AAC TECHNOLOGIES HOLDINGS INC. (Incorporated in the Cayman Islands with limited liability)
(Stock code: 2018 HK) 2020 1Q Results
15 May 2020 1Q 2020 Highlights
(RMB million) Revenue Gross Profit GP Net Margin Profit
1Q2020 3,560 823 23.1% 53
1Q2019 3,753 1,129 30.1% 432
YoY -5.1% -27.1% - 7.0 p.p -87.8%
1Q20 Revenue Breakdown Impact of COVID-19 outbreak: operation and production RMB（million） significantly affected during Q1; Optics , 245 , 7% Others , 4 , 0% Full resumption of operation and production by mid-March:
Comprehensive checks for all employees; frequent communication MEMS, 199 , 6% with customers and suppliers; Acoustics, 1,421 , 40% Continue to focus on R&D: R&D expenses at RMB489 million, +18.7% YOY, amounted to 13.7% of revenue;
Positive on 5G outlook: Rapid 5G development and higher ED&PM, penetration of 5G smartphones will bring new opportunities . 1,691 , 47%
1 Effective Financial Management & Solid Cash Position
Operating cash inflow of RMB1.08 billion for 1Q2020, well covered the capital expenditure of RMB1.01 billion;
The Group remained prudent in the financial management, and proactively managed the cashflow and liquidity by rigorously reviewing the budgets for capital expenditure and R&D.
Net gearing remains healthy at 8.7% as at 31 March 2020 (10.5% as at Dec 2019). Cash position of the Group was RMB5.81 billion.
Net gearing remains at low level; RMB Million Ample gross cash on hand 7,000 12.0% RMB million 1Q 2020 1Q 2019 5,512 5,811 (1 Jan - 31 Mar 2020) (1 Jan - 31 Mar 2019) 6,000 10.0% Cash & bank bal. as at beginning 4,814 4,059 5,000 8.0% Cash inflow from operations 1,077 1,430 4,059 3,864 4,034 4,000 Capital expenditure (1,010) (673) 6.0% Net borrowings raised / (repayments) 280 (66) 3,000 2,224 4.0% Share repurchase - (130) 2,000 1,603 Net changes in deposits and others 650 (157) 2.0% Cash & bank balances as at period 1,000 5,811 4,463 end 0 0.0% FY14 FY15 FY16 FY17 FY18 FY19 1Q20
Cash and Cash Equivalents (RMB'mn) - LHS Net Gearing* - RHS
*(Total loans and bonds-cash and cash equivalents)/Total assets 2 Performance by Business Segments Optics – Delivering Growth
Review: 1Q20 revenue +61.7% YoY to RMB245 million in 1Q20. GP Margin grew to close to 10%, continuing its uptrend. Plastic Lens: Yield and production efficiencies improving on the back of - (1) Big data modeling, simulation, and automation capabilities; (2) High precision manufacturing equipment; - Subsequent to 1Q20, monthly production output close to 60 million units in 2Q 2020, and expects to reach 100 million units by 3Q 2020. - 6P projects on track; 7P projects targeted for mass production in Q4. WLG： - Satisfactory progress made, collaborating with mainstream smartphone manufacturers; - Targeted for production of 30 million glass lenses in this year 2020.
Camera Modules: - Vertical integration as a core strategy, targeted for mass production in 2H 2020.
4 Acoustics
Performance in 1Q20 Outlook
1Q 2020 revenue and gross profit margin Stereo acoustics has become a standard feature declined by 24.3% and 6.8 ppts YoY, to for flagship smartphone models, and has gradually RMB1.42 billion and 26.0%, respectively. penetrated into mid- to low-end models.
Both the shipment and utilization rate Upgraded Classical SLS at ±0.75mm, is witnessed decrease under the impact of scheduled for shipment by 2H20. COVID-19
SLS penetration has increased further to 70% Proactively expanding into automobile, smart of our Android models by Q1, and target to speakers, smart TV, AR, TWS headphones and reach 80% by year-end. wearable devices
5 Electromagnetic Drives (ED) & Precision Mechanics (PM)
Performance in 1Q20 Outlook
ED & PM revenue reported a solid YoY growth Prepared for shipment of x-axis haptic motors to Android of +8.1% to RMB1.69 billion. Blended GP models to increase multi-folds to 45 – 50 million units in has narrowed 8.4ppts to 23.6%. this year 2020. Increased market share of the stepper motor modules, The margin was affected by the COVID-19 the Group expects the annual shipment could reach a outbreak as it has adversely affected the total of 20 million units in 2020. manufacturing efficiencies and product shipment. However, the industry demand for Planned to have >50% of business related to 5G haptics upgrade remains strong. smartphone projects.
