AAC (2018)

Equity Research 23 August 2026 | 8:53PM HKT

AAC (2018.HK) Better 2H with new business in expansion; down to Neutral on fair valuation

2018.HK 12m Price Target: HK$50.00 Price: HK$40.10 Upside: 24.7% NEUTRAL Allen Chang We remain positive on AAC’s focus on premium smartphone models | Goldman Sachs (Asia) L.L.C. and components expansion (e.g., from acoustics to cameras, vapor Verena Jeng chamber cooling, etc.), along with its extension to automotive | Goldman Sachs (Asia) L.L.C. electronics, AI data centers (e.g., cooling and lenses for CPO), and edge AI devices. Nevertheless, the 1H26 miss also reflects a slow Ting Song | Goldman Sachs (Asia) L.L.C. smartphone market amid high memory costs; on a sector-relative basis, we downgrade AAC to Neutral from Buy. Our new 12-month target price is HK$50.0 (vs. HK$62.5 previously), implying 25% Key Data _____________________________________ Market cap: HK$47.0bn / $6.0bn upside, which is lower than 87% upside for our Buy-rated coverage Enterprise value: HK$43.5bn / $5.5bn 3m ADTV: HK$296.9mn / $37.9mn in Greater China Technology. The share price currently trades at 14x China 2027E P/E on a +28% avg. NI YoY in 2027-28E, closer to our target Greater China Technology M&A Rank: 3 P/E multiple of 17x, suggesting the positives are largely priced in. We Leases incl. in net debt & EV?: No

could turn more positive on AAC if we were to see GS Forecast __________________________________ 12/25 12/26E 12/27E 12/28E stronger-than-expected smartphone market, faster-than-expected Revenue (Rmb mn) New 31,817.0 36,686.4 41,144.3 44,048.7 AI data center products ramp up, or healthier-than-expected Revenue (Rmb mn) Old 31,817.0 37,612.5 41,881.7 44,693.5 EBITDA (Rmb mn) 5,622.2 6,251.6 6,893.8 7,082.5 competition in smartphones. EPS (Rmb) New EPS (Rmb) Old AI data centers / edge AI devices as long-term upside: Besides P/E (X) P/B (X) 1.8 1.5 1.4 1.2 automotive acoustics, we see AAC continuing to diversify into new Dividend yield (%) 0.8 0.9 1.1 1.2

end markets to reduce its single smartphone market exposure. In AI CROCI (%)

data centers, cooling and lenses are the key areas of expansion, 12/25 6/26 12/26E --

including Coolant Distribution Units (CDUs), cold plate, Quantum EPS (Rmb) 1.42 -- -- --

Dot (QD), vapor chamber, and casing for optical modules cooling, as GS Factor Profile ______________________________ Growth well as lenses for Co-Packaged Optics Fiber Array Units (CPO FAU). Edge AI devices are another area of upside for AAC, which could be Financial Returns

new technology devices for consumers, expanding AAC’s Multiple

components market (e.g., acoustics, cameras, RF, casing, etc.). We Integrated are positive on AAC’s rising exposure to generative AI, and would turn more positive on AAC once its AI data center / edge AI devices Percentile 20th 40th 60th 80th 100th

revenue exposure can offset the impact from modest smartphone 2018.HK relative to Asia ex. Japan Coverage market growth. 2018.HK relative to Greater China Technology

2H26 to recover: The company’s 1H26 revenues were down 22% Source: Company data, Goldman Sachs Research estimates. See disclosures for details. HoH to Rmb14.5bn on a slow season and slow smartphone market

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.

AAC (2018.HK) Income Statement (Rmb mn) ________________________________ NEUTRAL Rating since Aug 23, 2026 12/25 12/26E 12/27E 12/28E Total revenue 31,817.0 36,686.4 41,144.3 44,048.7 Cost of goods sold (24,801.2) (28,236.7) (31,520.5) (33,675.2) SG&A (2,115.6) (2,447.6) (2,550.9) (2,731.0) Ratios & Valuation __________________________________________ R&D (2,311.5) (2,830.6) (3,141.8) (3,323.7) 12/25 12/26E 12/27E 12/28E Other operating inc./(exp.)…