On July 30, international rating agency Moody's confirmed AAC Technologies Holdings Inc. (02018) "Baa3" issuer rating and senior unsecured debt rating, while upgrading its rating outlook from stable to positive. Moody's believes the rating reflects AAC TECH's leading position in acoustic and haptic components, improving business diversification, long operating history, and strong track record of maintaining robust capital structure and excellent liquidity.

Roy Zhang, Moody's Vice President and Senior Analyst, stated: "The positive outlook reflects AAC TECH's improving profitability, primarily driven by margin improvements in its optical business division and continued business diversification across product portfolio, customers, and production bases. These developments further strengthen the company's credit profile, providing greater cushion against market volatility and execution risks associated with its expansion."

Moody's expects AAC TECH's revenue to grow approximately 10% annually over the next 12-18 months, driven by strong product portfolio and increasing customer penetration. EBITDA margin is expected to remain at 2024 levels of approximately 19%. Due to increasing EBITDA and stable debt, AAC TECH is projected to reduce its adjusted debt-to-EBITDA ratio to approximately 2.0x by the end of 2025.

Regarding the optical business, Moody's believes AAC TECH has gradually established itself as a key supplier in the optical business sector. With expanding operational scale, improved production efficiency, and increased contribution from high-end products, the optical business is expected to become a sustained source of profit contribution for the company over the next 12-18 months.

For the automotive business, Moody's believes that with continued synergies from the Premium Sounds Solutions (PSS) acquisition, AAC TECH's diversified business has structurally improved. This diversification includes increased product variety supply, expanded exposure to more end markets such as automotive, and expanded production base. These improvements enable AAC TECH to better respond to market volatility.

Additionally, Moody's noted that while uncertainty remains regarding the potential impact of increased U.S. tariffs on some of AAC TECH's customers, the direct impact is limited as the company sells very few products directly to the U.S. market. AAC TECH's robust financial position and excellent liquidity also provide some buffer.

According to reports, AAC TECH's optical business has achieved a remarkable CAGR of 36% over five years since 2019, with 2024 revenue surpassing RMB 5 billion and optical lens shipments ranking among the global top three. The company's globally unique WLG glass-plastic hybrid lens is expected to reach tens of millions of units in annual shipments this year, having been applied to flagship models' main cameras of mainstream brands including Huawei and Xiaomi, establishing large-scale production and application landscape.

AAC TECH's automotive acoustic business also developed rapidly in 2024, generating revenue of RMB 3.52 billion with a gross margin of 24.8%. Products from AAC TECH and its subsidiary PSS have been widely applied to traditional automotive brands and international luxury brands, with large-scale applications in new energy vehicle companies including Xiaomi, XPeng, AITO, and Li Auto.

According to AAC TECH's announcement on July 31, the company has completed the second batch acquisition of PSS shares, making PSS an indirect wholly-owned subsidiary of AAC TECH.