AAC Technologies 2018

[winston]

not vested

AAC Technologies net rises on firm sales

Shenzhen-based micro-component maker AAC Technologies (2018) saw its first-quarter net profit rise 2.1 percent to a record high of 619 million yuan (HK$737.1 million), boosted by a double-digit increase in sales of its major products.

Revenue rose 10.4 percent from a year back to 2.55 billion yuan on firm demand for dynamic components, which accounted for 66 percent of total revenue. Sales of the item soared 36 percent.

AAC said it received an encouraging response for its speaker boxes from several Android handset makers.

Revenue from mainland customers surged 41 percent, accounting for more than 35 percent of total sales. Gross profit rose 7.9 percent to 1.03 billion yuan.

But net profit margin slipped two percentage points to 24.3 percent, due to the increase in research and development expenditures on new projects.

Executive director Richard Mok Joe- kuen said AAC expects better sales in the second quarter and sustained gross profit margin.

Credit Suisse has set a new target price of HK$65.50 from HK$53.90 for AAC, while Morgan Stanley raised its target price to HK$70 from HK$65.

AAC rose 2.76 percent yesterday to HK$57.70.

Source: The Standard

[winston]

not vested

Winner in the new wave of product upgrades

1Q16 net profit 2% below our expectation and 4% below consensus due to 24% yoy jump in R&D expenses.

1Q results relatively weak due to low seasonality; FY16 will be back-loaded.

Growth of dollar content per device more important than volume growth in the hardware upgrade cycle, in both Apple and Android camps.

Demand for non-acoustic products among domestic brands the key growth driver.

Reiterate Add call; TP still based on 15.2x P/E in FY17 (+1 s.d. its 5-year average).

Reiterate Add with target price of HK$65

We reiterate our Add call as AAC is riding the new wave of specifications upgrades in speaker box and haptics components in both the Apple and Android camps.

AAC currently trades at 14x FY17F P/E, which is not demanding, in our view, given its strong new products pipeline and 21% EPS CAGR over F16-18F.

Our target price is still based on 15.2x P/E in FY17 (1 s.d. above its 5-year average).

Potential share price catalysts include new Apple product launches and rapid adoption of high-end speaker boxes among domestic brands.

Source: CIMB

https://brokingrfs.cimb.com/ewHUQyTDldb ... FY5Eg2.pdf

[winston]

not vested

May 30, 2016

AAC TECH Aims at 25% Production Expansion This Year

Richard Mok Joe-kuen, managing director of AAC TECH (02018.HK), said in every November/December, the company will set the plan for production expansion for the next year, and the target for production expansion is 25% in 2016, mainly from non-acoustic sector, aiming at meeting the target quarter-by-quarter.

The non-acoustic business took over 35% of total last year, and Mok hoped the proportion can be raised to 40% this year.

Mok did not directly respond to iPhone 7 orders, but said Android customers in China represented 35% of total customers of the company.

When asked about the quarterly decline in the company's revenue in the first quarter, he said the situation is optimistic according to the order and production arrangement in the second quarter.

Mok believed the second half of the year will be better than the first half, and will see quarterly growth by then.

Source: AAStocks Financial News

[winston]

not vested

May 27, 2016

<Research Report>G Sachs: AAC TECH Benefits from China Smartphone Launches; Target Raised to $51

Goldman Sachs stated in its report that looking at Chinese flagship smartphone models scheduled to launch in 2H16, including from leading brands like Huawei, Xiaomi and Meizu etc., it expected metal casings to become mainstream.

It viewed AAC TECH (02018.HK) as uniquely positioned to capture metal casing business from Chinese smartphone makers due to their expertise in developing RF (radio frequency) and metal casings, which can help smartphone brands solve complex cellular antenna design issues.

The research house expected AAC?s RF mechanical business to improve faster than the prior expectation, thus raise its EPS forecasts by 7%/5% for 2016/17.

It also kept the company at Neutral with target lifted from $48 to $51.

Source: AAStocks Financial News

[winston]

not vested

May 13, 2016

<Research Report>JPM Lifts AAC TECH (02018.HK) Target to $60; Rated Neutral

JPMorgan, in its report, lifted the target price of AAC TECH (02018.HK) from $54 to $60 and remained the rating Neutral given the fair valuation.

JPM agreed on the strong acoustic upgrade cycle at Android brands and Apple's iPhone. JPM raised its 2016/17 earnings forecasts by about 2-6%.

AAC's dynamics components are expected to grow 27%/12% yearly in 2016/17 on dual growth engines from Apple and Chinese brands.

JPM saw fast migration to speaker-box by Chinese brands and increasing adoption of stereo sound solution. AAC is also benefiting from the acoustics upgrade on iPhone 7 with a higher share allocation.

