AAC Technologies Holdings Inc. (2018) Earnings Call Transcript & Summary

Welcome, investors. Welcome to the AAC Technologies 2024 Interim Results Announcement. I'm [ Joyce Wang ], Director of IR Department and also host of the meeting. On behalf of the company, I would like to thank your attention in AAC. Please allow me to introduce the management. Mr. Benjamin Pan, Executive Director and Chief Executive Officer of AAC Technologies; and Mr. Kelvin Pan, Executive Vice President of AAC Tech; and Ms. Dan Guo, Chief Financial Officer of AAC Tech; and Mr. Jack Duan, CEO of AAC Optics; and Mr. Shi Tingjia, Vice President of Strategy of AAC Tech.

And thank you for your attendance. And today's meeting includes 2 parts, starting with my presentation on AAC Technology 2024 interim financial performance. This will be followed by a Q&A session. [Operator Instructions] Please introduce your organization and name before questions. [Operator Instructions] Thank you. Now let's take a look at the results. In the first half of 2024, the group's total operating revenue increased 22% year-on-year to RMB 11.25 billion. The GP margin stood at 21.5%, reflecting a 7.4 percentage points. The notable improvement was driven by the mild recovery in the smartphone sectors, improved product mix, mainly from acoustics, optics, precision mechanics, as well as continued improvement in operational efficiency and also the consolidation of PSS. The reported revenue, yes, RMB 9.75 billion with a GP margin 20.9%. PSS consolidation contributed revenue of RMB 1.52 billion, with a GP margin of 25%. And also the group's net profit amounted to RMB 537 million. In the first half, the group remained prudent in financial management, continued to strive for the strong cash position. And the group operating cash inflow amounted to RMB 2.65 billion, improved by 29.1%. Net gearing ratio stood at 6%. Cash on book is RMB 7.81 billion. The inventory turnover days were 71 days, improving by 9 days, from 80 days as of 31 December 2023. And then I would like to share with you the performance by business segments, Acoustics business. And in the first half, the group's acoustics business recorded a revenue of RMB 3.46 billion, represents an increase of 4.1% year-on-year. The gross profit margin reached 29.9%. And the Combo series is an innovative 2-in-1 acoustic and electromagnetic products, shipped close to 4.5 million units, providing customers with a wide range of product choices. Automotive and consumer acoustic products business. We are very happy to see that PSS related business consolidation contributed a revenue of RMB 1.52 billion with a gross margin of 25%. The group's automotive acoustics business continued to make breakthroughs and the synergy with PSS has been progressing well. After the acquisition, the group will also accelerate expansion in both overseas and the domestic markets and continue to supply medium, high-end models to leading NEVs. The group is exploring vertically integrated solution of loudspeakers, amplifier and algorithms and the tuning services and also actively plan its high performance products to penetrate first-tier automotive companies globally. Optics business. In the first half 2024, optics business reported revenue of RMB 2.21 billion, up 24.9% year-on-year, mainly driven by the recovery in the optic industry, higher shipments and improved ASP. The GP margin increased to 4.7%, significantly improvement of 21.7 percentage points Y-on-Y. And also, the premiumization of plastic lenses has been progressing well, with the 6P lens maintaining more than 15% of the total shipments. Camera modules also saw steady growth in both the shipments volume and ASP. And the 1G6P hybrid lens shipment rose by nearly 40% Y-on-Y to nearly 1.5 million units. The proprietary WLG technology has been gaining positive feedback from smartphone OEMs. It has a unique advantage of unibody modeling, which greatly improves the production efficiency and the precision. To meet the customers' demand for innovation -- and the group is proactively collaborating with the customers in the advanced developments of more high-end and the flagship models. Electromagnetics Drives and Precision Mechanics business. This consolidated segment generated revenue of RMB 3.66 billion, noting a year-on-year increase of 1.1%. And