X-axis haptics widely adopted by most Leveraging on precision mechanics capabilities and Android flagship models, as core selling point. liquid metal processing knowhow, the Group has developed mechanical hinges for folding panels, and has started discussions with customers. Furthermore, the PM business enjoyed rapid growth and is Group is also promoting its 3D cover-glass casing expected to deliver strong growth in the future. solutions to customers.
6 Micro-electromechanical systems (MEMS)
Performance in 1Q20 Outlook
Revenue +29.1% YoY to RMB199 million despite COVID-19 impact, Gross margin The Group plans to double the production capacity edged down by 2 ppts to 16.5%. of MEMS microphones in 2020.
The strong demand for MEMS microphone The Group’s high-end microphone with a SNR of was fueled by noise-cancelling TWS 70dB+, smaller size, and low energy consumption headphones, smartphones and home have been a hit in smartphone and smart watch appliances. customers.
MEMS market share gradually grew.
7 Efforts on Sustainability Key Benchmarks Disclosure Adhered to International Standards Select Ratings & Rankings
BBB GRI Standards ESG data assurance
AA Score 76.9/100
8 Efforts on Sustainability (Cont’) Major Awards & Recognitions
Certificate of Excellence of the Hong Kong Sustainability Award 2018/19 Organization Award Special Mention in the H-share Best ESG Report (Large Cap) Companies and Other Mainland Best in Reporting (Large Cap) Enterprises Category at the Best Excellence in GRI Report Citation for Environmental, Certificate of Merit Social and Governance Corporate Governance Awards Disclosure of the 2019 Best 2019 Innovative Frontrunner Award Annual Reports Awards
Recognized “Hong Kong Awarded World Green Organization’s Outstanding Corporate “Green Office and Eco-Healthy Citizenship” from HKPC Workplace Award” label
9 Appendix Appendix - AAC’s Key Product Lines
Acoustics 平台 MEMS
Including： 1 2 3 Products Products Speaker Receiver Acoustic MEMS System MEMS ASIC chip Design RF Tuner Modules Microphone
Optics Electromagnetic Drives
Products WLG Hybrid Plastic Camera Lens Lens Module Products Motor Exciter, Stepper motor audio display Module
Precision Mechanics
Products Metal 3D Glass Wireless Cooling LCP LDS Mechanics Power Transmission
11 Appendix - Major Segments Creating Synergies Together
MEMS Acoustics Haptics/ Optics Metal Casing/ RF Solutions Components ED Components 3D Glass
In-house Electromagnetic Integrated RF Front-end Special Metallic Expertise Seamless Integration Moulding Design
• Develop total solutions by cross-platforms core technologies • Production know-how to optimize functional performance 12 Appendix – Diversified Manufacturing Bases
Czech Republic
Kozomín (under development) Optics Moulding
Jiangsu Changzhou Acoustics Electromagnetic Drives Optics Precision Mechanics Shuyang Malaysia Acoustics Electromagnetic Drives Precision Mechanics Malaysia Suzhou (under development) Optics Moulding Optics Anhui Ma’anshan Precision Components Chongqing （under development） Optics Vietnam Philippines Guangdong Bac Ninh Guangxi Shenzhen(Longgang） Optics Nanning MEMS Optics General Vinh Phuc Acoustics Optics Optics Trias, Cavite (under development) Precision Mechanics Electromagnetic Ba Thien IP Industry Drives Park This map is for reference only and does not represent the actual territory of China. 13 Appendix – Investing in Future Sustainable Growth No. of Patents 6,000
4,885 Korea 5,000 Denmark Japan Suwon US Copenhagen 4,000 Osaka Aalborg Irvine Finland 3,000 China Turku Tampere Beijing, 2,000 Wuhan, Singapore Nanjing, Changzhou, 1,000 Suzhou, Shanghai, - Shenzhen FY14 FY15 FY16 FY17 FY18 FY19 1Q20
RMB Million RMB Million Capital Expenditure R&D Expenses 6,000 30% 5,286 2,000 15.0% 1,664 1,717 5,000 25% 1,512 4,138 3,903 1,600 12.0% 4,000 20% 3,033 1,166 1,200 9.0% 3,000 15% 2,225 2,421 859 800 656 6.0% 2,000 10% 489 1,010 1,000 5% 400 3.0%
- 0% - 0.0% FY14 FY15 FY16 FY17 FY18 FY19 1Q20 FY14 FY15 FY16 FY17 FY18 FY19 1Q20
Capex (RMB mn) - LHS CAPEX as % of Revenue - RHS R&D expenses (RMB'mn) - LHS R&D as % of Revenue - RHS
