AAC Technologies Holdings Inc

HKEX:2018

Q2-2025 Earnings Call

[Maggie Huang, executive]

Good afternoon, investors, and welcome to the AAC Technologies 2025 Interim Results Announcement Conference. I'm the host of this event, Joyce Huang, Director of Investor Relations at AAC Technology.

First, on behalf of the company, I would like to thank you for all your interest in AAC. Please allow me to introduce the company management team present today. Mr. Benjamin Pan, Executive Director and CEO of AAC Technologies; Mr. Kelvin Pan, Executive Vice President of AAC Tech; Mr. Dan Guo, Chief Financial Officer of AAC Tech; Mr. Jack Duan, Chairman of AAC Optics; and Mr. Shi Tingjia, Senior Vice President of Strategy of AAC Tech. Thanks management for attendance.

This meeting includes 2 parts, starting with my presentation on AAC 2025 interim results financial performance and business development. This will be followed by a Q&A session. [Operator Instructions]

Next, I would like to present the group's results for the first half of 2025. The group's revenue achieved RMB [ 13.32 ] billion, a rapid growth of 18.4% year-on-year, which was attributed to the continuous improvement in the market share of major products. Gross profit amounted to RMB 2.75 billion, an increase of 13.9% year-on-year. And the gross profit margin was [ 20.7% ], down slightly by 0.8 percentage point due to changes in product mix revenue from the precision mechanics, optics and sensors and semiconductors grew at a faster pace.

Revenue growth rate significantly outpaced growth of SG&A expenses. Net profit increased by 63.1% to RMB 876 million, primarily due to the continued profitability improvement in Optics and rapid growth in high-margin precision mechanics. The group's revenue continued to grow, achieving both improved quality and efficiency. According to IDC data, the global smartphone shipment volume increased by 1.5% and 1% in Q1 and Q2, respectively. As shown in the last figure, the group's consumer electronic-related business achieved revenue of 11.58 billion, a growth rate several times global smartphone shipment volume. Revenue from the EMD & PM and Optics business increased 27.4% and 19.7%. Automotive [indiscernible] achieved a total revenue of 1.74 billion, accounting for about 13% to 15% of the group's total revenue.

In terms of gross profit margin, the Optics saw a significant improvement, increasing by 5.5 percentage points year-on-year. [indiscernible] margin for plastic lens surged by over 10 percentage points. In the automotive sector, the GP margin of the newly acquired company, First Light, also exceeded the industry average. And the group's operating cash inflow amounted to RMB 2.89 billion, up 9.1%, and while free cash flow was RMB 1.86 billion, CapEx was RMB 1.44 billion, an increase of 57.5%. Net gearing ratio stood at 4.7% with cash on book of RMB 7.75 billion. The group will continue to improve its operational efficiency and operating cash flow will support the group's long-term healthy development and innovation.

Next up, we'd like to share with you the performance by business segment, acoustics. In the first half of the year, Acoustics business revenue reached RMB 3.52 billion year-on-year increase of 1.8%. GP margin was 27.2%. SLS master and Coaxial speakers continue to lead the mid- to high-end market with shipments exceeding 17 million units, 17 million units in the first half of the year and the increase of nearly 40%. Group also launched industry [indiscernible] speaker with a unit thickness of only 1.4 million liters. Accompanied by the second half of the more high-end product ramp Acoustic business gross margin will significantly increase.

And we also in the Automotive Acoustic Business revenue of a RMB 1.74 billion, up 14.2% year-on-year. GP margin was 23.9% awarded for domestic encompassing [indiscernible] speakers. And we also have the full-stack-in-vehicle acoustic systems was unveiled in the Shanghai Auto Show showcasing the high-performance speakers and also the AI music splitting algorithm creating a comprehensive acoustic experience for customers. The group also announced the acquisition of Hebei First Light Auto Parts with key product portfolio of smart microphone, E-call microphones and RNC sensors. Its smart microphones are now covering all major vehicle models, further strengthening the group presence in autonomous acoustic system solutions.