the GP margin for the combined segment stood at 22.9%. And the electromagnetic drives business saw a notable growth in the gross margin, which was largely fueled by the group's high-performance x-axis motors and the product mix improvement. The cumulative shipments of the group's x-axis linear motor are expected to exceed 1.9 billion. And we also have this first mass production shipments of the new form of extendable lens transmission VCM module and with its ultrathin 3 mm thickness. The group has maintained a stable relationship with the various core customers in precision mechanics, which contributed to top line increase in many products, such as the metal hinges, heat dissipation and the laptop enclosure business. And also, we'll have this kind of hinge product shipments with nearly 500,000 units in the first half of 2024. Heat dissipation products increased by almost 100%. And we also see this as capacity build in Yangzhou began to ramp up, the group's market share in overseas customers' laptop enclosure is steadily growing. Let's take a look at the Sensor and Semiconductor business. In the first half, revenue from the sensor and semiconductor business amounted to RMB 389 million, down by 21.2%, mainly due to delay in new projects into the second half of 2024. And we also have the shipments and the proprietary high-performance MEMS microphone with the shipment proportion of Android mid- to high-end products rising 15 percentage points to over 60%, spearheading industry. After sharing the financial performance by segment, let's focus on the business highlights and the strategic development. The group have developed a compact acoustic platform that achieved a significant amplitude of up to 6. -- 0.65 mm enhancing energy density in a confined space. The dual coil coaxial product will soon be launched in flagship models with an improved frequency response. Haptics. The group has the industrial original acoustic and motor integration design that is in the stacking space while providing excellent sound and tactical (sic) [ tactile ] experience, realizing the greater synergy. And ultraslim series is tailored for the slim devices with a lightweight design of just 2 mm. Optics. G+P solutions actively being advanced with multiple clients. And also the intake -- the light intake can be increased by 15% (sic) [ 50% ]. And we can also realize the prism on OIS. And in terms of the precision manufacturing based on the raw materials and simulation design and we have become the topnotch heat dissipation supplier and providing the clients with an outer sink and hinge solution and can reach this thinness of 2.84 mm and improved impact resistance by more than 100%. And we are creating the ultimate experiences and leading the upgrade of the smart devices. At the same time, with the new technologies emerging and also the faster development of AI and our group is also seizing the opportunities. And there are 2 opportunities. The first one is about the terminal AI's launch requires higher heat dissipation design. And secondly, the MEMS microphone as the core component of the voice pickup will significantly benefit from spec upgrades. The trend towards device stainless is driving increased demand for ultra slim components such as an actuator and speakers. Our group's latest acoustics and electromagnetic products are more than 50% thinner than the conventional specifications. And we are continuing to explore the motors application in optic modules and the self-proprietary technology is highly recognized by the customers. And we think in the future, the ultrathin phones will accelerate the demand for the retractable camera modules. The future automotive market outlines the second growth curve for the group. And the PSS product portfolio covers high-performance classic car speakers in various sizes, including low, medium, high and full range, providing high-quality sound experience for customers. [indiscernible] in first tier automotive companies globally. After completing the acquisition, the group will also accelerate its expansion in both domestic and overseas markets. And the group exploring a variety on the vertical integration solutions of the loudspeakers and tuning services, et cetera. The above is my introduction of the interim results. We can start the Q&A session.

