【行业研究报告】瑞声科技-Solid outlook for PSS merger & optics margin recovery; Maintain HOLD on fair valuation

25Mar202425Mar2024CMBInternationalGlobalMarkets|EquityResearch|CompanyUpdateAACTech(2018HK)SolidoutlookforPSSmerger&opticsmarginrecovery;MaintainHOLDonfairvaluationAACreportedFY23revenueofRMB20.4bn(-1.0%YoY)andnetincomeofRMB740mn(-9.9%YoY),aboveconsensusestimatesmainlyduetoexchangegainsandotherincome.FY23GPMcameinat16.9%,largelyinline,and2H23GPMrecoveredto19.2%(+1.4pptsYoY/+5.1pptsHoH),drivenbydemandrecoveryandproductupgrades.ForFY24E,mgmt.guided10-15%YoYsalesgrowth(+20-30%YoYincludingPSS),drivenby:1)anopticsGPMturnaroundin2H24Eonmarketrecovery,specupgradesandWLGramp-up;2)autobizPSSintegrationtobringautosynergy;3)acoustics/haptics/casing/hingestobenefitfrommodellaunchesandmarketsharegains,and4)AIphoneupgradesinacousticsandcoolingparts.Overall,weliftourFY24/25EEPSby29/50%toreflectthePSSdealandstrongermarginandbusinessoutlook.WhilewearepositiveonAAC’sbusinessoutlook,thestocknowtradesat20.2x/16.2xFY24/25EP/E,whichisfairinourview.MaintainHoldwithanewSOTP-basedTPofHK$22.44,implying18.0xFY24EP/EFY23earningsbeatonacross-the-boardmarginrecovery.Bysegment,acoustics/ED&PM/optics/MEMSrevenueposted-15%/+13%/+13%/-18%YoYchanges.Inparticular,opticssegmentreportednarrowinglossin2H23duetoimprovingASP/marginandpremiumproductramp-up.Mgmt.statedthatplasticlensesturnedprofitablein1Q24andguidedapositiveGPMin2H24/FY24E.ED&PMdeliveredsolidgrowthsupportedbyfurthersharegainsforhaptics/metalframes/foldablephonehinges.FY23GPMcameinat16.9%withstrongmarginrecoveryin2H23acrossthesegments,benefitingfromdemandrecoveryandproductupgrades.FY24Eoutlook:opticsmarginimprovement,ED&PMupgradeandPSSconsolidation.ForFY24E,mgmt.guided10-15%YoYsalesgrowth(+20-30%YoYincludingPSS),drivenby1)opticsmargintoturnpositivein2H24/FY24EonbetterHCMGPM,ASPhikesandanimprovingscale;2)acceleratedgrowthinacoustics/haptics/casing/foldablephonehinges;3)PSSconsolidationtoboostsalessynergyinautoacousticsbusiness.Overall,weestimateFY24Erevenue/netprofittogrow+30%/+82%YoY.Recentrallyreflectedmostpositives;maintainHOLDonfairvaluation.ForFY24E,whilewearepositiveonAAC’searningsrecovery,webelievetherecentrallyhasreflecteditspositivesanditscurrentvaluationat20.2x/16.2xFY24/25EP/Eisfair.MaintainHOLDwithanewSOTP-basedTPofHK$22.44,implying18.0xFY24EP/E.Near-termcatalystsincludekeycustomer’snewmodellaunchandcustomersharegains.TargetPriceHK$22.44(PreviousTPHK$14.04)Up/Downside(10.2%)CurrentPriceHK$25.00ChinaTechnologyAlexNG(852)39000881alexng@cmbi.com.hkClaudiaLIUclaudialiu@cmbi.com.hkStockDataMktCap(HK$mn)29,950.0Avg3mthst/o(HK$mn)120.052wHigh/Low(HK$)25.00/13.00TotalIssuedShares(mn)1198.0Source:FactSetShareholdingStructureWuChunyuan21.9%PanZhengmin19.5%Source:HKExSharePerformanceAbsoluteRelative1-mth29.5%31.4%3-mth11.4%10.3%6-mth86.6%104.2%Source:FactSet12-mthPricePerformanceSource:FactSetRelatedreports:1.AACTech(2018HK)-1H23worsethanexpectedonslowrecovery;MaintainHOLD(link)2.AACTech(2018HK)-4Q22slightlybelow;recoveryremainsbumpy(link).EarningsSummary(YE31Dec)FY22AFY23AFY24EFY25EFY26ERevenue(RMBmn)20,62520,41926,46229,39230,685YoYgrowth(%)16.7(1.0)29.611.14.4Netprofit(RMBmn)821.3740.41,350.51,678.61,891.4YoYgrowth(%)(37.6)(9.9)82.424.312.7EPS(Reported)(RMB)0.690.631.151.431.61YoYgrowth(%)(37.1)(8.3)82.424.312.7ConsensusEPS(RMB)0.690.541.031.331.88P/E(x)22.325.220.216.214.4P/B(x)0.80.81.21.1nsYield(%)78.675.951.9117.2132.1ROE(%)3.73.35.97.07.5Source:Companydata,Bloomberg,CMBIGMestimates