20240325-招银国际-瑞声科技-02018.HK-Solid_outlook_for_PSS_merger___optics_margin_recovery__Maintain_HOLD_on_fair_valuation_7页_1mb

Company Update and Financial Performance: AAC Tech reported FY23 revenue of RMB20.4 billion, a slight 1.0% decline year-on-year, and net income of RMB740 million, down 9.9% YoY, but above consensus estimates due to exchange gains. Gross Profit Margin (GPM) reached 16.9% in FY23, largely consistent with expectations, with a strong recovery in the second half driven by demand and product upgrades.

Segment Analysis: Key segments include acoustics (slightly down YoY), ED&PM (solid growth), and optics (narrowing loss in 2H23, improving margin). By segments, revenue changes were -15% for acoustics, +13% for ED&PM, +13% for optics, and -18% for MEMS in YoY comparison. Optics GPM improved due to higher ASPs and premium product ramp-up.

Future Outlook for FY24E: Management expects sales growth of 10-15% YoY, with a higher range of 20-30% including PSS contributions, driven by optics margin recovery, PSS auto business synergy, and upgrades in acoustics/haptics. Estimated FY24E revenue growth at +29% YoY, net profit +82% YoY, supported by market recovery and customer share gains.

Valuation and Recommendation: The stock trades at 20.2x/16.2x FY24E/FY25E P/E, which is fair in the analyst's view. Maintain a "Hold" recommendation with a new share price target of HK$22.44, based on SOTP valuation with a 18.0x target P/E. Recent rally may reflect key positive factors, but fair valuation justifies the Hold stance. Near-term catalysts include customer new model launches and PSS integration.

Key Highlights and Risks: Positive on business outlook with diversification across segments. Current valuation seems reasonable. Good visibility from synergies and market share gains, but risks include competitive pressures and global economic factors.

For detailed financial data, including income statements, balance sheets, and performance metrics, refer to the original report.