[Operator Instructions] Let's take the first question. It's from CICC, [ Huang Tien Tsin ].

Thank you management for your time and we are very happy to see the outstanding performance in the first half of 2024. We have also seen that the AI content is increasing in the smartphone and we are glad to see there are a lot of integration of your products in the smartphones. So with the AI's emerging opportunities and how do you foresee your product portfolios in the individual module value increase and also your future collaboration in the big North American clients? Would you like to share more about this information to all of us?

I'd like to answer this question. In recent years -- and the smartphone market has entered a relatively steady development and we stick to the value improvement principle. And we will increase our value by the high performance and quality. At the same time, we will provide the same performance with the cost -- lower cost products. So in the speakers and the motor as well as our heat dissipation products, the strategies are consistent. And it includes the Combo and Android motor penetration to the lower or mid- to low-end products and all the operation and the practices in line with our value first principle. The AI developments are present. We paid more attention into its development. But at present, we are still stick to the customer value-based strategy. In terms of the voice increase as well as the future demands raised by AI, we think this kind of change will be occurred in the next 1 or 2 years. And in different models -- different model changes triggered by AI, we will also face a lot of challenges. You can see the ultrathin models and the foldable models and ultrathin foldable models and those are the megatrends. The ultrathin model will have a higher requirement of the inner space. So in the future, the speakers and hinge and the dissipation -- and heat dissipation, we need to strive for the ultrathin trend. And this also provides opportunities for us. In the future or in the second half of the year or even in the next year, this will be more obvious. So the growth at present are driven by the product portfolio improvement and our diversification. And AI smartphone that's launched this year and there are a lot of new AI functions launched. And I believe there will be new AI functions. And next year and those functions and the new changes will be more systematic. And the ramping up of the volume will also be more obvious next year. And we believe that the next year will be the -- this standardized or this starting year for this AI function and the smartphones ramping up and the growth. With regard to our customers, we have a very good relationship with our U.S. clients and including other clients. And we want to provide a sustainable products and services to our clients, both in the domestic and overseas markets.

Thank you. Next question.

My second question is about the optical business and we see a strong recovery in the optics in the first half of the year. So I would like to know more about the outlook in the second half, for example, the shipment volume as well as the GP margin. Now do you have any guideline -- and any guideline or target of net profits? And WLG's shipments in the first half was promising. And there was the outlook of a shipment in the second half. And what are the clients of the WLG? So any expectation of the volume in the second half?

Thank you for your question. In terms of the optics, I will give you some figures. And as for the development of WLG and Mr. Duan will supplement. As far as we know, the total revenue of the optics is RMB 2.21 billion, and the GP margin is also increase. And the comprehensive is -- GP margin is about 5% and this is 22% year-on-year growth. Plastic lens. And the revenue is CNY 490 million and our GP margin is 16% to 17% and a year-on-year growth of 27%. And we see the plastic lens for the whole year, the environment is good. And also the value is sound. So for the full year of this year, we think the shipment volume will be increased by 5% to 9%. And the sales will increase about 20% -- or above 20%. And the GP margin has increased -- the GP margin for the first half is about 16% to 17%, as mentioned before. And in the second half, we hope to achieve 25% with the product mix and also efficiency enhancement. Modules. The shipment volume of the full year is about 20% growth and the sales value is about 40% growth. So we think in the full year, the revenue of the optics can achieve a 25% growth. The net profits in the second half and in the fourth quarter and we will turn positive. And the net profit will also have a very positive development in the second half.

Okay. With regard to the WLG, as you can see, the shipment volume is going up. And in this year, we also followed this growing trend. The shipping volume cycle is long. And this year and next year and the shipment will continue. In terms of the new clients acquisition -- and you can also see the development of the new clients based on our outstanding performance. And then all our customers are interested in WLG, this technology. So with our efforts this year, we believe the high-end projects from some key clients or big clients will be launched. And the revenue contribution will be made next year and the shipment volume of the smartphone can reach over 10,000 units in the WLG. And also this prisms and also our casting -- processing and also recognized by the [indiscernible] on clients and also the tele lens is the potential market. The WLG prisms market is very important and this has become a very core components to many clients. Apart from the smartphones, the automotive cameras, as well as dispose cameras, their shipments is over 1 million. And the next year, this will be several million. And for the pure glass lens, we use the WLG to replace that conventional glass. And we have this advantages. And we have the confidence for the WLG's growth. It also is reflected in our capacity and our preparation of the mass production in the overseas market. So the WLG, is the important driving force of our future growth.

Thank you, management, answers. And thank you, [indiscernible] question. Next question is from Andy Meng from Morgan Stanley.

Thank you, Joyce. Good afternoon, leaders and management. First, I would like to congratulate on your excellent performance. My question is about the AI smartphone and the heat dissipation. And you talked about the growth of next year is higher. And we sold a number of -- 150 million units in your report. So with the rapid growth of AI, whether this volume and the value can be grown to over CNY 1 billion or higher figure. And what's the outlook of its value? So whether this segment has a potential of CNY 1 or 2 billion?