In terms of Optics, and the revenue was RMB 2.6 billion, up 19.7% year-on-year. Shipment volume of both optic sensors and optic modules increased year-on-year, accompanied by the continued growth in ASP. And GP margin was 10.2% a year-on-year improvement of 5.5 percentage points. and there are 3 main business lines. Firstly, for plastic lenses, shipment volume of 6P and above plastic lenses exceeded 18% with stable shipment of high specification, 7P products and increased orders for mid- to high-end plastic lenses.

And secondly, regarding the camera modules ASP further increased, thanks to the rapid shipment of mid- to high specification products with module revenue increasing by over 20% year-on-year shipment volume of modules 32 megapixel and above accounted for over 34%, an increase of over 3 percentage points year-on-year. [ 108 ] main camera modules for several key Android models have entered mass production, OIS modules sales exceeded RMB 800 million, up close to 150% year-on-year. Thirdly, regarding plastic hybrid lenses, the WLG product line achieved a milestone in product development and has been widely recognized by customers. We will provide details later.

Next, we will focus on the EMD and PM. In the first half of the year, revenue from this consolidated segment increased by 27.4% to RMB 4.63 billion, mainly due to the continued ramping up of the products such as access motors, innovative side buttons and metal casing in customers' mid- to high-end models and the GP margin was 22.9%. The group rapidly expanded new business for example, the innovative customized groundbreaking SuperSlim Engine at just 2.33 millimeters thick and weighting only 2.25 grams and it continues to lead in this mobile phone industry.

And in the field of PM, the group's 3 major business segments have achieved a breakthrough. In terms of the metal casting, the group continues to maintain a high and stable supply customers mid to high-end and folding model and benefit from the market penetration. Regarding Laptop Enclosure, revenue was RMB 713 million in the first half and 18.4% year-on-year.

Finally, let's look at the Sensors and Semiconductor business. In the first half, the revenue was RMB 608 million, 56.2% year-on-year increase primarily driven by the large-scale shipments of the group's high SNR microphones to major overseas customers.

So these are the financial performance of each business segment. And we will start the Q$A session.

[Operator]

First let's welcome -- first question and this is from the Everbright [indiscernible].

[Unknown Analyst]

Good afternoon management, I'm [ Tianzi Fu ] from Everbright [ Securities ]. [indiscernible], I'd like to congratulate congregative the achievement for the first half and this is a very encouraging in terms of the revenue and the profit. And many investors also the system nonrecurring income, and this also made a contribution to the purpose income, and it did also make [indiscernible]. So please explain this process be nonrecurring income and what's the influence in the second half?

[Unknown Executive]

Okay. Thank you very much for the question. In terms of the nonrecurring income and as it relates to the application and the continue of the application of a [ PFS ]. Actually, the value gain should the actual high paid lowered by the previous [indiscernible] very reasonable price. And after we complete this transaction, and this will help us to create better synergy and this is just a onetime adjustment [indiscernible] half of the year.

Next, I will also talk about the opportunity. As you mentioned, both in the revenue and the profitability a very good growth trend has already been shown in the first year -- first half of the year. And the revenue for this first half of the year -- the growth rate was about 18.4%, and we can we have the confidence that the growth rate in the second half of the year will remain at this level and will not be lower than 18.4%. In addition, the GP margin is about 22.1% and you see the new products ramping up and the GP margin is also lower than the average and with the development of this new product the second half, we have the confidence to increase the GP margin.

And yes, last year, the GP margin -- overall GP margin was [ 30.2% ] and the last year [indiscernible] very clear.

[Unknown Analyst]

Thank you very much. And the second question is about the Optics business and Optics business improvement is one of the highlights in our performance. And the last year, had [indiscernible] achieved the profit, positive profit. And this year and this kind of situation has been validated. Many investors are interested in the continuous development and [indiscernible] regarded this year can be regarded in the first year for the largest [indiscernible]. So what's the outlook of the steel of profitability?

[Unknown Executive]

I'd like to take this question. And this is a large-scale mass production and this will be more than 10 million. And [indiscernible] the expectation is about 15% and growth. We also talked about the WLG [indiscernible] and the positive profitability. I think this will grow [indiscernible] next year and new WLG is very stable and above 80%. We are realizing the single land profitability. There's a mass production in the second half, the [ G+ ] hybrid lens system. In the second half, the [ G+ ] hybrid lens will be exceeded -- will be exceeded the plastic lenses and they will reach about 33%.