JPM cited AAC's management, who reiterated an above 20% revenue growth in 2016; raised capex by 25% to RMB3 billion, mainly for production upgrade in non-acoustic business.

The broker stayed bullish on RF/mechanical and expecting non-acoustics (Haptics/ RF) to contribute over 40% growth of FY16 revenue; and expected 2H16 over 1H16 growth momentum to be stronger.

However, JPM expected AAC's lead to narrow with competitors to catch up and acoustics upgrade demand to largely slow down by 2H17.

Source: AAStocks Financial News

[winston]

AAC Tech: Apple Pushes For Force Touch, Credit Suisse Raises Estimates

By Shuli Ren

Apple acoustics supplier AAC Tech (2018.Hong Kong) is back in favor after Apple (AAPL) unveiled operating system upgrades at the annual developers’ conference this week.

Yesterday, Morgan Stanley said smartphone suppliers’ worst days may be over and listed AAC Tech as its favorite component supplier stock.

The bank talked about AAC being a beneficiary of Apple’s iPhone 7 refresh and that AAC has only one major competitor GoerTek (002241.Shenzhen).

Today, Credit Suisse raised its price target to 75.70 Hong Kong dollars, a 15% boost from HK$65.50 previously. AAC Tech jumped 3.3% today to HK$65.60.

Much of Credit Suisse’s price target increase comes from higher multiples. The bank raised its 2016-2018 earnings estimates by 5-7% but its fair valuation from 15.8 times forward earnings to 17 times.

There are two things analyst Sam Li likes.

First, AAC is poised to gain more market share from Apple this year, from 46% previously to 55%, thanks to “AAC’s solid track records on yield learning curve at initial manufacture stage.”

Second, Apple introduced several new functions for iOS10 using Force Touch capabilities, “including improved interaction with notifications, ‘touch-and-go’ home screen functionality without opening apps, and expanded use in third-party a

pps.” So surely, force touch is a key differentiation factor for Apple and other OEMs may follow suit as well? A better Force Touch ecosystem means more future business for AAC.

Source: Barron's Asia

http://blogs.barrons.com/asiastocks/201 ... estimates/

[winston]

not vested

<Research Report>Daiwa Rates AAC TECH (02018.HK) at Buy with Target Price Lifted to $78

Daiwa, in its report, said the ASP of AAC TECH (02018.HK)'s acoustic products will see increases due to new iPhone launch.

The broker expected the earnings growth to accelerate in 2H16, expecting 20% or above growth in 2016-17.

The broker reinstated the rating Buy with target price lifted $68 to $78.

The broker said AAC?s share price has risen by 45% year-to-date, possibly driven by the market starting to realise that AAC is immune to muted smartphone volume growth and iPhone inventory adjustments in 1H16, and the broker believed the rising trend is not over.

Source: AAStocks Financial News

[winston]

<Result Ann>AAC TECH 2Q Net Profit Up 15% to RMB736M

AAC TECH (02018.HK) announced the result for the second quarter ended 30 June 2016.

During the period, net profit rose 15% yearly to RMB736 million; EPS was RMB0.6; net profit margin fell 2.2 ppts yearly to 24.4%.

During the period, the revenue rose 26% yearly to RMB3.019 billion; gross profit rose 26% to RMB1.258 billion; gross profit margin rose 0.2 ppts yearly and rose 1.2 ppts quarterly to 41.7%.

Source: AAStocks Financial News

[winston]

not vested

<Research Report>M Stanley: AAC TECH 2Q Results Meet Estimates; Recovering Mildly since 1Q

Morgan Stanley stated in its report that AAC TECH (02018.HK) 2Q net profit met estimates and mildly recovered from 1Q.

Revenue rose 26% yearly to RMB3 billion; gross profit margin reached 41.7%, up 1.2 ppts from 1Q, slightly topping estimates.

Net profit of RMB736 million was largely in line with estimates.

Target was $88 with rating Overweight.

Source: AAStocks Financial News

[winston]

not vested

2Q16: Results In Line; New Revenue Streams From 3D Cover Glass Product And Handset Lenses

AAC’s 2Q16 results and interim dividend payout are both in line with our expectations.

Net profit was up 15% yoy and gross margin remained above 40%.

Going forward, we foresee continued growth in the RF mechanicals segment, increased speaker box adoption by Chinese smartphone customers as well as new revenue contribution from a 3D cover glass product and handset lenses.

We upgrade AAC to a BUY and raise our target price to HK$91.00, based on 23x 2016F PE.

The inclusion of AAC in HSI is also viewed as a positive catalyst.

Source: UOBKH

https://research.uobkayhian.com/content ... 8151b1084f