Performance Meeting Minutes | AAC TECH(02018): Revenue to reach all-time high in 2025 driven by AI business growth

Recently, AAC TECH (02018) released its full-year performance report for 2025. The financial report shows that the group's revenue once again reached a record high of 31.82 billion yuan, a year-on-year increase of 16.4%. Net profit increased by 39.8% year-on-year to 2.51 billion yuan. Operating cash flow reached 7.18 billion yuan, an increase of 38.1% year-on-year. During the meeting, the management emphasized that the company has undergone a strategic transformation from a traditional component manufacturer mainly focused on acoustic and haptic components for mobile phones. AI has become the core cornerstone driving the growth of the company's multiple product lines, with the rapid growth of consumer electronics heat dissipation business, future layout in automotive intelligent cabins, AR glasses, Siasun Robot & Automation, all stemming from new demands and industrial transformations brought about by AI. Looking ahead to 2026, the group expects the annual revenue growth rate to be no lower than that of 2025, and the gross profit margin to increase on the basis of 22.1%. The following is a summary of the Q&A session from AAC TECH's performance meeting: Question: The gross profit margin of the company's optical business has significantly increased. What are the main reasons for this and what are the prospects for the future of the optical business? Over the past two years, the company has made significant improvements in the technical level, production efficiency, and yield rate of the optical field. In 2025, the optical business segment achieved overall profitability for the first time, which is significant as this segment covers vertical integration capabilities of plastic lenses (including WLG, G+P unique technology routes) and modules. In 2025, the overall gross profit margin of the optical business was about 11.6%. Among them, the gross profit margin of plastic lenses exceeded 30%, and it is expected to further increase to around 35% in 2026, leading the industry. The gross profit margin of module terminals is expected to steadily increase from a base of 4%-5% in 2025. High-end products in 2025, such as 7P and above lenses, OIS modules, saw a nearly doubling in sales year-on-year, reflecting the company's mature technology and production capabilities. In the future, the company will continue to explore incremental growth in the mobile phone, automotive, and non-mobile phone sectors, and leverage WLG technology to lead the way. Question: Looking ahead to 2026, what are the three major growth engines that the company is optimistic about? Are there any further merger and acquisition plans? The company's revenue growth rate in 2025 was 16.4%, and it is expected that the growth rate in 2026 will not be lower than this level. The main growth engines include: 1. Precision components: Significant progress was made in 2025, with VC heat dissipation products contributing revenue of over 1 billion yuan. It is expected that the revenue growth rate of this segment in 2026 will exceed 30%, and the heat dissipation business will maintain high growth in the next 3-5 years. 2. Optical business: The layout has reached scale and will maintain a good growth trend in the coming years. 3. Automotive business: After completing the acquisitions of PSS and PSG, the company has become a system-level solution provider, with capabilities in algorithms, power amplification, and speakers. The revenue of automotive acoustics is expected to maintain high double-digit growth of 15%-20%, with a stable gross profit margin. In terms of merger and acquisition layout, the company has acquired a 51% stake in YuanDi to establish a market position in the liquid cooling industry. In the future, it will strengthen its overseas layout, not ruling out setting up factories in the United States to serve global customers and accelerate the development of the server liquid cooling business. In addition, the company is optimistic about the medium to long-term growth opportunities brought by the AI era in the form of AR glasses (including diffractive waveguide, optical engines) and Siasun Robot & Automation. Question: Please summarize the core reasons driving the performance growth in 2025 and introduce the strategic plans for each business line in 2026. What are the plans for the server liquid cooling field? The performance in 2025 was the result of comprehensive breakthroughs in each product line. In 2026, it is expected that the acoustics will maintain mid to high single-digit growth, with the gross profit margin increasing steadily on the basis of 2025; the revenue growth rate of electromagnetic transmission is expected to be 5%-10% or higher, with a steady gross profit margin; the revenue growth target of precision components is 30% or more, with continued optimization of the gross profit margin; the scale of the optical business will steadily expand, with the gross profit margin further increasing; the revenue of sensors and semiconductors is expected to grow by 15%-20%, with the gross profit margin remaining steady. Regarding server liquid cooling, through the acquisition of YuanDi, the company has gained a foothold in the data center construction wave. In the future, it will expand into connectors, mechanical components, cooling plates, etc., combine its global operational and manufacturing capabilities, rapidly obtain certification from top customers, and respond to overseas demand. Question: The heat dissipation business achieved a multiple growth in 2025. What was the DRIVE behind this? The company's VC heat dissipation solutions have achieved mass production. Building on a solid market share in China, the company has successfully entered the supply chain of major overseas customers. Driven by overseas customer demand and sales growth, the performance of this segment in 2025 was impressive. In the future, the heat dissipation business will expand from mobile phones to laptops, tablets, and other terminals. We believe that this field has the potential for a billion-dollar business scale and will be a core growth engine in the next five years. Question: The company conducted a large-scale share buyback in 2025. How do you view the current secondary market valuation? The management strongly supports the buyback plan, with a total buyback amount of approximately 450 million Hong Kong dollars in 2025. Currently, the company has sufficient cash flow, with an operating cash flow net of capital expenditure of 4.5 billion yuan in 2025, providing solid support for merger strategies, new direction investments (such as liquid cooling, AI), and shareholder returns. When market valuations are low, the company will continue to buy back shares and consider using buyback shares for equity incentives to support long-term high growth. Question: How do you understand the company's transformation from a hardware supplier to a "global leader in AI perception and interaction systems"? AI is reshaping industries, and we are strategically positioning ourselves through core technology platforms such as sound, light, electromagnetics, and precision to participate in this transformation. We have already achieved stage results in related fields; we are actively exploring and even leading emerging cutting-edge tracks, continuously expanding technological boundaries and application spaces. This transformation is reflected in the deep layout of new AI hardware. For example, in the AR glasses field, the company combines Dispelix's globally leading diffractive waveguide technology and expands capabilities in optical machinery and optical engines, significantly increasing the value per unit (expected to reach 100-200 USD). These layouts are expected to bring clear opportunities for mass production and significant revenue and profit growth in the next 2-3 years. Question: What is the company's layout and progress in cutting-edge fields such as humanoid Siasun Robot & Automation? The company launched the humanoid Siasun Robot & Automation solution last year, including core product matrices such as motion joints, dexterous hands, six-axis force sensors, IMUs (inertial sensors), miniature microphone arrays, and precision components. Currently, the company is jointly developing the first AI hardware-specific motor project with customers. In addition, dexterous hand-related products have been mass-produced and shipped, with revenue exceeding tens of millions in 2025. The company is in close communication with many Siasun Robot & Automation companies at home and abroad. Although the humanoid Siasun Robot & Automation market is still in the early stages of diverse development, AAC TECH's deep layout in acoustics, motors, optics, precision components, and motors is highly compatible. The company widely communicates with customers through BU-style management to actively seek commercial opportunities. Once the industry takes shape, the company will become an important participant in this field. Question: How does the company transform its AI industry layout into real business opportunities and performance? The related content has been mentioned earlier. Through the company's transformation in recent years and external technological developments, AI has truly become the foundation for our multi-product line growth, leading to direct contributions to performance, such as why our consumer electronics heat dissipation growth is so fast in 2025? This is mainly due to AI demand. For example, the increased demand for AI algorithms has increased the reliance on high-performance VC heat dissipation products; the demand for AI voice interaction has driven a significant growth in the company's sensor and semiconductor business. Furthermore, AI is leading to the emergence of multi-form devices (such as glasses, Siasun Robot & Automation), bringing broader growth opportunities for comprehensive service providers in the sound, light, and electromagnetics fields.