Advertisements

What’s New
– AAC Technology (2018 HK) announced its 3Q21 results today in lunch break of HK market.

– Revenue declined 6.1% y-o-y to RMB4.25bn.

– Segment-wise, acoustics business revenue increased by 1.9% y-o-y to RMB2.20bn, with gross margin down 2.1ppts q-o-q.

– Optics business revenue decreases 17.6% y-o-y to RMB 0.39bn, with gross margin down 7.0ppts q-o-q.

-MEMS business revenue falls 31.1% y-o-y to RMB 0.25bn, with gross margin down 0.6 q-o-q.

– Net profit slump 57.4% y-o-y to RMB 0.18bn, in line with the earning forecast of c.51% to 61%.decrease.

Advertisements

Our View:
– The results were in line in both top line and bottom line. The unsatisfactory performance is mainly due to the decline in acoustic and optics business revenue and their margin contraction

-The decrease in net profit was due to the decline in revenue and a exchange loss of RMB 0.12bn.

-The weaker smartphone demand impacted the shipment volume of plastic lens and camera module and thus the capacity utilization rate, a contraction in margin resulted.

– Overall performance showed a slowdown especially in optics business compared with 2Q21, owing to sluggish global smartphone shipment growth attributed by the chips shortage resulting in delays and cancellation of domestic customer’s smartphone shipment especially in android model. 

-Near-term share price support is expected as uncertainly in result relieves and results are in line with estimate in profit warning announced in early Oct 2021

– We currently rate BUY on the counter on the back of the expectation of better product mix and increasing market share in the coming 2-3years