicating a positive trend in product demand and pricing [5][6]. Strategic Positioning - AAC Technologies is positioned to benefit from the automotive acoustics market through its acquisition of PSS, which has a market share of 15-20% in the global automotive speaker market [1][2]. - The company is leveraging its expertise in acoustic solutions to meet the growing demand for intelligent cockpit systems in vehicles, indicating a strategic expansion into new market niches [1][2].

Investment Rating - The report upgrades the investment rating to "Buy" [1] Core Views - The company's performance in the first half of 2024 exceeded market expectations, with significant improvements in gross margin and net profit [1] - The optical business has turned profitable, driven by product structure optimization and upgrades in optical specifications [1] - The company anticipates a continued increase in acoustic gross margin, aiming for 35% by the end of the year [1] Summary by Sections Financial Performance - For the first half of 2024, the company reported revenue of 11.247 billion RMB, exceeding market expectations by approximately 9.4% and showing a year-on-year increase of 257.3% [1] - Net profit for the same period was 5.37 billion RMB, with a gross margin of 21.5%, up 7.4 percentage points year-on-year [1] - The acoustic business revenue reached 3.460 billion RMB, reflecting a year-on-year increase of 34.6% [1] Business Segments - The acoustic segment is experiencing steady growth, with a significant increase in shipments of high-end acoustic products, driven by a recovery in the smartphone market and improved operational efficiency [1] - The optical segment's revenue was 2.21 billion RMB, up 24.9% year-on-year, with a gross margin of 4.7%, an increase of 21.7 percentage points [1] - The precision structural components and electromagnetic drive segments also showed growth, with revenue of 3.658 billion RMB, a year-on-year increase of 1.1% and a gross margin of 22.9% [1] Future Outlook - The company has raised its net profit forecasts for 2024 and 2025 by 16% and 41% respectively, now projecting net profits of 15.25 billion RMB and 22.02 billion RMB [1] - The report introduces a new net profit forecast for 2026 at 25.08 billion RMB, indicating a strong growth trajectory across all business segments [1]

23 Aug 2024 CMB 国际全球市场 | 股票研究 | 公司更新 AAC Tech （ 2018 香港 ）骑上新的升级周期 ； 升级购买 (上一个 TP HK$37.80 HK$22.44) 21.0% 我们将 AAC 升级为基于 SOTP 的 TP 为 37.8 港元 （ 25 财年市盈率为 19.6 倍 ） ， 因为我们相信声学 / 光学 / 触觉和即将到来的 AI 的规范升级 智能手机周期将推动收益增长至 FY25 / 26E 。 AAC 的 1H24 营收 / 净利润同比增长 22% / 257% 超市场预期 ， 。 得益于强劲的利润率恢复 (同比 + 7.4 个百分点 / + 2.3 个百分点) ， 更好 声学 / 光学 / PM 和 PSS 整合的产品组合。对于 FY24E ， 管理层。 在 GPM HoH 扩张的推动下 ， 销售额同比增长 15% （ 不包括 PSS ） 通过 ： 1 ） 光学 ： 更好的 HSL / HCM ASP / 出货量 ， 并将 GPM 提高到 4Q24E ， 2 ） 声学 ： SLS / Combo 产品渗透 ， 3 ） 触觉 / 外壳 / 铰链 ： 高 最终 ...

Investment Rating - The report upgrades AAC Tech to a BUY rating with a target price of HK$37.8, based on a sum-of-the-parts (SOTP) valuation reflecting a 19.6x FY25E P/E multiple [2][10]. Core Insights - AAC Tech is expected to benefit from a new upgrade cycle in acoustics, optics, and haptics, alongside an upcoming AI smartphone cycle, which will drive earnings growth into FY25/26E. The company reported a 22% revenue growth and a 257% net profit growth year-over-year in 1H24, surpassing market expectations [2][5]. - Management has reiterated a 15% year-over-year sales growth target for FY24E (excluding PSS), with gross profit margin (GPM) expansion anticipated due to several factors including better average selling prices (ASP) and product mix improvements [2][6]. Financial Performance - In 1H24, AAC Tech achieved revenue of RMB 11,247 million, a 22% increase year-over-year, and gross profit of RMB 2,418 million, reflecting an 86% increase year-over-year. The adjusted net profit reached RMB 537 million, up 257% year-over-year [5][8]. - The gross margin improved to 21.5% in 1H24, up 7.4 percentage points year-over-year, with management optimistic about further GPM expansion in the second half of 2024 [5][9]. Earnings Outlook - For FY24E, AAC Tech's management expects revenue to reach RMB 26,791 million, representing a 31.2% year-over-year growth, with net profit projected at RMB 1,665 million, a 124.9% increase year-over-year [6][15]. - The report anticipates earnings growth of 125% in FY24E and 24% in FY25E, with EPS estimates revised upward by 23-31% to reflect strong performance in 1H24 and expected margin recovery [2][7]. Valuation Metrics - The new target price of HK$37.8 implies a 19.6x FY25E P/E, with the stock currently trading at 20.2x FY24E and 16.3x FY25E P/E, which is considered attractive [2][10]. - The SOTP valuation assigns different P/E multiples to various business segments, including 20x for acoustics and optics, and 18x for PSS, aligning with industry peers [10][11].