14 Appendix – Financial Summary: P&L RMB Million Q1 2020 Q1 2019 Revenue 3,560 3,753 Cost of goods sold (2,737) (2,623) Gross profit 823 1,129 Gross margin % 23.1% 30.1% GM% excluding non-recurring items 24.1% 30.1% Other income, gains and losses 130 64 Fair value gain on financial assets at FVTPL - 2 D&S expenses (67) (70) Administrative expenses (172) (160) R&D expenses (489) (412)
Exchange loss (12) (4) Finance costs (84) (56) Profit before taxation 129 494
Taxation (77) (62)
Profit for the period 53 432 Net profit excluding non-recurring items 87 432
Weighted average shares 1,209 1,213 EPS-Basic(RMB) 0.04 0.36 Effective tax rate 59.3% 12.6% 15 Appendix – Financial Summary: Balance Sheet As at 31 March 2020 As at 31 December 2019 Non-current assets Property, plant and equipment 17,034 16,911 Right-of-use assets 1,108 1,072 Goodwill 164 164 Deposits made for acquisition of PPE 705 455 Investment property 13 14 Equity instruments at FVTOCI 344 351 Intangible assets 425 434 Current assets Inventories 3,712 3,664 Trade receivables 3,146 4,345 Other receivables 1,546 1,231 Amounts due from related companies 5 4 Taxation recoverable 61 41 Pledged bank deposits 11 11 Bank balances and cash 5,811 5,512 Total assets 34,085 34,207 Current liabilities Trade payables 3,323 3,961 Other payables 1,543 1,513 Contract liabilities 11 10 Lease liabilities 128 97 Amounts due to related companies 62 75 Taxation payable 190 178 Short-term bank loans 2,567 1,876 Non-current liabilities Long-term bank loans 3,497 3,850 Unsecured notes 2,727 2,685 Government grants 210 209 Deferred tax liabilities 64 65 Lease liabilities 327 310 Derivative financial instruments 39 16 Total equity 19,398 19,361 16 Appendix – Financial Summary: Operating Cashflow
Q1 2020 Q1 2019 RMB Million
Profit before taxation 129 494 Adjustments: 657 583 Operating cash flows before movements in working capital 787 1,077 Decrease in trade and other receivables 983 980 Increase in contract liabilities 1 1 Decrease in trade and other payables (517) (826) (Increase) decrease in inventories (75) 275 Decrease in amounts due to related companies (13) (4) (Increase) decrease in amounts due from related companies (1) 2 Cash generated from operations 1,165 1,505 Taxation paid (88) (75) Net cash from operating activities 1,077 1,430
17 Investors information
STOCK CODE CONTACT INVESTOR RELATIONS
The Stock Exchange of Hong Kong Limited: Company website: https://www.aactechnologies.com/en/
2018 Bloomberg: 2018: HK Email : [email protected]
Reuters: 2018.HK Official IR wechat: ISIN: KYG2953R1149
MAJOR MARKET INDEXES
Constituent stock of the Hang Seng Index and included in its sub-indexes: (Contents in Chinese only; English contents are available on company website) − Corporate Sustainability Index, (Mainland and HK) Corporate Sustainability Index, HSI ESG Index − Composite LargeCap Index − Composite Industry Index (Industrials) − High Beta Index − SCHK China Technology Index − Large-Mid Cap Momentum 50 Index
MSCI China Index Disclaimer
The performance and the results of operation of AAC Technologies set out in this presentation are historical in nature and past performance is not a guarantee of future performance.
Certain statements made herein are forward-looking or which use certain forward-looking terminologies. These forward-looking statements are based on the current beliefs, assumptions and expectations of the Board of Directors of AAC Technologies regarding the industry and markets in which it operates. Actual results may differ materially from expectations discussed in such forward-looking statements and opinions.
AAC Technologies, the Directors, employees and agents of the Company assume (a) no obligation to correct or update the forward-looking statements or opinions contained in this presentation; and (b) no liability in the event that any of the forward-looking statements or opinions do not materialize or turn out to be incorrect.
Investors should carry out their individual due diligence research and should not make their investment decisions based on any information or representations contained herein.