According to Bank of Communications International's research report, the positive development of AAC Technologies (02018.HK) in all segments of the market will continue to drive its sales revenue and profit margin for the 2024 fiscal year through the rest of this year. The Bank predicts that AAC Technologies' revenue for H1 2024 will increase by 24% YoY and also will increase by 2% compared to H2 2023.

The Bank estimates that the acquisition of Premium Sound Solutions (PSS) by AAC Technologies could contribute RMB 1.3 billion (and a total income of RMB 3.2 billion for the entire fiscal year of 2024) in revenue for H1 2024. The Bank also expects the net profit of AAC Technologies for H1 2024 to be RMB 616 million, a YoY growth of 310%. For the entire fiscal year of 2024, the net profit is expected to be RMB 1.54 billion, representing a YoY growth of 108%.

In terms of market segments, the Bank expects AAC Technologies' acoustic business revenue to steadily grow. The optical business will recover its profit in the second quarter of 2024. The electromagnetic drive business will realize a steady recovery in the Android market. The MEMS business will also benefit from the rising demand for high-performance microphones driven by artificial intelligence, which will further expand AAC Technologies' market share.

Bank of Communications International stated that AAC Technologies' continued improvement is mainly due to the rebound of the smartphone market, AI-driven opportunities from its major customers in the United States, increased utilization rate and average selling price, and favorable changes in product structure. Based on these factors, the Bank revised AAC Technologies' profit forecast for the fiscal years of 2024 to 2026 upward by 21%, 15%, and 11%, respectively, and raised its target price from HKD 26 to HKD 38, maintaining an "outperform" rating. (js/w)

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