Financial Performance - The company's total revenue for the first half of 2024 reached RMB 11.247 billion, representing a year-on-year increase of 22.0%[4] - Gross profit for the same period was RMB 2.418 billion, with a gross margin of 21.5%, up 7.4 percentage points from the previous year[4] - Net profit surged to RMB 537 million, reflecting a significant year-on-year growth of 257.3%[4] - Operating cash inflow was RMB 2.65 billion, an increase of 29.1% compared to the previous year[7] - In the first half of 2024, the company's revenue increased by RMB 2.03 billion to RMB 11.25 billion, driven by an increase of RMB 1.51 billion from PSS-related businesses and a revenue growth of RMB 517 million from existing businesses[20] - The gross profit for the first half of 2024 was RMB 2.42 billion, an increase of 86.4% compared to RMB 1.30 billion in the first half of 2023, primarily due to additional gross profit contributions from PSS-related businesses of RMB 384 million[21] - The gross margin improved from 14.1% in the first half of 2023 to 21.5% in the first half of 2024, with all business segments showing improved profit margins[21] - The company reported a pre-tax profit of RMB 627,926 thousand for the six months ended June 30, 2024, compared to RMB 174,832 thousand in 2023, marking an increase of 259.5%[60] - The net profit attributable to the company's owners for the first half of 2024 was RMB 537 million, more than 2.5 times higher than RMB 150 million in the first half of 2023[28] Business Segments - The acoustic business generated revenue of RMB 3.46 billion, a year-on-year growth of 4.1%, with a gross margin of 29.9%[8] - The optical business achieved revenue of RMB 2.21 billion, up 24.9% year-on-year, with a gross margin improvement to 4.7%[12] - The PSS-related business contributed RMB 1.52 billion in revenue, with a gross margin of 25.0%[11] - The electromagnetic transmission and precision components segment reported revenue of RMB 3.66 billion, a year-on-year increase of 1.1%[13] - The sensor and semiconductor business reported revenue of RMB 389 million in the first half of 2024, a decline of 21.2% year-on-year, mainly due to project delays[17] - Revenue from thermal products nearly doubled year-on-year to RMB 150 million in the first half of 2024[16] - Revenue for the Greater China region increased to RMB 6,133,618,000 for the six months ended June 30, 2024, compared to RMB 4,509,060,000 for the same period in 2023, representing a growth of approximately 36%[80] Cash Flow and Investments - The net cash inflow from operating activities was RMB 2.65 billion in the first half of 2024, compared to RMB 2.05 billion in the same period of 2023[31] - Net cash used in investment activities for the first half of 2024 was RMB 2.444 billion, significantly up from RMB 0.504 billion in the same period of 2023[35] - Capital expenditures for the first half of 2024 totaled RMB 916.8 million, compared to RMB 616.1 million in the first half of 2023[36] - The group recorded a net cash inflow from financing activities of approximately RMB 729.8 million in the first half of 2024, with bank loans raised amounting to RMB 2.260 billion[37] - As of June 30, 2024, the group had cash and cash equivalents of RMB 7.806 billion, an increase from RMB 6.825 billion as of December 31, 2023[38] Financial Position - Total assets as of June 30, 2024, amounted to RMB 32,401,426 thousand, an increase from RMB 28,781,395 thousand as of December 31, 2023[64] - The company's non-current liabilities increased to RMB 9,724,327 thousand from RMB 6,410,126 thousand as of December 31, 2023, representing a growth of approximately 51.5%[65] - The debt-to-asset ratio as of June 30, 2024, was 23.7%, up from 22.6% as of December 31, 2023[39] - The company’s total liabilities increased to RMB 7,124,469,000 as of June 30, 2024, from RMB 5,796,468,000 as of December 31, 2023, representing an increase of about 22.9%[119] Shareholder Returns - The company will not pay an interim dividend, maintaining a payout ratio of 15% for the final dividend[7] - The final dividend per share for the six months ended June 30, 2024, is HKD 0.10, down from HKD 0.12 for the same period in 2023, totaling HKD 119,850,000 (approximately RMB 108,932,000) for this period[8]. Strategic Initiatives - The company aims to solidify its position as a global leader in perception experience solutions through technological innovation and interdisciplinary product development[19] - The company is diversifying its revenue sources by expanding into the electric vehicle market through a major acquisition, reducing dependence on the smartphone market[44] - Significant