There are different categories in our heat dissipation and the conventional is the bronze pipe for the heat dissipation. And the biggest challenge of the bronze was the size. And then these -- this heat dissipation VCs changed it from the bronze to stainless steel. So from the low, mid -- the mid-end products where we will use this stainless steel heat dissipation but this heat dissipation function is not as good as the bronze. And the high performance of ultrathin on heat dissipation is still trend in the industry. And both in the smartphones and the laptops or even the [indiscernible] and AR -- VR and they will also use this high-performance ultrathin heat dissipation. And they will have higher requirements of its thinness and the performance. At least in the smartphone, the high-performance of bronze heat dissipation, the cost is about RMB 10. And with the AI's development, this kind of high performance will return to the markets. And the time line, I think this will be penetrated in the market in next year or the year -- after next year, in 2025 to 2027. If the penetration rate can reach 20% to 25% and the market for AAC can easily exceeded over RMB 1 billion. And this kind of heat dissipation will be firstly applied in the smartphones because the chips are integrated. And when this integrated chips can be extended to the laptops and other devices and this ultrathin heat dissipation products will be expanded, its market. So in the next 3 years or more and this market potential can exceed RMB 1 billion. But where is the ceiling, we still need to observe the client demand. And we need to provide an AI with a high performance transformation and transmission and energy. And AAC has its strategic plan on this regard. Apart from this heat dissipation products with our manufacturing capability and all the VCs automatically manufactured. And we also have our upgrade plan on our automation. And this will help us to reduce the cost and also help the development of the industry.

Thank you, Andy's question. Next question is from [indiscernible].

Thank you, Joyce. Good afternoon. In the first half and the GP margin has significantly improved. You also mentioned the product mix improvements. So do you have any breakdown of the product mix and any improvements of those specific segments? And any breakthroughs in the acoustics and optics?

In our reports, we mentioned the ASP of the acoustics and the growth is double digits. Smartphone market is more stable. And with a stable development and our shipment volume will be increased. We think those several new products, promotions and the first one is the SLS structured products. Because in the smartphone, the power requirement is high but the space for -- the size is limited. So we use this structure to enhance the performance and also control the cost based on the platform. So all the high-end, high-performance products, including the mid-performance products, which -- of 2,500 -- all the 2,500 products will be upgraded with the SLS structure. And this kind of upgrade will continue because of the new trend, the ultrathin models and the foldable models. So the foldable models, if they want to maintain the same performance or even better performance, [Audio Gap] structure and to balance the performance and the power and the size. So the SLS will be the trend. And in terms of our low and the mid-end products, there is some noisy environment and they need the higher voice volume. And we will maintain the higher voice volume of our products. And we will increase 13% to 15% of the voice volume in our low- and mid-end products and to have a differentiation with other products. So the large voice volume products, the shipment volume this year is over 5,000. And also the Combo products of the motor and the speaker and we'll continue to promote and then penetrate in the market. And the combo is a combination of a motor and a speaker within 1 space and this kind of price is further optimized and we have these advantages. Some new products, for example, the refractory cameras as well as the motors. And we will make more ultrathin models and to make breakthroughs. So in the next year and in the next 1 or 2 years and we want to achieve milestone breakthroughs. Innovation is time. We think 1.5 year or 2 years and you will see the market penetration. But from the demand of the customers, we have already witnessed the development of the products and the introduction of the products. And some products will be launched in the end of this year in the market.

Frank He from HSBC, please go ahead.

Thank you, Joyce. Congratulations on your interim results. I have 2 questions. The first question is WLG and also the future -- the modules. WLG, the individual module's volume is large. But compared with this size and this needs to be improved. As far as I know, you have made a significant improvement in the yields. So would you like to share more information on the WLG's outlook?

