Apple announced its Q1 results for fiscal year 2022 after the market closed on January 27. The report shows that Apple’s revenue in this fiscal quarter reached US$123.945 billion, a year-on-year increase of 11%, setting a record high.

Editor's note: The stock price has dropped back to 8 years ago. AAC Technology , which is facing fierce market competition, still retains its unique competitiveness.

Author: Simon

Apple Inc. announced its Q1 results for fiscal year 2022 after the market closed on January 27. The report shows that Apple’s revenue in this fiscal quarter reached US$123.945 billion, a year-on-year increase of 11%, setting a record high. At the same time, net profit reached US$34.63 billion, a strong year-on-year increase of 20%.

After the market opened, Apple's stock price rose sharply by more than 5%. It "single-handedly" pushed up the stock index futures , which had plunged again overnight, by nearly 1%.

is like a chicken or a dog ascending to heaven. The strong revenue performance of , apple, and should logically take away its suppliers. But AAC Technology (02018.HK), once known as "Apple's number one supplier", is completely different.

As of the close of trading on January 27, AAC Technologies' stock price hit a new low since March 2014, retracing more than 80% from its high point, with a market value of less than HK$30 billion. You know, the market value of AAC Technology at its peak exceeded HK$200 billion.

Source: Huashengtong

What happened to bring AAC Technology to where it is today? In the current environment, is AAC Technology worth picking up?

1. Lower performance and fierce competition

The recent decline in the stock price of AAC Technology is directly related to its performance.

On November 19, AAC Technology announced that the group's revenue for the year ending December 31, 2021 is expected to only increase "slightly", but the unaudited comprehensive net profit attributable to the company's owners is expected to be approximately less than the same period in 2020. 12% to 16%.

Although the expected decline in profits is mainly due to the absence of special exchange gains similar to those in 2020 and the reduction of government subsidies, it cannot hide the dilemma of AAC Technology’s revenue growth slowing down.

Judging from the published third quarter financial report, 2021Q3 AAC revenue was 4.25 billion yuan, a year-on-year decrease of 6.1%; the gross profit margin also dropped by 0.9 percentage points to 22.7%; the net profit dropped by 57.4% year-on-year to 22.7%. 183 million yuan, the situation is becoming more and more serious.

Source: Company Financial Report

On the one hand, external negative factors have a huge impact. The ongoing overseas epidemic has significantly affected the gross profit margin of AAC’s Android acoustic products. In addition, as the prices of upstream raw materials have increased, production costs have increased, so gross profit margins have also been lowered, and profitability has declined.

On the other hand, the market competition is more intense. AAC’s new optical business, which has high hopes, has been strongly squeezed by its big brother Sunny Optical Technology (02382.HK). The latter has strengthened the expansion of the low-end mobile phone lens field since the third quarter of last year, compressing AAC Technology’s market share. In addition, Taiwanese company Largan is also squeezing market space through unique patents.

Source: Internet

The sluggish stock price of AAC in recent years can be said to be an apple's success or failure. The deep "binding" with Apple's business has made AAC famous. However, according to industry insiders, Apple's almost "paranoid" control over supply chain companies has put AAC in a passive position in the competition.

In addition, as the Apple industry becomes larger and larger, more suppliers have surfaced. Companies such as Luxshare Precision and Qiutai Technology have intensified AAC's market competition.

2. Diversified revenue structure, AAC is still attacking

AAC Technology started with speakers, but currently its main business has extended to the fields of optics, acoustics, electromagnetic transmission and precision structural parts, and it still has a strong presence in the field of acoustics An unshakable position. As of 2021, AAC Technologies has accumulated 4,883 patents in the field of acoustics, ranking first in the world.

Source: Financial report, compiled by Huashengtong

At the same time, AAC Technologies also has considerable strength in new fields. It proactively spends money on research and development, and can also maintain its leadership in technology patents. In the 2021 TOP100 ranking of PCT international patent applications by Chinese companies, AAC Technology ranks eighth in the country with 771 PCT national patents, and is the only domestic manufacturing company in the top ten.

Recently, the AAC Technology team released the latest research results: the world's first ultra-wideband X-axis linear motor CyberEngine, which has the characteristics of ultra-wideband, ultra-strong vibration, ultra-power-saving, ultra-quiet, and ultra-comfortable, and will soon be brought to the market. Come to the revolutionary super vibration experience.

Source: Internet

At the same time, AAC officially launched RichTap’s tactile feedback development tool on January 26. Currently, RichTap Creator is the first to be listed on the Apple App Store. As of now, RichTap Creator ranks first in the App Store software development tools list and has received a five-star rating of 5.0.

After the concept of metaverse was born, the demand for technology in AR\VR and other industries is strong, and the market prospect of tactile feedback is considerable. According to the latest report released by British consulting firm IDTechEx Research in February this year, the tactile feedback technology market is growing exponentially, and it is expected that the market size will be close to US$5 billion (approximately RMB 32.1 billion) by 2025.

In addition, Puyin International is optimistic about AAC’s development prospects in the optical business. Although its share is not comparable to that of Sunny and Largan, it is expected that by 2023, AAC will become the top three in the Android mobile phone lens market.

Source: Puyin International

3. The stock price is sluggish, is it a good time to buy goods?

As AAC’s stock price continues to decline, its dynamic PE has fallen below 15 times, which is at the lowest level in the past 10 years.

Source: Wind

The market has produced relatively obvious differences. On the one hand, company executives and some investment banks have frequently increased their holdings in the company since the end of last year, and the prospects are promising; but on the other hand, since the company issued a profit warning, many investment banks have begun to downgrade their ratings, indicating risks.

Public data shows that JPMorgan Chase increased its holdings of 2.6517 million shares and 3.7274 million shares of AAC on November 12 last year and January 20 this year respectively. On January 21, the company's executive director Mo Zuquan increased his holdings by 80,000 shares; on December 13 last year, CEO Pan Zhengmin increased his holdings by 1 million shares, raising his shareholding ratio to 41.15%.

However, CLSA, Macquarie, and Bank of America Securities are all pessimistic about the company’s prospects, and have lowered their stock target prices to HK$24, HK$20.8, and HK$28 because the company’s performance fell short of expectations and they believe that competition will be more intense in the future. .

Puyin International believes that the company’s strategic goals are clear and the strategy is well implemented. In the long term, AAC Technology's active deployment of automotive electronics is expected to help its rapid growth in the context of the explosion of the new energy vehicle industry.

Source: Puyin International

As of press time, AAC Technology bucked the trend and rose 1.5%, and the recent decline has shown a certain easing trend. Are you optimistic about the future of AAC Technology? Are you planning to start buying bargains? Welcome to leave a message for discussion.

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