[Unknown Analyst]

Okay. And the last question is about the strategy. And our team have followed AAC for more than 10 years. [indiscernible] From these Automotive, Acoustic and [indiscernible] development and including the consumer electronics. So -- and as well the robotics business. I'd like to see the outlook whether there will be a new company growth engines or the new profit engine in the future?

[Unknown Executive]

To answer this question [indiscernible] and we have [indiscernible] in the technology on R&D in mobile and smartphone industries and consumer electronic industry, and we will continue to optimize our plan in the smartphone industry [indiscernible]. In addition, we will also capitalize the opportunity of AI development and the [indiscernible] sensor you see from the last year has already about 700 million and it may double this year, and it is will be scaled up and this is the growth engine.

And in addition, our [indiscernible] solutions for the overseas high-end [indiscernible]. In the second half of the year, and this will enter the next production as well. And last year, there still was about 300 million. This year, it will be tripled. So in the overall AI application scenario [indiscernible] will remain better contribution to profitability. And we see a stable smartphone shipment volume.

[indiscernible] also talk about thinking smartphone folding [indiscernible] it raised the demand of ultra sales products and provide new opportunities for us. For example, we have this high performance, high energy and high density product and this will help us to improve our continuous development on ASP and which the stable development, our Acoustic, and so [indiscernible] will record growth, and those [indiscernible].

Okay. We also have our global [indiscernible] Automotive industry. And last year, we acquired our [indiscernible] and this year, we acquired [indiscernible] and from the high-end [indiscernible] amplify our system and the core [indiscernible] and we have the sensor module and specific [indiscernible]. And on automotive sectors have already accounted about 10% of our revenue. And we have already obtained the design win for a very high-end brand in the domestic stage will redefine the selling of the domestic audio system. And this system has a [ 13 car ] requirements and we have this design [indiscernible] still is also very large and we will have more information for our customers.

And we will also continue our expansion and the autonomous automotive industry and [indiscernible] on the brand expansion. In the longer run, we will also see some opportunity of AI so for example, the robotics and the [indiscernible] insight and we are preparing our plans in this regard. In the next few years, AI and [indiscernible] our devices will provide opportunity. And apart from the [indiscernible], there will be more demand and we are proactively discussing with our customers overseas and domestically. And in the future, and will be some independent AI devices directly connected with some large models of AI overstate [indiscernible]. We think those kind of products will be long next year, and that mass production will be carried out as well.

[Unknown Analyst]

Thank you, thank you very much, Mr. [indiscernible], for your detailed answers, and I am looking forward to the company's continued breakthrough in performance in the second half and the future. Thank you.

[Operator]

Thank you for your question. And next one, we'd like to invite [indiscernible].

[Unknown Analyst]

I have 3 questions. First, is about the GP margin. I'd like to follow up the GP margin. The GP margin improvement is significant in Optics so what about the Acoustics and the Automotive Acoustic and the Microphone [indiscernible]? What are the reasons and what are the long-term trend?

[Unknown Executive]

Okay. There are 2 parts in the consumer electronics, we see that [indiscernible] or this kind of [indiscernible]. And in the first half, the sales of my microphone is included. [indiscernible] GP margin it's a little lower than last year because we are ramping up the new products in the first half. And in the first half of the year, and the revenue as percentage will be about [ 4% ], and next year -- second half of the year is [ 6% ]. So the GP margin for the first half is a little lower and after the ramping up of the new products and the GP margin, we'll return to a more healthy level. And we say with the collaboration pace with our customers. The GP margin will be improved in the second half of the year.

In terms of the automotive, it's relatively stable. In the short term, the automotive market is a little [indiscernible] about [ PSS ], we are helping the opportunity to expand the business on a dramatic market. So in terms of the [indiscernible] GP margin, this is a relatively balanced and the new products will be further introduced. And also [indiscernible] new products will be introduced in the second half. If we hope our GP margin in the second half and the next year, and [indiscernible] it is a very solid collaboration with this customer especially in the new products and R&D and the penetration. So we don't need to have much to worry about it.

