AAC's Q3 profit dives 57pc amid supply disruptions

AAC Technologies (2018) saw its third-quarter net profit slump 57.4 percent from a year ago to 183 million yuan (HK$222.7 million) amid supply chain disruptions caused by the Covid-19 pandemic.

The Apple supplier's net profit for the first nine months, in contrast, rose by 47.1 percent from a year ago to 1.1 billion yuan.

For the first nine months, AAC recorded revenue of 12.8 billion yuan, up 4 percent from a year ago while third-quarter revenue fell 6 percent to 4.25 billion yuan. Its gross margin also fell 0.9 percentage points to 22.7 percent in the third quarter.

AAC said the drop in the third-quarter's net profit is due to the disrupted global supply chain amid the pandemic, the increase in operating costs in China, and weaker demand from domestic customers on the back of chip shortage resulting in delays and cancellations of certain phone models.

The company expects that the supply chain and Covid overhangs may linger and cause near-term uncertainties to its financial performance.

Meanwhile, Semiconductor Manufacturing International Corp (0981) posted a 25.3 percent rise in net profit to US$321 million yuan (HK$2.5 billion) in the third quarter, amid a management reshuffle. The company said that Chiang Shang-Yi has resigned as its vice chairman and executive director and Liang Mong Song has also resigned as an executive director in order to focus on his duties as co-chief executive officer.

SMIC's revenue was US$1.42 billion in the third quarter, a 30.7 percent rise from a year ago, and it expects revenue to increase by 11 percent to 13 percent in the fourth quarter.

Also reporting earnings was Hua Hong Semiconductor (1347), whose net profit nearly tripled year-on-year to US$50.8 million (HK$396.2 million) in the third quarter with revenue reaching a new high.

It posted a revenue of US$451.5 million for the period, up 78.5 percent from a year ago and 30.4 percent from the previous quarter.

The gross margin for the third quarter was 27.1 percent, up 2.9 percentage points over the same period last year and 2.3 percentage points quarter on quarter, which is mainly attributed to the average increase in selling prices of its products, it said in an exchange filing.

The company expects its revenue in the fourth quarter to reach US$490 million and the gross margin is expected to be in the range of 27 percent to 28 percent.

Separately, FIH Mobile (2038), a subsidiary of Hon Hai Precision, also known as the world's largest electronics maker Foxconn, saw its loss for this year's first three quarters narrow by 94 percent year-on-year to US$6.73 million.

Revenue and other operating revenue in the first three quarters dropped by 7 percent year-on-year to US$ 5.93 billion.