I'd like to take the question. WLG's technology, I think, though it's not about the [ GMO's ] combination with other technology. It's more like the semiconductor technology. It depends on the simulation and also [indiscernible] as well as the highly precision and of the tools and the equipment. About 1 year ago, the WLG is about 1.4 inches and it was a new technology. And many people think this kind of performance will be lower than general. This will be higher. Actually, this kind of performance will be higher than the plastic lens and with the same diameter. So not mentioned in higher diameter. So this is the definite and affirmative progress we have achieved. And compared with [ GMO ] the individual WLG has a very high performance. In terms of the yield -- and then for example, around about 30 pieces in the automotive products. And the yield -- the product yield is high, it's about 85% to 90% in the car products. And in [ NPI ] level, if we can achieve the mass production and this yield, kind of example. And we have completed 10 million. And the product yield can reach about 90%. With regards to the cost. And we cannot and state here directly but compared with the [ GMO ] it's only 30% to 40% of its cost, if we just compare their costs or even lower because we have these products of [ GMO ] and we can obtain the -- and accurate information of our customers. So if we have a conservative calculation and this cost can be lower than 35% to 40%. So the WLG has an advantage in its function, performance and the cost.

The semiconductor and the -- also transmission and we see the revenue was down for the first half but the GP margin was up. So I'd like to know the reason and whether this kind of growth can be sustained? And from the revenues perspective, can you make an expectation that in the second half of next year, the revenue will have a positive growth?

Kelvin, can you take the question?

Sure. I'd like to answer this. So in the first half of the year, the GP margins growth is mainly due to the sale of proprietary microphone. And from last year and to this year, we are promoting the proprietary microphone and the lens and also the ASICs manufactured by ourselves and we can control the cost well. With the abundant shipment volume, this cost is well under control. And with the AI's development, we will continue to promote the proprietary microphone and we also have a plan to develop the high-end microphone -- for more high-end microphones and to support the clients in both domestic and overseas markets. We've been ramping up our customers and also the timing of the ramping up. And in the second half and this mass production will be realized in the second half. And the revenue of the first half has kept flat with last year. But next year, we see this high-end microphones introduction, or this high-end mobile phones introduction and this kind of growth will be speeded up. So next year -- and there will be about a 3 to 4 pieces used in 1 high-end cell phones. So starting from next year, we have our good preparation and the R&D and this will support us, a rapid development and we expect that next years the microphones business in both the product portfolio and the proprietary ratio as well as the profitability will have a very significant growth. And this AI trend will last at least for 2 to 3 years. And this also pave the way for this development. And we have a good connection with our customers. And the innovation in the R&D is faster than the peers. So in the next 2 to 3 years, we will have a very strong potential in this market.

Thank you, Kelvin. Thank you, management. And this next question is from [ Tina ].

Thank you, management. I'd like to ask you a question about the automotive products. And the PSS has already been consolidated. So in the future, how do you leverage their customers and R&D resources to expand your business? And in your report, we also see in the mid- to high-end EVs and you have further development. Do you have any price pressure? And what kind of speed we will adopt in the PSS automotive products?

Thank you for your question. And after the acquisition of PSS, we have also obtained a very good R&D and customer platforms. So through this customer platform, how do we apply our products into automotives? So this is our plan. As mentioned before in the microphone and also the algorithm and the motor -- and we have already achieved the [ sizings ] in the platforms. And in the future and we want to realize our core technologies and in the automotives and also make breakthroughs. And this is the important strategy in our automotives. The business growth of PSS -- and actually is related to the PSS and acoustic products. It doesn't only include the speakers and -- but also the amplifiers and the tuning services, et cetera. And this can be synergized with AAC's own technology and to provide the customers with the high-quality hardware as well as the outstanding experience. So this is the future growth trend of this business. Next year -- we think this growth will be obtained next year, not only in the hardware but also the comprehensive development.

So do you have any -- the -- like this growth targets that from a compound growth or long-term growth target?

In the next 3 to 5 years, the volume can be reached to the volume of our consumer products, 3 to 5 years to achieve this target.