investments in research and development are planned to establish a sustainable technology development blueprint and intellectual property portfolio[49] - The company has formed a Sustainability Committee and implemented a comprehensive climate change policy to manage climate impacts through mitigation, adaptation, and resilience strategies[52] Risk Management - The group’s reliance on its top five customers, which accounted for 67.3% of total revenue in the first half of 2024, poses a significant risk to its business[45] - The company faces production disruptions due to unforeseen events and supply chain difficulties, which may lead to increased commodity prices and pressure on profit margins[47] - The company faces foreign exchange risks due to international operations, with sales primarily denominated in USD while reporting in RMB[54] - The company aims to achieve natural hedging by matching revenue and expenses in the same currency, and will use appropriate foreign exchange contracts to mitigate risks when necessary[56] Corporate Governance - The company’s board believes that effective corporate governance is essential for long-term development and value creation, and it has complied with all corporate governance code provisions during the first half of 2024[171] - The company has adopted a more stringent code of conduct for securities trading by directors and related employees compared to the standard code outlined in the Hong Kong Listing Rules[185] Employee and Share Incentives - The company has established an equity incentive plan to attract top talent and incentivize employee contributions to business development[181] - The total number of restricted shares held for eligible participants as of June 30, 2024, was 102,013,127 shares, an increase from 78,162,133 shares as of December 31, 2023[148] - The company incurred share-based payment expenses of RMB 27,215,000 for the six months ended June 30, 2024, compared to RMB 3,065,000 for the same period in 2023[149]

Investment Rating - The report assigns a "Buy" rating for the company with a target price of HKD 32.50, based on a current price of HKD 25.60 [1][3]. Core Insights - The company has shown signs of an operational improvement with a notable performance turnaround in the second half of 2023, driven by various business segments [2][8]. - The expected compound annual growth rate (CAGR) for the company's net profit from 2024 to 2026 is projected at 40.6%, justifying the valuation of 25 times PE for 2024 [3][25]. Summary by Sections Financial Performance - In 2023, the company reported revenue of RMB 20.42 billion, a decrease of 1% year-on-year, with a gross margin of 16.9%, down 1.4 percentage points. The net profit was RMB 740 million, a decline of 9.9% [2][8]. - The second half of 2023 saw revenue of RMB 11.2 billion, remaining stable year-on-year, with a gross margin of 19.2%, an increase of 1.4 percentage points, and a net profit of RMB 590 million, up 25.2% [2][8]. Business Segments - **Acoustic Business**: Revenue was RMB 7.5 billion, down 15.4% year-on-year, but showed a 25.7% increase in the second half. The average selling price (ASP) improved by 10% due to smartphone specifications upgrades [2][3]. - **Optical Business**: Revenue increased by 12.7% year-on-year to RMB 3.63 billion, with a significant 36% growth in the second half. The gross margin improved by 20.5 percentage points year-on-year [2][16]. - **Electromagnetic Transmission and Precision Components**: Revenue grew by 13.3% year-on-year to RMB 8.25 billion, benefiting from increased demand for high-end smartphones [2][19]. - **Sensors and Semiconductors**: Revenue was RMB 1.03 billion, down 18.4% year-on-year, but the segment is expected to benefit from AI-driven upgrades in MEMS microphones [3][22]. Strategic Developments - The acquisition of 80% of Premium Sound Solutions (PSS) in February 2024 is expected to enhance the company's capabilities in the automotive audio market, leveraging PSS's established presence and technology [13][15]. - The company is focusing on high-end optical products, with significant increases in the shipment of advanced lens types, indicating a shift towards higher-value offerings [16][22]. Market Outlook - The global smartphone market is showing signs of recovery, with a projected increase in demand for mid-to-high-end devices, which is expected to positively impact the company's revenue streams [8][19]. - The report anticipates that the company's diversified product offerings and strategic acquisitions will position it well for future growth in various sectors, including automotive and consumer electronics [15][25].