[Unknown Analyst]

Okay. Second question is about Optics business. And we see this hybrid lense [indiscernible] is very high and [indiscernible] and this is also our competitive edge. So I'd like to know the percentage of this hybrid lense and in the overall lens and the penetration in the next 3 years. And what's the percentage and penetration?

[Unknown Executive]

And in this question has already been mentioned by Mr. Dan before. And this year, the main customer size can reach about 10 million. And in the future, and we think that we can achieve 15 million and this is a remarkable change, and we are also the exclusive suppliers to our coverage. And with the team, solution, this can help customers to stop the pain point. And with the development of the system and our customers, and this will trigger a profound changes of our customers. And in the next year, we think the 15% growth is [indiscernible] and even higher. And the penetration [indiscernible] is not very fast, and most of the applications are in the flagship models and most of the suppliers -- most of the supplies from us also [ 1.28 ] [indiscernible]. And the upgrade of lense will bring about changes in user experience and it will be from the mainstream. So we think it's key [indiscernible] for this year. The shipment volume 10 million to 15 million. And next year, it's about 20 million, but it will be higher. We still have to look at the whole project in the market.

At present [indiscernible] the momentum has become more and more certain and we've also seen the combination of [indiscernible] and also [indiscernible] application, that those kind of applications is lower than the [ DSP ] solution. But many models applying the [indiscernible] and also to [indiscernible] equipment. And this kind of momentum will be more apparent in the first half of next year.

[Unknown Analyst]

Okay. Mr [indiscernible]. And last question is about participation. [indiscernible] talk about the big customers dissipation products mass production. So what about the [indiscernible] in the second half and next year or any downgrade or slowdown of this penetration or whether we will see the [indiscernible] products, and [indiscernible] products [indiscernible]? And what are the changes of material? Thank you.

[Unknown Executive]

For customers, we see the AI opportunities on smartphone and the pad and it will be AI applications momentum. And actually, it's in line with the [indiscernible] product [indiscernible] from the AI function and it's [indiscernible] as far as application see it, similar to the development pace of [indiscernible]. So this is a very [indiscernible].

[Unknown Executive]

Yes. [indiscernible] and from the mass production, it will start from the high-end model and the overgo application scenario, this will be rapidly extended penetrating from the high end to other models. And the overall demand is higher [indiscernible] more demanding [indiscernible] biomanufacturing process so as the investment, which is quite large and demanding. So we're saying in the future, the performance of our [indiscernible] will continue to be more public and this will be complex in the future. And will become more complex in the future. And I think the market potential and echoing the AI development momentum mentioned. I think this year just as the beginning we just see the market grow from last year is about 300 million to just get 3x and this is just a preliminary potential in the future, and we will see a very, very large potential for the evolution.

[Unknown Executive]

Thank you very much. And we like to show you the highlights of our financial performance and the [ HB ] segment. And as you see, the group is actually capitalizing this upgrade. And in the smartphone and also the AI glasses and our group continues -- to continue make contribution as mentioned by our management and the government is [indiscernible] capitalizing opportunities to fully empower [indiscernible] solution update.

As shown the last figure, the group shipments are expected to achieve a CAGR of [ 98% ] between 2020 and 2025 shipment volumes continued double-digit growth. It will both ample product resources and the future its products cover a wide range of materials, including [indiscernible] aluminum copper as well as [indiscernible] and titanium [indiscernible]. [indiscernible] has rapidly expanded [indiscernible] it will support the domestic customers high-end flagship model with [ 160 ] main camera upgrade leading a significant [indiscernible]. The group also successfully mass produced [indiscernible] solution.