Yes. Thank you. I'll add little. And the first product of the mass production is from 2022. And after the acquisition of PSS and the competition of our company has largely improved because PSS -- and has a good connection and a customer base in the Europe and the U.S. markets. And its R&D potential is also high. So in the future, we have the plan to further penetrate in the Europe and the U.S. markets and also speed up the upgrade. And in Chinese markets and we also have our plans because the automakers and breakthroughs and innovations are faster. And we have the mass production in the amplifier and algorithm and we also have the reason to be in microphone in the next 1 or 2 years and those products will enter the automakers domestically. And this kind of customers can be introduced to PSS. So the growth of PSS includes 2 parts. The first part is traditional clients and also their products. And the second part is from the new products and the clients from AAC. So in the next 3 to 5 years with the parallel development of the 2 markets, we will emphasize the synergy with PSS. And our R&D will also help PSS to enter new markets, for example, the Japanese and the Korean markets. And therefore, in the next 3 to 5 years, these strategies will be implemented step by step. In the short term, PSS will still rely on its conventional routes in the Europe and the U.S. markets. And to achieve a stable developments in the future, this will be expanded.

Thank you. And the next question is from Everbright. [indiscernible], please go ahead.

I'm analyst from Everbright. My question is about the short-term development and in the Q4 and the outlook of the consumption of smartphone is gloomy. Or there will be the sales decline in the market. So what's your outlook of your optics and acoustics? And the growth trend will be maintained in the second half? Or do you have any guidelines or targets of your GP margin in the second half?

I will answer first part of the question. And for this plan and also the guideline and is prudent for this year. And the markets we expected this year is about CNY 1.15 billion to CNY 1.2 billion. And this is very prudent and conservative. And the second half of the market -- or the second half of the year in the market, this kind of status will be stable. Of course, there were different opinions of customers. And we will be in line with our customers' expectation because they have their own forecast. And we will -- based on their forecast to make our plans. And based on their forecast and our development is relatively steady. And it won't have a big influence on our products selection or model selection because those kind of decisions have already been made in the first half. Product optimization and the shipment volume increase and the ASP improvement. And this kind of opinions won't have a big impact. Of course, there will be different opinions or different voices on the key clients -- big clients that we have already considered these volatilities in our strategy in the second half. And this won't influence us in the second half. And in the next 3 to 5 years, there will be different trends or tendency in the market that we will have our risk management strategy as well.

Okay. I will make a supplement on some figures. And for the first half and as mentioned before, we talked about the optics and the heat dissipation and also on other products and electromagnetic transmission and all the growth are stable. And the revenue is 15% higher compared with last year and it doesn't include the consolidation of PSS. And then for the first half, for the full time and the PSS consolidation is about CNY 3 billion. And the GP margin is also growing, about 21.1%, including PSS. For the full year, the second half -- the second in terms of the specification and also the product mix for the full year and the GP margin, including the PSS, will be higher than the 21.5% to about 22% to 25%.

Thank you for your questions. And the next question is from [ Kane ].

I have a small question. And the R&D expenditure is increased by 40%. So what's your forecast for the second half and next year? And this R&D expenses and increase is related to the development of new products in the second half of the year?

And yes, of course, the second half of the -- second half of the year, the revenue will be higher. So we will have a higher R&D expenses in the first half. And the number of our R&D staff is stable. And we think -- I mean, we have an average and kind of balanced R&D expenses for the full year. And we want to help our customers to do the upgrade and experience an upgrade. And this will have more projects development. So it seems the R&D expenses are higher. But in the next 1 or 2 years and this kind of expenses will be stabilized.

Yes. And this is a kind of secular impact and some R&D made in the first half. And this will also trigger the growth of the revenue of the second half. And the R&D expenses and always about [ 7% to 5% ] and we controlled at this rate.

And the last question is from Haitong Securities.

I'd like to congratulations on your interim results and it's an outstanding performance in the first half. So my first question is about the -- for example, the R&D and the technology restoration or preparation in the haptics and acoustics and optics, et cetera. And this is also a platform like company. And also, we see the development of AI goggles. And AI goggles will become the advantageous and -- of the company. So with regard to the AI goggles, do you have any optic preparation or this instruments capability?

