Goldman Sachs lowers target price of Apple supplier AAC Tech to HK$20.5, rating kept at Buy

 

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Apple supplier AAC Tech’s first-half revenue declined by 2% year over year, in line with its low single-digit guidance, but gross margin dropped further to 14.1%, resulting in a 27% drop in gross profit, which is 20% weaker than Goldman Sachs and the market expectations, said Goldman in a note. 

The broker lowered its net profit forecast for the period of 2023 – 2027 by 12% – 16%, mainly due to lower revenue forecasts and gross margins, reflecting intense competition in the smartphone lens and slow performance in the smartphone end-market.

Goldman continued to expect revenue growth and gross margin recovery for the company next year, and expected its second-half revenue to rise 18% from a year earlier, supported by the launch of new smartphones by major clients, as well as the increased use of high-end acoustics, mechanical components and lenses by Chinese brands, it said.

Goldman lowered its target price for AAC Tech to HK$20.5, and maintained its Buy rating. AAC Tech is trading 1.5% higher at HK$15.26 as of 13:42 pm Hong Kong time.