In "The Big Banks," China International Capital Corporation raised the target price of AAC TECH to 62.9 yuan, driven by AI-enabled devices and diversification for long-term growth

Bank of China International published a research report indicating that AAC Technologies (02018.HK) reported a year-on-year revenue growth of 18% to RMB 13 billion in the first half of the year, with a gross margin of 20.7%, both lower than expected. Net profit saw a significant year-on-year increase of 62% to RMB 871 million, but when excluding one-time PSS acquisition fair value gains, it fell short of market expectations. However, management's optimistic guidance for the second half exceeded market expectations, with expectations of a strong quarterly rebound in gross margin as multiple high-end projects come online and operational leverage significantly recovers in the second half.

The firm stated that due to the company's guidance for the second half and its technological leadership in the acoustic and haptic fields, it maintains an optimistic outlook. Additionally, AAC Technologies has made effective progress in its years of expansion in the optical and precision structural components sectors. The firm expects that as AAC Technologies completes the integration of its full platform capabilities in optics, acoustics, and structural components, it will facilitate rapid expansion in emerging markets such as automotive, XR, and robotics.

The firm slightly raised AAC Technologies' target price from RMB 62.6 to RMB 62.9, corresponding to a 2026 forecast price-to-earnings ratio of 22 times, maintaining a "Buy" rating, and is optimistic about long-term growth driven by AI-enabled devices and diversification