R&D and Innovation - AAC Technologies invested 7.7% of its revenue in R&D in 2023, with 3,961 R&D personnel and 5,938 patents granted as of December 31, 2023[12] - The company operates 18 R&D centers globally and has 2,298 patents pending[12] - AAC Technologies focuses on diversified development in smartphones, smart cars, AR/VR, industrial, and semiconductor sectors[10] - The company's core strategy is "dual-wheel drive": advanced R&D + precision manufacturing[11] - AAC Technologies aims to lead market innovation and enhance user experience through high-value precision manufacturing[11] - R&D expenses as a percentage of revenue increased by 0.2 percentage points year-on-year to 7.7%[17] - R&D expenses increased by 1.8% to RMB 1.573 billion in 2023, driven by increased R&D activities for automotive and AR/VR new businesses[39] Financial Performance - Revenue for 2023 was RMB 20,419 million, a year-on-year decrease of 1.0%[16] - EBITDA for 2023 was RMB 4,183 million, a year-on-year decrease of 1.6%[16] - Free cash flow for 2023 increased by 51.0% year-on-year to RMB 3,805 million[16] - Capital expenditure as a percentage of EBITDA decreased by 10.5 percentage points year-on-year to 33.0%[16] - Net profit attributable to shareholders for 2023 was RMB 390.8 million, a year-on-year decrease of 9.9%[17] - Gross margin for 2023 was 16.9%, a decrease of 1.4 percentage points year-on-year[17] - Revenue for H2 2023 was RMB 11.2 billion, flat YoY, with a gross margin of 19.2%, up 1.4 percentage points YoY and 5.1 percentage points QoQ[27] - Net profit for H2 2023 was RMB 590 million, up 25.2% YoY, while full-year 2023 revenue was RMB 20.42 billion, down 1.0% YoY[27] - Capital expenditure for 2023 was RMB 1.38 billion, down 25.4% YoY, with inventory turnover days reduced from 109 days in 2022 to 80 days in 2023[27] - Operating cash inflow reached RMB 4.63 billion, a 5-year high, with free cash flow hitting a record RMB 3.81 billion, and cash on hand at RMB 6.82 billion[25] - Net profit attributable to shareholders decreased by 9.9% to RMB 740 million in 2023, down from RMB 821 million in 2022, primarily due to lower gross profit[42] - EBITDA decreased by 1.6% to RMB 4.183 billion in 2023, compared to RMB 4.251 billion in 2022[43] - Net cash generated from operating activities increased to RMB 4.6325 billion in 2023, up from RMB 4.372 billion in 2022[44] - Inventory turnover days decreased from 109 days in 2022 to 80 days in 2023, with inventory reduced by RMB 1.41 billion[47] - Capital expenditures totaled RMB 1.3785 billion in 2023, down from RMB 1.8475 billion in 2022, focusing on sustainable capital expenditure plans for new market opportunities[49] - Net cash used in financing activities increased to RMB 3.1706 billion in 2023, up from RMB 1.4387 billion in 2022, mainly due to bank loan repayments and share repurchases[50] - Cash and cash equivalents, including short-term deposits, stood at RMB 6.8245 billion as of December 31, 2023, with 65.2% denominated in USD[51] - Asset-liability ratio decreased to 22.6% as of December 31, 2023, compared to 23.9% in 2022[52] - Net asset-liability ratio, after deducting cash and cash equivalents and short-term time deposits, was 5.1% as of December 31, 2023, down from 6.2% in 2022[52] - Unsecured bonds amounted to RMB 5,619.7 million as of December 31, 2023, a decrease from RMB 6,087.8 million in 2022[52] - Short-term bank loans were RMB 1,463.9 million as of December 31, 2023, down from RMB 1,832.6 million in 2022[52] - Long-term bank loans were RMB 1,726.0 million as of December 31, 2023, slightly down from RMB 1,727.2 million in 2022[52] Business Diversification and Acquisitions - The company has been expanding its non-acoustic business, with touch motors and RF structural components contributing 20% of revenue for the first time in 2014[23] - The company acquired Acoustics Solutions International B.V. and WiSpry, a US company with RF MEMS technology, in 2016[24] - The company acquired Premium Sound Solutions (PSS) to enhance its automotive audio system solutions and expand global market penetration[25] - The company plans to focus on lightweight, high-performance, and innovative solutions in 2024, targeting consumer