20230308-招银国际-瑞声科技-02018.HK-4Q22_Preview__earnings_recovery_remains_bumpy__Maintain_HOLD_7页_1mb

AAC Tech (2018 HK) Summary

Core Content

AAC Tech is expected to report its 4Q22 results on 23 Mar. The earnings forecast for 4Q22E indicates a revenue increase of 16% YoY to RMB 5,579 million and a net profit increase of 18% YoY to RMB 250 million, slightly below the consensus. The company's performance is driven by strong demand in Apple's acoustics/haptics and Toyo's PM sales, despite challenges in the optics segment.

The stock is currently trading at 16.4x FY23E P/E, which the analyst deems fair. The recommendation remains HOLD, with a new target price of HK$15.62, implying a 14.1x FY23E P/E. The analyst notes that while there is positive outlook for 4Q22 earnings recovery, near-term challenges such as weak demand, inventory destocking from Android, and Apple's seasonal weakness will likely drag on earnings recovery.

Key Financial Highlights

Revenue and Profit Growth

• FY20A: Revenue RMB 17,140 million, Net Profit RMB 1,316.3 million
• FY21A: Revenue RMB 17,667 million, Net Profit RMB 1,506.7 million
• FY22E: Revenue RMB 20,364 million, Net Profit RMB 834.2 million
• FY23E: Revenue RMB 20,909 million, Net Profit RMB 1,188.5 million
• FY24E: Revenue RMB 21,744 million, Net Profit RMB 1,299.2 million

EPS and P/E

• FY20A: EPS RMB 1.09

• FY21A: EPS RMB 1.25

• FY22E: EPS RMB 0.69

• FY23E: EPS RMB 0.98

• FY24E: EPS RMB 1.08

• FY23E P/E: 16.2x

• Target P/E (FY23E): 14.1x

Valuation Metrics

• Current Price: HK$18.12
• Target Price (HK$): HK$15.62
• Price Performance (12M): Fairly valued at 16.4x FY23E P/E
• Dividend Yield (%): 307.8 (FY23E)

Segment Analysis

• Acoustics/Haptics: Expected to grow 2% / 12% YoY in 4Q22E
• ED&PM: Expected to grow 31% YoY in 4Q22E, driven by Toyo's NB casing and improved product mix
• Optics: Weakness in the segment, with low utilization and margin pressure, expected to grow 29% YoY in 4Q22E

2023 Outlook

The analyst anticipates a focus on:

1. Margin Recovery: Across multiple segments, especially optics and HCM
2. Automotive Acoustics: Progress with leading Chinese EV customers and tier-ones
3. AR/VR: Mass production of new 3P VR pancake module in 2023E
4. Share Gain Potential: From newly acquired Toyo's PM business

Earnings Revision

• Revenue: CMBIGM's forecast is slightly higher than the consensus (1% increase)
• Gross Profit: Slightly lower than consensus (-1%)
• Operating Profit: Lower by 7%
• Net Profit: Lower by 4%
• EPS: CMBIGM's forecast is slightly higher than consensus (2%)

Valuation Methodology

The target price is based on a SOTP (Sum of the Parts) valuation, using weighted average P/E multiples:

• Acoustics: 15x P/E
• MEMS: 10x P/E
• ED&PM: 13x P/E
• Optics: 15x P/E

Shareholding and Stock Data

• Market Cap: HK$21,707.8 million
• Avg 3Mths Turnover: HK$18.7 million
• 52W High/Low: HK$22.30 / HK$11.14
• Total Issued Shares: 1,198.0 million
• Shareholders:
  • Wu Chunyuan: 22.0%
  • Pan Zhengmin: 19.6%

Share Performance

• 1-Month: -10.5% (Absolute) / -7.2% (Relative)
• 3-Months: +4.1% (Absolute) / -4.6% (Relative)
• 6-Months: +23.1% (Absolute) / +14.2% (Relative)

Financial Summary

Income Statement

• Revenue: FY23E RMB 20,909 million
• Gross Profit: FY23E RMB 4,146 million
• Operating Profit: FY23E RMB 1,198 million
• Net Profit: FY23E RMB 1,189 million
• EPS (Reported): FY23E RMB 0.98

Balance Sheet

• Total Assets: FY23E RMB 41,842 million
• Total Liabilities: FY23E RMB 18,648 million
• Total Equity and Liabilities: FY23E RMB 41,842 million
• Cash & Equivalents: FY23E RMB 6,305 million
• Share Capital: RMB 98 million
• Other Reserves: RMB 22,724 million

Cash Flow

• Operating Cash Flow: FY23E RMB 1,502 million
• Investing Cash Flow: FY23E RMB -3,126 million
• Financing Cash Flow: FY23E RMB -984 million
• Net Change in Cash: FY23E RMB 1,502 million

Analyst Certification

The analyst certifies that the views expressed in the report reflect his or her personal views and that there is no direct or indirect compensation related to the specific views.

CMBIGM Ratings

• HOLD: Potential return of +15% to -10% over next 12 months
• OUTPERFORM: Industry expected to outperform the relevant broad market benchmark
• MARKET-PERFORM: Industry expected to perform in-line with the benchmark
• UNDERPERFORM: Industry expected to underperform the benchmark

Important Disclosures

There are risks involved in transacting in any securities. The information in this report is for reference only and does not constitute investment advice.