In "The Big Banks," Citigroup: AAC TECH's performance last year met expectations, lowering the target price to 50.4 yuan

Citi published a report stating that AAC Technologies (02018.HK) is expected to meet performance expectations for 2025, with net profit projected to grow by 40% year-on-year to RMB 2.512 billion, mainly due to fair value gains related to PSS, which is above market consensus. The group anticipates that revenue growth in 2026 will not be lower than last year's level, and gross profit will steadily improve. The company also expects limited impact from rising memory prices and announced the acquisition of liquid cooling company JYUN5DEI6.

In light of the consumer electronics cycle being at a low point, Citi has lowered the target price-to-earnings ratio to 18 times and correspondingly reduced the target price from HKD 60.5 to HKD 50.4. However, it maintains a "high conviction outperform the market" recommendation rating.

Citi believes that AAC's long-term growth prospects remain unchanged, driven by improved profitability in the optical business, iPhone thermal management business, AI/AR glasses, and new edge AI device business. The bank maintains its earnings forecast for the group in 2026 while raising next year's earnings estimate by 6% to RMB 3.053 billion. Due to short-term headwinds in the smartphone market, the target price valuation's price-to-earnings ratio has been lowered from 25 times to 18 times