瑞声科技（2018.HK）：产品升级及边际扩张将持续;重申买入

We hosted AAC Tech 4Q24 outlook investor call yesterday (28 Nov). Mgmt. is positive on continued spec upgrade in smartphone acoustics/optics/haptics in 2H24E and expects mild smartphone demand recovery to extend into FY25E. Mgmt. also reiterated FY24E guidance of 15% YoY revenue growth (exclu. PSS), with GPM HoH expansion in 2H24E. By segment, mgmt. shared the latest updates: 1) Optics: high-end HLS mix to improve with higher OIS/periscope HCM shipment to Android customers, WLG order wins to boost sales upside into FY25/26E. 2) Acoustics: high-end order wins with multiple major customers. 3) Haptics/casing /hinges: continued spec upgrades on light-weighted designs and foldable phone penetration. 4) Heat dispassion: material innovation and AI smartphone upgrade demand. Overall, we lift our FY24-26E EPS forecasts by 6-8% to reflect strong product upgrade trends, better margin recovery and AI spec upgrade into FY25/26E. Our new TP of HK$40.83 implies 19.6x FY25E P/E. Near-term catalysts include key customer product launches, spec upgrades and GPM expansion.

Spec upgrades and better margins across all segments in 2H24E. Mgmt. stated that AAC secured order wins in acoustic/haptics/optics/casing products in Apple/Android's latest flagship models in 2H24E, which will boost margins due to better spec and higher supply share. In particular, mgmt. maintained positive view on GPM expansion for both plastic lens and HCM in 2H24E, and breakeven target for optics biz is on track in 4Q24E. AAC's WLG business also secured order wins with customers from both smartphone and automotive clients, targeting 10kk unit shipment in FY25E.

FY24E/2025 outlook: spec migration for iPhone 17 and Android AI phone. Mgmt. is confident that sales momentum and margin expansion will sustain into FY25/26E, mainly driven by 1) share gains in optics HLS/HCM/WLG with GPM expansion, 2) spec upgrade (acoustics/haptics/heat//optics) for next-gen Apple/Android AI smartphones, 3) sales synergy with PSS auto acoustics. Overall, we expect AAC's earnings to grow 138%/27% YoY in FY24/25E.

Our FY24-26E EPS forecasts are 5-9% above consensus; Maintain BUY. We lift our FY24-26E EPS forecasts by 6-8% to reflect strong product upgrades, better margin profile and AI spec upgrade into FY25/26. Our new SOTP-based TP of HK$40.83 implies 19.6x FY25E P/E. The stock now trades at 21.8x/17.2x FY24/25E P/E.