Sohu Finance APP learned that First Shanghai released a research report stating that it maintains a 'buy' rating for aac tech (02018), predicting the company's revenue for 2024-2026 to be 26.03 billion yuan / 29.24 billion yuan / 32.99 billion yuan; net income will be 1.68 billion yuan / 2.13 billion yuan / 2.66 billion yuan, with a target price of 39.09 Hong Kong dollars.

First Shanghai's main points are as follows:

Strong performance in the first half of the year 24:

In the first half of 2024, the company achieved revenue of 11.25 billion yuan (RMB, the same below), a year-on-year increase of 22.0%; gross margin was 21.5%, up 7.4 percentage points year-on-year; net income was 0.54 billion yuan, an increase of 257.3% year-on-year, exceeding market expectations, mainly benefiting from the global smart phone market recovery trend, as well as the optimization of acoustic, optical, and precision structural component product mix, coupled with the incremental impact of PSS consolidation. Looking ahead to the second half of '24, the smart phone market enters a new peak season for stocking new machines, the company continues to invest in IoT, AR/VR, and in-vehicle areas and obtains relevant patents, while PSS company will help the company penetrate the global automotive industry, with the industry bullish on the company's future development.

Continuous advancement and upgrade of mobile acoustics, simultaneous domestic and international advancement in automotive acoustics:

The company's acoustic business achieved revenue of 3.46 billion yuan, a year-on-year growth of 4.1%, with a gross margin of 29.9%, up by 4.4 percentage points year-on-year, benefiting from product high-endization; PSS and other automotive audio business revenue amounted to 1.52 billion yuan, with a gross margin of 25.0%, gradual manifestation of synergies between PSS and the company. The industry expects that the company's continued introduction of high-end acoustic products into mainstream models and the domestic and international business revenue and profit contributions brought by the PSS company will lead to a certain increase in acoustic revenue and profit for the full year '24.

Optical business is expected to turn around by the end of the year, with an increase in gross profit from precision structural components and other businesses.

The optical business achieved revenue of 2.21 billion yuan, a year-on-year increase of 24.9%, benefiting from the company's increased market share in mid-to-high-end models resulting in higher shipment volume and improved unit price. The gross margin turned positive, at 4.7%, an increase of 21.7 percentage points year-on-year, with both plastic lenses and optical module gross margins showing year-on-year improvement. The proportion of shipments of plastic lenses of 6P or higher continued to increase, obtaining a new project involving 7P lenses, and the WLG process yield continued to improve, with shipments increasing by 40% year-on-year to 1.4 million units. The company expects to achieve a turnaround in net income in Q4.

The electromagnetic transmission and precision structural components business achieved revenue of 3.66 billion yuan, a year-on-year increase of 1.1%, with a gross margin of 22.9%, up 3.6 percentage points year-on-year. The revenue growth was mainly driven by continued volume of high-end products such as motors, heat sinks, metal mid-frames, and laptop motor shells. The sensor and semiconductor business generated revenue of 0.39 billion yuan, with a gross margin of 16.4%, up 5.1 percentage points year-on-year, benefiting from the increase in the proportion of high-margin revenue. The bank expects that the advancement of AI smartphones will drive the iteration of smart voice interaction technology and promote the scaling and upgrading of MEMS microphones.