electronics, automotive, AR/VR, and AI-enabled fields[25] - The company completed the acquisition of Acoustics Solutions International B.V., which will be consolidated into the group's financial performance, aiming to diversify into the automotive industry and enhance audio solutions[34] - The company is expanding its XR technology layout, with XR acoustic solutions already shipped to several global XR leaders, and is advancing AR/VR optical solutions with partners like Dispelix[34] - Strategic acquisition of Premium Sound Solutions (PSS) in 2023, marking a significant milestone for the automotive audio division[69] - The first batch of the PSS acquisition was completed on February 9, 2024, with the target company becoming an 80% owned indirect subsidiary[88] - The total consideration for the repurchase of optical shares was approximately RMB 1,449 million, representing 7.1670% equity in Chenrui Optics[90] - The first batch purchase price for the PSS acquisition included $320,000,000 plus interest at an annual rate of 6.75% from the effective date to the completion date[87] - The second batch purchase price for the PSS acquisition is capped at $204,613,000 plus interest, with completion expected around mid-2025, mid-2026, or mid-2027 depending on the effective date[89] - Following the optical shares repurchase, the company indirectly holds approximately 88.2620% of Chenrui Optics[90] - The PSS acquisition is a strategic move to accelerate the company's diversification in the automotive industry and enhance its acoustic solutions portfolio[89] Product and Market Performance - Shipments of glass-plastic hybrid lenses reached nearly 8 million units by the end of 2023, with precision component revenue growing over 30% YoY[25] - The company's SLS master-level speakers achieved shipments exceeding 10 million units, driven by innovative design and algorithm solutions[28] - Optical business revenue in H2 2023 reached RMB 1.86 billion, a YoY increase of 36.0% and a QoQ increase of 4.8%, with a gross margin of -9.2%, improving by 20.5 percentage points YoY and 7.8 percentage points QoQ[29] - Shipment of 5P and above high-spec lenses increased by approximately 48% YoY to over 350 million units, accounting for nearly 70% of total shipments, with 6P lenses making up about 14%, up 5 percentage points YoY[29] - Electromagnetic transmission and precision components business revenue in H2 2023 was RMB 4.63 billion, a YoY increase of 6.5% and a QoQ increase of 27.8%, with a gross margin of 20.7%, down 1.3 percentage points YoY but up 1.4 percentage points QoQ[30] - Metal frame revenue grew by 34.3% YoY in 2023, with both shipment volume and ASP achieving double-digit growth, maintaining leading market share in high-end and flagship models[32] - Sensor and semiconductor business revenue in H2 2023 was RMB 531 million, a YoY decrease of 31.7% but a QoQ increase of 7.5%, with a gross margin of 15.7%, up 5.3 percentage points YoY and 4.4 percentage points QoQ[33] - Total group revenue in 2023 decreased by 1.0% YoY to RMB 20.42 billion, with declines in acoustic and sensor & semiconductor businesses partially offset by growth in electromagnetic transmission, precision components, and optical businesses[35] - Gross profit decreased by 8.6% to RMB 3.45 billion in 2023, down from RMB 3.78 billion in 2022, primarily due to market competition in the acoustics and optics businesses[36] - Gross margin declined from 18.3% in 2022 to 16.9% in 2023, mainly due to reduced sales in the higher-margin acoustics business[36] Corporate Governance and Leadership - Pan Zhengmin, the CEO, has significant experience in sales, marketing, production, and technology R&D, contributing to the development of patented technologies for acoustic products[62] - Mo Zuquan, an executive director, oversees overall business operations, focusing on sustainability, internal audit, and risk management, with over 20 years of experience in the financial services industry[63] - Wu Chunyuan, a non-executive director and co-founder, does not participate in the company's daily operations[64] - Zhang Hongjiang, an independent non-executive director, holds multiple prestigious positions including being an independent