And looking ahead to the second half of the [indiscernible] flagship models with large [indiscernible] hybrid lens and the [ microgreens ] produced by the group [indiscernible] marking a milestone for the group [indiscernible] product line. In addition, group had excellent product developments and the design [indiscernible] industry leader in optical structural and model design. [indiscernible] auto with the [indiscernible] leading sensory interaction and other configuration demand and this market size in 2030 is expected to exceed 400 million. [indiscernible] group has a perfect [indiscernible] ecosystem and high-end multi-branded [indiscernible]. And the group brand system [indiscernible] actually model design [indiscernible] of the flagship [ SUV or dramatic NV ] brand [indiscernible] 14 channels amplifies and turning services deliver the outdoor luxury automotive acoustic experience.

At the same time, we haven't completed the acquisition of First Light, an automotive microphone manufacturer. The group target 100 billion level market size focusing on product and deployment around high-value segments of a humanoid robot prioritizing the development, have a vertical integrated [indiscernible] high component [indiscernible] large volumes [indiscernible], the material and solution for robot is about to enter mass production. And so has [indiscernible] foundation and [indiscernible] and sense optical sensing and [indiscernible] module and [indiscernible] and focus on those deals in the future because it's comprehensively building full [indiscernible] and [ AR ] devices with a key process actually [indiscernible] so they can display systems. If we continue to supply [indiscernible] the microphone to several leading domestic and international AI largest manufacturing in the first half of the year, and there are several products in the development and we deliver it.

The group has a global plan, R&D and a production bases in Asia, Europe and the U.S. nearly 20 countries and regions in Singapore, United States, Denmark, Japan, Finland and other [indiscernible]. Manufacturing [indiscernible], Malaysia, Mexico, et cetera. They have strong support for the company's risk diversification to build and [indiscernible] will still new high for shareholders and the customers [indiscernible].

So the above is the introduction of the performance in the first half of 2025. Now we continue with Q&A session.

[Operator]

Next question from the China merchant. [indiscernible]

[Unknown Analyst]

Good afternoon management [indiscernible]. I'm very pleased that you have the opportunity to question. I have 2 questions. First question it's about the robotics plan -- business plan include the current business department ideas and the customer [indiscernible].

[Unknown Executive]

Let me talk about it, and we have a top foundation and the technology reserves in the field of model. So when the AI [indiscernible] together with the robotics on emerge, and this will provide the opportunity for us. As mentioned before, we have collaborated with domestic and [indiscernible] customers on robust remote or some [indiscernible]. And this is in the primary development stage and then most of the products are in the upgrading and the iterations phase and there will be more opportunities.

For us, our process for recent years and it still is [indiscernible] with the larger customers, and for the product development. And secondly, within AI development there will be more empowerment from AI, there is an application, for example, the humanoid robot and we are large language model into action. In the [indiscernible] 1 or 3 years, we will see some new AI devices and some startup to on those times [indiscernible] product. And apart from the Acoustics and Optics products, we understand nowadays and there will be more interaction products.

In the short run, and this is it will benefit up to the introduction of our new products. [indiscernible] application [indiscernible] or hardware and to interact with [indiscernible].

[Unknown Analyst]

Thank you. That's all for me [indiscernible] a better development in the future.

[Operator]

Next question is from [indiscernible].

[Unknown Analyst]

Thank you very much. I have 2 questions. The first question is about the GP margin of the Acoustics. It's related to the pressure of the new products or any other innovation pressure.

[Unknown Executive]

In terms of the GP margin, [ Kevin ] has already mentioned, part of it and I'd like to add a little. Acoustics is actually is our starting point and in the first half of this year, we see a lot of changes in our Acoustic products. In terms of the upside, there were obvious changes from our perspective. And we also see our operational efficiency improvement and with the net reduction and the ramping up of the mass production in the second half of [indiscernible] we are very confident to maintain the GP margin level with that of last year, last year was 13.2%. And we [indiscernible] and this year, GP margin [indiscernible] Acoustics will be below [ 30% ]. So you don't need to worry about this.

And with the development of our brand and the promotion, and we think there is still potential for improvement in the second half. In addition, our sales scale and this year has increased by more than 50%. And our testing margin is also changing. [indiscernible] and we [indiscernible] with Japan at [ CDK ] and we indeed build a product design packaging and the [indiscernible] provides it.