Okay. I'd like to take this question. And we are conducting the XR preparation, including the VR and AR. And the first project is about the MR products and including this 2P, 3P and also and other components of the -- and other components. And of the optics or some kind of this reflective and optics products. And some products are in the mass production and shipment. And the Meta AI goggles sales, as far as I know, has already achieved over 1 million. We see the potential of the market need. And this also -- and this is the potential of the speakers. And we are collaborating our customers for the mutual on R&D and this kind of products will be launched in the market soon in the next 1 or 2 years. But we need to consider it's a smaller size and privacy and high performance. So in the privacy protection and we have our technology advantages. So in the AI goggles, we think there is a great potential for us. And AI goggles also related to the optics. Like this optical display and we also invested in the optical waveguide and also these other investments and the semiconductor process. And we are collaborating with our partners to do the design and the simulation. And we see this need of the AI goggles. And there will be some single color AI goggles in the market in the next, or the year after next year, there will be color AI goggles. But it also raised a challenge for us. And including -- and with our current optics, including AR display and also our structural components and our technology, as a supplier, we can help our customer to and upgrade their products and need to do the vertical integration. And the AI goggle is relatively simple structural products. Most of the components can be installed by us or integrated by us. And many clients and hope us to do this -- to do this vertical integration because those wearable devices and also have price pressure. With the AI goggle, there's about over USD 1,000, this pressure will be high. So in the next 3 to 5 years and the plan will be more clear and obvious and we are collaborating with our customers in domestic and overseas on the R&D.

Thank you, management. And thank you, your question. Hence, would like to ask Benjamin Pan to make a summary.

And we are very happy to see that we have made great developments since 2020 and under the leading of Kelvin's team and we have fulfilled this M&A and other performance. And this CNY 537 million, is reflecting our potential growth. The acoustics gross profit has returned to its sound track and we can achieve the 35% in the near future. And before, we only have this in micro acoustics. And with the acquisition of PSS, we established this customer and complete or whole scenario solution provider. So this will become the growth force or this driving force for our growth. And acoustics is the first segment of the company of over CNY 10 billion revenue. And in the next 5 years, it can reach about CNY 20 billion. And for example, this 30-odd, over 30% GP margin can be maintained. And the PSS as well as the amplifier, their GP margin of 25% can be maintained as well. With our efficiency enhancements and the cost control, we still have the potential for this growth. And this is the most important segment in our company. Optics. We also entered this sound and [indiscernible] development. And the GP margin of the optics together with the sales growth will be in line with our product upgrades. As mentioned by Ms. Guo, the shipment volume of this year of our lens has increased by 9%. But the sales revenue -- the sales value has increased about 20%. And the GP margin for the first half is less than 17%. And in the second half, we want to achieve the 25%. And the GP margin will be over 25% in the second half. And with the upgrade of the products and the technology improvement, we will also achieve the product use and the efficiency development and they will pave the great potential for the next year's GP margin growth. G+P, together with the WLG's development. You also see a lot of development. And in the future, we will see more mass shipment to our customers. And this will gradually become the highest value -- valuable segment. And the GP margin of the optics -- optic modules will be further improved as well. And we want to use 2 years to benchmark with the leading companies in the industry. Certainly, I'd like to talk about the transmission and haptic products. And with its value growth and in the future, we will spin off this -- with this precision mechanics. For the first half of the year with our motor upgrade, especially the Android motor grade -- upgrade, our GP margin has already achieved about 30%. And this growth will be maintained. And most importantly, in this segments, we want to achieve the higher growth status and trends in this segment. So this is the -- our expectation for the transmission and the -- this business -- motor business. And fourthly it's about our precision mechanics and heat dissipation products. And in the first half, the GP margin is about 18%. And the scale is, at present, it's only about RMB 150,000 but in the future, this potential will be -- exceed CNY 1 billion. At present, we can foresee the CNY 5 billion in the market. And also, this has the potential of CNY 10 billion. And next is about the sensor and the semiconductor and the GP margin is improved. And in the second half, this will be further improved and the momentum will be kept in the next 1 or 2 years. We also have our self-proprietary R&D. This is also driving the value of our products. I would like to kindly remind you that this RMB 537 million profits is not our target. It's also about our potential of the future development. Thank you.

Thank you. Our time is constrained. AAC Technology 2024 Interim Results announcement has to be concluded. Our results and also materials will be uploaded to the company official website. Feel free to contact the company IR team. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]