director at Huami Technology and XPeng Motors, and has extensive experience in technology and investment sectors[65] - Guo Lin Guang, an independent non-executive director, serves on the boards of several listed companies including Café de Coral Group and China Oilfield Services, and has a strong legal and financial background[66] - Peng Zhiyuan, an independent non-executive director, has over 20 years of experience in corporate finance and management, currently serving as Global Strategy Officer at Sands Capital Management[67] - Zhang Hongjiang holds a Ph.D. in Electronic Engineering from the Technical University of Denmark and has received numerous awards including the 2012 ACM Multimedia Outstanding Technical Achievement Award[65] - Guo Lin Guang holds a Master of Laws from the University of Sydney and has served in various government advisory roles, including as Chairman of the Transport Advisory Committee[66] - Peng Zhiyuan holds an MBA from the University of Virginia Darden School of Business and has held senior positions at Goldman Sachs and Morgan Stanley[67] - Zhang Hongjiang previously served as CEO and Executive Director of Kingsoft Cloud and has significant experience in the tech industry, including roles at Microsoft[65] - Guo Lin Guang is a qualified lawyer in multiple jurisdictions including Hong Kong, Australia, and England & Wales, and has served as a partner at several international law firms[66] - Peng Zhiyuan is a board member of the University of Virginia Health System and has experience in founding and leading an innovative environmental technology company[67] - Guo Lin Guang was appointed as a director of the Hong Kong Capital Market Practitioners Association, effective October 3, 2023[67] - The board proposed a final dividend of HKD 0.10 per share for 2023, with a dividend payout ratio of 15%, consistent with 2022[27] - The company's distributable reserves amounted to RMB 1,410,894,000, an increase from RMB 1,102,177,000 in 2022[76] - The company's total issued shares as of December 31, 2023, were 1,198,500,000[82] - Pan Zhengmin, the CEO, beneficially owns 70,262,162 shares, with additional interests through related entities totaling 497,917,652 shares, representing 41.54% of the company's issued shares[82] - Wu Chunyuan, a non-executive director, is deemed to have interests in 497,917,652 shares, representing 41.54% of the company's issued shares[83] - Mo Zuquan, an executive director, holds 279,195 shares, representing 0.02% of the company's issued shares[80] - The company's property, plant, and equipment details are disclosed in Note 14 of the consolidated financial statements[76] - The company's share capital changes are detailed in Note 34 of the consolidated financial statements[77] - The company's directors and senior management profiles are listed on pages 23 to 30 of the annual report[79] - The company confirmed the independence of its non-executive directors as per Hong Kong Listing Rule 3.13[79] - The company successfully repurchased $111,182,000 of the 2024 bonds, reducing the outstanding principal amount to $276,818,000[84] - The 2024 bonds bear an annual interest rate of 3.00%, with interest payments made semi-annually on May 27 and November 27[84] - The company signed a total lease agreement for office and production facilities in Shenzhen, covering an area of 11,631 square meters, with an expected annual rent of RMB 15.64 million for 2023[93] - A lease agreement for factory and warehouse facilities in Changzhou covers 10,385 square meters, with an annual rent of RMB 1.777 million for 2023[93] - The company leased 5,685 square meters of office space in Jiangsu, with an expected rent of RMB 791,000 for 2023[93] - A lease agreement in Vietnam covers 3,344 square meters, with an annual rent of USD 160,600 for 2023[93] - The company entered into a total procurement agreement with suppliers, with an annual cap of RMB 140 million for materials such as foam blocks and plastic sheets[95] - Another procurement agreement for acoustic and optical components has an annual cap of RMB 90 million[95] - The company ensured fair pricing by obtaining quotes from at least two independent third-party suppliers for procurement