So the GP margin in this regard is going to be lower. So [indiscernible] also reviewed the profitability of our [indiscernible] microphone. And the last year, I mean, this GP margin was very stable and compared with the year before last year, it was stable as well. And with the [ TP ] collaboration, the GP margin will be a little slow down, but the growth potential is still promising. In the future, we think -- and last year, the growth is about 800 million to 600 million. And this year, the growth rate will be about [ 50% to 60% ]. So you -- we still see the potential for the next microhone.

[Unknown Analyst]

Thank you very much. My second question is about the Optics. Optics revenue together with the GP margin for the first half of the year have significantly improved. So I like to know, the [indiscernible] and up the GP margin for the land and the modules [indiscernible] outlook and a guideline for the second half?

[Unknown Executive]

GP margin was mentioned. I mentioned last year was over 30%. And this year and for the first half of this year, it has excited [ 30% ]. For the full year, [indiscernible] GP margin [indiscernible] lenses will exceed 30%. The GP margins growth, there are 2 address. And the first one is the upgrade in the plastic lenses in the market and causing the pricing hike and a stable increase and in addition, we also improve our operational efficiency. So we are confident. And the full year GP margin growth rate can reach above 30% and still have the potential for the growth.

[Unknown Analyst]

[indiscernible] what's about margin?

[Unknown Executive]

[indiscernible] margin for the full year, it's a [indiscernible]. Yes, this is for the GP margin growth being driven by the [ ASP ] and the [ AISC ] growth is due to the [indiscernible] in the [ 108 megapixel ] and also [ Tier 2 100 megapixel ] have began to be shipped. And in the second half, our pre goal as well as the [indiscernible] product will enter mass production and we are confident and to have the growth on the modules next year.

[Operator]

Next question is from Andy Meng from Morgan Stanley. Please go ahead. [indiscernible] is a little delayed. Let's invite next one first. [indiscernible]

[Unknown Analyst]

Thank you, management. I have 2 questions. In the introduction the management have already provided the data for the business segment. So I would let you know the guidelines for the second half for each business segment, including the revenue and the GP margin, it is the first question.

[Unknown Executive]

Okay. I'd like to take the questions. As mentioned at the beginning and we have the full year at night, and we will kick on guidelines, and 2 questions related to Acoustic GP margin. As we introduced, there are a lot of new products to ramp in the second half, and there should be a margin of [indiscernible] will be stabilize and will make gains above 30%. In terms of the [ EM ] and the [ PM ] and our motor business and the growth will be rapid. And in terms of the [indiscernible] mentioned about [ Kelsen ] and this is one of the highlights in the first half and the GP margin is higher than the average GP margin of our group and our shipment will be concentrated in the second half of the year. [indiscernible] will be increased by about 18% to 20% in terms of the sales. And in terms of the GP margin we're thinking it's about 18% to 22%.

In terms of [indiscernible] in the sales and the revenue will be increased by about 15% to 20%. I mean, GP margin is also about [ 50% ]. If you talk about the Optics and the GP margin of lense is very encouraging which has achieved 30% and lens will also continue -- will continue to increase in the second half of the year. In terms of the overall sales on the year-on-year increase it's about [indiscernible] and including the lense and modules. In lense and the modules, and we also see the double-digit [indiscernible]. So the overall year-round should be between 10 to 15. And Mr. [indiscernible] also talked about the [indiscernible]. As mentioned by Mr. [ Pan ], we have our prior [indiscernible] product and the other products. And this kind of percentage will be further increased and this will increase our topline at the same time increase improvement of the GP margin [indiscernible] and this will be very positive in flows on the GP margin.

And we're seeing demand and revenue this year is about 50% to 60%. And it's GP margin increase about 15% to 20% [indiscernible]. So this is about the segment [indiscernible]. In addition, people concerned about the automotive business and the application of the asset has already been completed and from its revenue and the GP margin. And so the contribution were stable, and the revenue and contribution [indiscernible] will keep the growth rate in the second half and GP margin this year for the full year of this year will not be lower than that of last year.

I hope this will give you a clearer guidance.

