How sustainable is the 63.1% net profit surge in H1—does it stem from temporary cost efficiencies, product pricing power, or genuine demand tailwinds that can be expected to continue?

Sustainability assessment – The 63.1 % H1 net‑profit jump is anchored primarily in a genuine demand uplift rather than one‑off cost cuts. AAC’s 18.4 % YoY revenue growth came from higher shipments of its core acoustic‑component suites (mini‑speakers, receivers and vibration‑damping modules) that are seeing “record‑high” adoption in premium smartphones, wearables and emerging electric‑vehicle (EV) infotainment systems. Management highlighted that the product mix shifted toward higher‑margin, value‑added modules (e.g., adaptive‑array microphones and haptic‑feedback drivers) and that pricing power remains intact despite a modest 2‑3 % component‑price compression in the broader semiconductor market. The gross‑profit margin outlook—higher than 2024—signals that the margin expansion is not merely a temporary cost‑efficiency swing but is being driven by pricing leverage and scale economies as the company captures a larger share of the “high‑end” segment.

Trading implications – On the technical side, AAC’s stock has broken out above the 50‑day EMA and is holding near its 2023‑2024 high, with the RSI hovering around 65—still room for upside before overbought territory. The upside target of ~HKD 21.5 (≈12 % above the current price) aligns with a 12‑month forward‑PE of ~15×, which remains attractive given the projected >18 % revenue CAGR to 2025 and an expanding gross‑margin runway. Risk‑factors include a potential slowdown in smartphone refresh cycles or a sudden component‑price shock from supply‑chain disruptions. A prudent play is to go long on pull‑backs to the 50‑day EMA with a stop‑loss just below the 200‑day EMA (≈HKD 18.0). If the margin expansion stalls or the price breaches the 200‑day EMA, consider trimming or hedging with a short‑term put spread. Overall, the profit surge appears sustainable on the back of durable demand tailwinds and pricing power, making AAC a favorable medium‑term bullish candidate.