This is a company report on AAC Tech (02018 HK), a company in the telecommunications equipment sector. The report notes that the company's FY21 results were in line with previous profit estimates, with a 12.6% YoY decrease in shareholders' net profit. Revenue increased by 3.1% YoY, while gross margin remained flat. The report revises down revenue forecasts, expecting component shortages to persist in 1HFY22 but ease in 2HFY22. The report also expects the unit value of acoustics products in smartphones to increase, automotive acoustics to bring new growth, and x-axis haptics to gain more share in mid- to low-end markets. However, the report also notes that the optics business is expected to face pressure in terms of shipments and average selling prices due to fierce market competition and a lack of specification upgrades. The report revises down gross margin forecasts, expecting increased penetration of standard small cavity speaker modules to benefit the acoustics business, but intense market competition and weak market demand to still put pressure on the gross margin of the optics business.