[Unknown Analyst]

Yes, very clear. And we look forward to be steadily sold in revenue and the GP margin in the future. My second question is about glasses and AI glasses, AI and AR. So what's the development? And what's the [indiscernible] with our customers and our strategy of [indiscernible]?

[Unknown Executive]

And we have deeply discussed with our top-tier customers on AI glasses in both Acoustics and Optic system. And in terms of [indiscernible] Optical [indiscernible], we have had in that discussion with some mainstream customers, and hoping to realize massive production in the second half of the year. [indiscernible] in the next year. In a future as a component and a smartphone. And this will have very rapid growth like watch -- like the electronic watch.

[Operator]

Next question is from [ Tina Wang ] from Citi. Tina?

[Unknown Analyst]

First, question is about motor and its future opportunities the last [indiscernible] application and on the high-end model. [indiscernible] platforms because we see some affordable smartphone for next year. So we upgrade [indiscernible] and also acoustics [indiscernible]. [indiscernible] like to know the opportunity, in addition, it's about the camera [indiscernible]. And some people say some camera button will be canceled in the future. So whether this will influence your future product plans.

In addition I also like to know more about Optics. For example, the vertical integration, what's your plan for your vertical integration [indiscernible] and the modules? And we like to [indiscernible] so what the future plan on [indiscernible] in the high-end optical market?

[Unknown Executive]

I'd like to answer the question for motor. And some people say next year, there will be some high-end foldable smartphone. It's possible to see equipped with several motors or multiple model, and there may be a momentum in the future in the high end platform model. So from this scenario, we think they will increase the opportunity in motors [indiscernible] continuing on upgrading their product. We see the opportunities that [indiscernible] and support this development. So we have our plans [indiscernible] motor, which is in line with the momentum. And lastly we shipped for the camera button module and we didn't hear any or seen any this kind of the function buttons [indiscernible] and there are some information indicate there will be more potential opportunity in iteration and will give us more opportunity to help our customers and a lot of customers overseas and domestically are using the camera buttons, and we didn't receive any information that this will be canceled.

[Operator]

Next we would like to invite Cherry Ma from Macquarie.

[Cherry Ma, analyst]

[indiscernible] [ PSS ] and Acoustic business and its growth is very [indiscernible] so whether this is related to price [indiscernible] price pressure it's the cost structure they need more new products to be introduced and to improve GP margin.

[Unknown Executive]

Let me answer the question that. And after [indiscernible] you have a little background noise on your side, will you please mute for awhile. Thank you very much.

And we have some upgrade business in the product and it does cost influence in exchange in the GP margin. But no matter what kind of changes it has this year, and we believe the revenue and profitability will capture flat with that last year in [indiscernible]. And we also see this collaboration -- [ PSS ] collaboration with the European customers to obtain the design wins this year.

So this will [indiscernible] revenue and the GP margin stable flows. So that's the development and the market potential of [indiscernible] Automotive Acoustics.

[Cherry Ma, analyst]

Okay. Another one is about Acoustics. The GP margin for the first half slowed dow [indiscernible] you could see R&D cost or other reasons?

[Unknown Executive]

As explained before, the Acoustics GP margin to slow down in the first half so it's related to the new products, mass production. There are more new programs mass production, and that's the reason we have the confidence to maintain the full year GP margin of 30%. And this is not related to R&D cost. [indiscernible] of the new products was not high and this influenced the GP margin. A new production [indiscernible] the new product introduction [indiscernible] to be margin at some stage.

[Operator]

Okay last 2 questions from [indiscernible].

[Unknown Analyst]

Thank you very much for the opportunity. The Acoustic lenses GP margin has already reached 30% [indiscernible] and what the margin of the plastic lense and what's the GP margin of our hybrid [indiscernible] lenses? [indiscernible] next year and what the specific GP margin in [indiscernible]? In addition the Optics business otherwise [indiscernible] net profit level -- what's the overall net profit level? And what's the outlook for the net profit level in the second half of the year?

[Unknown Executive]

Okay. I'd like to answer the part of the GP margin, [indiscernible] perhaps you can take the question of net profit.

