Market Insight | AAC TECH Surges Over 4% at the Close, Company Benefits from Marginal Recovery in Smartphone Shipments, Market Expects Apple to Eliminate Physical Buttons

According to the information from the Wise Finance APP, AAC TECH (02018) surged more than 4% at the close, with a 3.66% increase as of the time of publication, reaching HKD 26.9, with a turnover of HKD 2.08 billion.

Sinolink International released a research report stating that the market expects the full-year shipment volume of smartphones in 2024 to record a low single-digit year-on-year growth, mainly driven by a double-digit year-on-year growth in high-end/flagship smartphone shipments. The company's acoustic products mainly supply high-end products to customers, which is expected to benefit; the management is positive about the FY24 outlook, expecting revenue to grow by a low to mid double-digit percentage year-on-year (excluding PSS consolidation), and gross profit margin to improve year-on-year. As for the company's electromagnetic drive and precision structural components division, with the introduction of new projects, capacity and shipment volume are continuously increasing, providing support for the company's FY24 performance.

In terms of catalysts, as global smartphone shipments marginally recover, the industry's competitive landscape is expected to improve. The pressure on the gross profit margin of the optical business (lens + module) is expected to further ease. During FY18-FY22, the average net profit in the first half of the year accounted for 43% of the full year, and it is expected that the company will have a profit pre-announcement for 1H24; the market anticipates that the new flagship smartphones of American smartphone customers this year will upgrade their existing physical keys to solid-state key design keys/virtual keys, which will require additional haptic vibrators to achieve virtual key functions