Investment Rating - The report upgrades the investment rating of AAC Technologies from NEUTRAL to BUY with a target 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].
瑞声科技：Improved earnings visibility favours re-rating