In the second half of this year, The net -- the plastic lens GP margin will be higher. And this is just related to our technology operating an improvement. So 40% will be our target of the plastic lense. In terms of the [indiscernible] the main product, together with our WLG GP margin, we can see above the [ 55% ] level. And this is the level we can see.

In the long run, we think will be similar or even higher than the [indiscernible] and GP margin. And of course, it depends on the WLG [indiscernible] and the mass applications. So we think [ TSP ] can be similar to our key GP margin.

[Unknown Executive]

Okay, I'd like to talk about the net profit. The net profit Optics for the first half and has already become positive and this continues the trend of the Q4 last year, with the module shipment volumes increase and also with [indiscernible] lense and WLG. WLG this year, the volume is about 10 million is very impressive. So the overall net profit will be improved on [indiscernible].

[Unknown Analyst]

I'd like to the follow-up question. So the plastic lens and WLG hybrid lens. And apart from [indiscernible] smartphone business, any new applications in the [indiscernible] or like action camera or autonomous [indiscernible]?

[Unknown Executive]

Yes, we are celebrating with the top-tier enterprises and in many [indiscernible] in the action camera and drones and to provide them with the lense. And then with our non mobile phone business. And the trend for us is to provide integrated solutions to our customers.

[Operator]

Thank you very much. Thank you, Tony. [indiscernible] to ask a question from a message board, which from [indiscernible]. The company's business is growing very hard. Looking forward to the second half of the year, which [indiscernible] of the project from major customers, and we achieved significant increase in revenue scale and with the development of the [indiscernible] projects. Can we continue to promote the growth of these [indiscernible].

[Unknown Executive]

In terms of participation business. And this year, the growth is certain. And last year, If I remember correctly, it's about 320 million and this year, we think we can reach about 1.2 billion even higher and the growth in the future will be double digit.

Our investments in R&D and in CapEx in the autonomous application in this [indiscernible] and also the equipment investment. From the passive dedication to the active reputation, and this is a very margin complying with the development of AI, and this will become a new driving force of our growth for both revenue and our [indiscernible].

[Operator]

Thank you very much. In the interest of time, today's Q&A session concludes here. I would like to invite Mr. Benjamin Pan, Executive Director and CEO of AAC Tech to give a summary.

[Zhengmin Pan, executive]

Thank your investors, for interest and support to AAC. [indiscernible] regarding to your questions I'd like to make a summary here. And the revenue -- the growth revenue is very stable, as you said. And in the second half of the year, and in this kind of [indiscernible] will not be slowed down and this is about the [indiscernible] digit growth. And this [indiscernible] digit growth can be sustained in the next few years. And which is a double-digit growth, with this double-digit growth, we don't mean to give up the pursuit of the GP margins growth. And we will achieve this high growth on the basis of a stable or even a higher GP margin. So this is the credence from our management and with the transformation led by [ Kevin ] for the past years, we have already seen this achievement and efficiency improvement from this transformation.

And secondly our R&D and the [indiscernible] and management expenses and it's actually under control. So we this kind of expense control, and we also resumed the return our net profit margin. And of course, the strong cash position will provide us a more stable development. We are constantly looking for and managing such opportunities.

Last but not the least the changing our business. In the first example, the optical lenses, and we want to achieve the 30% or even 40% in the [indiscernible] GP margin. And secondly, is a patient business will scale up from the 300 million last year and to [indiscernible] 1.2 billion or even larger scale, and this has become our important production line and its GP margin is higher than the average of the group. And certainly, Acoustics GP margin is a little slow down in the first half of the year, but we're still very confident because what is with our starting products and we will have the confidence and to improve a GP margin on the basis of the original stable foundation and with the efficiency improvement.

So this is the summary for this interim results. Thank you.

[Unknown Executive]

Thank you [ Mr. Pan ], for your speech and Mr. [indiscernible] mentioned the continuous growth in revenue and the GP margin and we will also provide only shareholders with a sustainable [indiscernible].

In interest of time, this concludes AAC Technologies 2025 Interim Results. Our performance [indiscernible] our website. If you have any questions, please feel free to contact our Investor Relations team. Thank you for your interest in AAC Technologies. Thank you.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]