Lion: Raises the target price of AAC TECH (02018) to HK$54.4, maintains "high conviction to outperform the market" rating.

Citi released a research report stating that AAC TECH (02018) had a net profit of 901 million RMB in the first half of the year, up 2.9% year-on-year, while the adjusted net profit grew by 37.4% year-on-year. The company expects double-digit revenue growth for the fiscal year 2026, with a steady improvement in gross margin. AAC TECH has made new progress in its liquid cooling and optics businesses. Amid industry headwinds, the company maintains a solid full-year guidance. Citi noted that progress in its liquid cooling and optics businesses is expected to make a greater contribution starting next year. Citi maintains the valuation multiples target for AAC TECH, considering that earnings forecasts for 2026 to 2028 have been raised by 3% to 13%. Consequently, the target price has been adjusted from HKD 50.4 to HKD 54.4, equivalent to a target price-to-earnings ratio of 18 times for this year and next, and maintains a "highly confident outperform" rating.