agreements[95] - The lease and procurement agreements were negotiated under fair commercial terms, ensuring favorable conditions for the company[95] - The company disclosed the relationships with related parties involved in the lease and procurement agreements, including ownership details[97] - Chenrui Optics provided a revolving loan of up to RMB 74,000,000 to Tianjin Chengrui, with a maximum outstanding balance of RMB 83,000,000 over a three-year period[98] - The loan interest rate is based on the one-year Loan Prime Rate (LPR) of 3.45% as of the loan agreement date, calculated on a 360-day basis[98] - In 2023, the actual loan amount provided was RMB 19,191,000, including a principal of RMB 19,134,000 and interest of RMB 57,000[99] - Tianjin Chengrui is a related party under Hong Kong Listing Rules, and the loan agreement constitutes a continuing connected transaction[100] - The internal audit department reviewed the related party transactions and confirmed the effectiveness of the internal control system[101] - Independent non-executive directors confirmed that the transactions were conducted on fair and reasonable terms, in the best interests of the company and shareholders[102] - JPMorgan Chase & Co. held 11.32% of the company's issued shares as of December 31, 2023[105] - JPMorgan Chase & Co. holds a total of 133,378,882 shares in long positions, including 60,000 shares in cash-settled listed derivatives and 1,445,854 shares in physically-settled unlisted derivatives, along with 865,000 shares in cash-settled unlisted derivatives[106] - JPMorgan Chase & Co. also holds 12,041,951 shares in short positions, including 1,244,000 shares in physically-settled listed derivatives, 172,000 shares in cash-settled listed derivatives, 221,399 shares in physically-settled unlisted derivatives, and 2,750,095 shares in cash-settled unlisted derivatives[106] - JPMorgan Chase & Co. has an interest in 7,799,243 shares available for lending under the Securities and Futures Ordinance[106] - The 2016 Share Award Plan allows the company to award up to 1.65% of its issued share capital, which amounts to 19,775,250 shares as of March 21, 2024[109] - Under the 2016 Share Award Plan, the maximum number of shares that can be awarded to any single selected employee is 0.5% of the company's issued share capital, equivalent to 5,992,500 shares as of March 21, 2024[109] - From the adoption of the 2016 Share Award Plan until December 31, 2023, a total of 10,230,593 shares were awarded to 340 employees, with 2,722,799 shares and 2,627,518 shares vested on March 24, 2023, and March 24, 2024, respectively[111] - As of December 31, 2023, the 2016 Share Award Plan trustee held a total of 17,210,645 unvested shares, with 11,462,239 shares remaining available for further awards[111] - The total number of shares available for award under the 2016 Share Award Scheme as of January 1, 2023, was 10,262,235 shares, and the remaining shares available for further awards as of December 31, 2023, were 11,462,239 shares[112] - In 2022, 340 employees were granted 10,230,593 award shares under the 2016 Share Award Scheme, with performance targets set at both organizational and individual levels[113] - The 2023 Share Award Plan allows for a maximum of 45,000,000 shares to be awarded, representing approximately 3.75% of the company's issued share capital as of March 21, 2024[115] - As of December 31, 2023, the 2023 Share Award Plan trustee held a total of 9,119,000 shares purchased from the Hong Kong Stock Exchange for the plan[115] - The company's subsidiary, Chenrui Optics, has a subsidiary equity incentive plan aimed at attracting top talent and rewarding contributions to business development[116

瑞声科技（2018） 更新报告 买入 2024年4月2日 23年业绩略有下跌，声学有望升规升配，结构件业务增势强劲 陈晓霞  23 年业绩略有下跌：公司 2023 年全年实现收入 204.2 亿元（人民币，下 852-25321956 同），同比下降 1.0%。毛利率为 16.9%，同比下滑 1.4 个百分点。净利 润 7.4 亿，同比下降 9.9%，基本符合预期，主要是因为全球智能手机恢 xx.chen@firstshanghai.com.hk 复不及预期，消费需求疲软。展望 24 年，智能手机市场微复苏，公司 主要数据 IoT、AR/VR 及车载领域均获成果，尤其车载领域取得定点项目和收购 PSS公司，将助力公司全球汽车行业渗透。 行业 TMT  光学业务稳健增长，声学有望升规升配：光学业务实现收入 36.3 亿，同 股价 26.25港元 比增长12.7%，得益于塑胶镜头和光学模组业务产品升级进展顺利以及在 目标价 29.04港元 中高端机型份额的提升，公司全年塑胶镜头和 WLG 镜头出货量同比分别 （+10.6%） 提升 20%和 22%。毛利率为-13%，同比持平。公司去库存进展良好，预计 今年一 ...