Core Viewpoint - The article discusses the significant drop in the stock price of AAC Technologies, which fell over 14% following the release of its interim financial results, despite showing revenue growth and improved net profit [1][3][4]. Financial Performance - AAC Technologies reported a revenue of 13.318 billion RMB for the first half of 2025, representing an 18.4% year-on-year increase [6]. - The company's net profit attributable to shareholders was 876 million RMB, reflecting a 63.1% increase compared to the previous year [6]. - The gross margin decreased to 20.7%, down 0.8 percentage points year-on-year, primarily due to changes in product mix [6]. Business Segments - The acoustic business generated revenue of 3.52 billion RMB, a 1.8% increase year-on-year, with a gross margin of 27.2%, down 2.7 percentage points [7]. - The optical business achieved revenue of 2.65 billion RMB, growing 19.7% year-on-year, with a gross margin of 10.2%, up 5.5 percentage points [8]. - The electromagnetic transmission and precision components segment saw a revenue increase of 27.4% to 4.63 billion RMB, maintaining a gross margin of 22.9% [8]. - The sensor and semiconductor business reported revenue of 608 million RMB, a 56.2% increase, but with a gross margin of 12.1%, down 4.3 percentage points [9]. Market Reactions and Analyst Ratings - Following the earnings report, the stock price of AAC Technologies experienced a significant decline, with a market capitalization dropping to 52.4 billion HKD [4]. - Prior to the drop, the stock had risen 26% from August 1 to August 20, with a market cap exceeding 60 billion HKD [11]. - Analysts from Bank of America upgraded the stock rating from "Neutral" to "Buy," raising the target price from 44 HKD to 57 HKD, citing improving fundamentals [11]. - CMB International also raised its target price from 58.78 HKD to 63.54 HKD, maintaining a "Buy" rating, reflecting expectations of growth in optical and precision components [11][12].