[ET Net News Agency, 14 December 2018] HSBC lowers its target price for AAC Tech
(02018) to HK$49.8 from HK$87 and maintained its "hold" rating.
The research house believes the growth of AAC's addressable market has stalled,
primarily due to a smartphone shipment and design innovation slowdown. From the volume
side, they see low visibility to increase acoustic and haptic units per device in upcoming
5G phones as AAC needs to compete with other mission-critical components for limited
space.
HSBC thinks the competition will continue to intensify. They believe Luxshare is
becoming more competitive in the acoustic and haptic business, while Goertek has
strengthened its leadership position in acoustic via launching the SBS solution to compete
with AAC's SLS platform. Given competitors are catching up with improving yields, while
AAC still generates premium gross margin relative to peers, they see risk for AAC to face
further market share losses and pricing pressure ahead. (RC)