CICCG has maintained AAC Tech's (02018) 'Outperform' rating and raised its profit forecast for the fiscal years 2024 to 2026 by 21%, 15%, and 11%, respectively. The target price has been raised from HKD 26 to HKD 38. Positive development in all of the company's business segments will drive sales and profit margins in fiscal year 2024 to continue to rebound for the remaining of the year. The improvement in AAC's prospects is mainly driven by a rebound in the smartphone market, opportunities driven by artificial intelligence from major US customers, improved utilization rates and average selling prices for products, and favorable changes in product structure.

The bank predicts that AAC's revenue in the first half of fiscal year 2024 will increase by 24% year on year and by 2% compared to the second half of fiscal year 2023. It is also estimated that the acquisition of Premium Sound Solutions will contribute RMB 1.3 billion in revenue to AAC in the first half of fiscal year 2024 and RMB 3.2 billion for the entire year. The bank expects net income of RMB 616 million in the first half of fiscal year 2024, a 310% year-on-year growth, and RMB 1.54 billion for the full fiscal year 2024, a 108% year-on-year increase. Regarding the outlook for the various business segments, the bank expects AAC's acoustic business revenue to steadily increase, the optical business to return to profitability in the second quarter of fiscal year 2024, the electromagnetic drive business in the Android market to achieve steady recovery, and the MEMS business to benefit from the increasing demand for high-performance microphones driven by artificial intelligence, further expanding AAC's market share.

Regarding the forecast for various business segments, the bank expects AAC's acoustic business revenue to steadily increase, the optical business to return to profitability in the second quarter of fiscal year 2024, the electromagnetic drive business in the Android market to achieve steady recovery, and the MEMS business to benefit from the increasing demand for high-performance microphones driven by artificial intelligence, further expanding AAC's market share.