China's AAC Technologies (2018) and Apple supplier yesterday reported its third quarter net profit fell 28.7 percent to 973 million yuan due to lacklustre iPhone sales.
For the nine months ended September 30, the weaker global smartphone market continued to have a negative impact on the company, AAC's executive director Richard Mok Joe-kuen said.
AAC Technologies, which supplies acoustic and haptic components for Apple products such as the iPhone, said revenues in the July-September quarter dropped 8.5 percent to 4.87 billion yuan, compared with the consensus estimate of 5.7 billion yuan. However, driven by Android customers' adoption of innovative solutions, the contribution to the company's revenue generated from Android customers increased by 3.6 percent.
AAC, which is estimated by research and brokerage firm Sanford Bernstein to derive half of its revenue from Apple, saw its stock plunge 57 percent this year as trade war friction between China and the United States intensified. Apple's iPhone shipment unit in the September quarter remained almost flat from previous year at 46.9 million units, even though total revenue jumped 20 percent due to higher product prices.
An appreciation of the Chinese yuan and a weak product upgrade cycle resulted in a 4.2 percentage points decrease in gross profit margin for the first nine months of the year, AAC said.
Shares of AAC Technologies once fell as much as 7.3 percent before ending at HK$55.80, the lowest since October 26. As of the last close, the stock has fallen 57 percent so far this year.
AAC, which also supplies leading Chinese smartphone makers including Huawei Technologies, has underperformed the Hang Seng Commerce & Industry Index sector by 20.6 percentage points in the past month.
In August, the company reported a second-quarter net profit fell for the first time in nearly four years, hit by plateauing iPhone sales and a sluggish global smartphone market.
AAC competes against China's Goertek and US-based Knowles as one of the world's largest acoustic component makers. Neil Shah, partner at Counterpoint Research said the increasing number of products with microphones, such as smart speakers and TVs represent a bigger business opportunity, but competition is also tough.
Meanwhile, Q technology (1478), a camera module manufacturer for Chinese branded smartphone, yesterday said it recorded an almost 80 percent increase in sales of camera modules in October compared with the previous year and a 35 percent increase in sales in fingerprint recognition modules.