AAC Technologies Holdings Aktie

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

First, on behalf of the company, thank you all for your interest in AAC. Please allow me to introduce the company management present today. r. 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's attendance.

Today's meeting includes 2 parts, starting with my presentation on AAC 2025 annual financial performance and business development. This will be followed by a Q&A session. The statements made at this meeting contain forward-looking information, which are based on the company's assumptions and expectations regarding market conditions and the company's current development. [Operator Instructions]

Next, I would like to present the group's results for 2025. In 2025, the group's revenue was RMB 30.8 billion, a rapid year-on-year increase of 16.4%. Acoustics business maintained strong performance and emerging business made huge leaps. Gross profit was RMB 7.02 billion, up 16% year-on-year. The group's GP margin was [ 21.1% ], flat year-on-year. And the group's revenue growth rate was significantly higher than its 3 expenses. Net profit increased by 39.8% to RMB 2.51 billion, mainly due to the continued improvement in the profitability of the optics and the growth of high-margin business.

By 2025, the group's revenue growth significantly outpaced the expansion of global smartphone shipments, achieving both quality and efficiency enhancement. SSE, EMD and PM optics business revenue growth 21.3% and 14.1%, respectively. The group achieved rapid breakthroughs across multiple views more diversified mix. Key distribution business revenue surged by over 400%, while the shipments of hybrid lenses exceeded 10 million units and the co-development of co-motors AI hardware with customers.

During the reporting period, the group's operating cash inflow was RMB 7.18 billion, up 38.1% year-on-year and its free cash flow was RMB 4.88 billion, up 65.1%. The CapEx was RMB 2.83 billion, an increase of 21.5% equivalent cash and cash equivalents was RMB 8.61 billion, increase of 14.1%. Net gearing ratio was 2.1% and down 1.1 percentage points. And this will support the development and innovation of the group.

Next, I would like to share with you the performance by business segment. Acoustics. In the second half of 2025, the group's Acoustics business revenue was RMB 4.83 billion, increase of 1.6%. Full year revenue was RMB 8.3 billion, up 1.7% and gross profit margin was 27.6%. The decline was mainly due to the changes in customers and product mix with more module products. Market share among key customers remained stable with increase. And industrial first coaxis speakers delivered distinct depth and fidelity and also enable a more immersive and superior interactive experience.

Automotive acoustics. In the second half of 2025, the group achieved revenue of RMB 2.3 billion, an increase of 14%. Full year revenue was RMB 4.1 billion, increase of 16%. Gross margin was 23.8%, a decrease of 1 percentage points due to the addition of new product forms and the positive impact of high-end brand automotive audio system on profitability will be materialized by 2026. Group has become one of the leading automotive audio system supplier, second only to Harman and Bose and also acquired Hebei First Light, a leading digital microphone company forming the vertical integrated business synergy. The group has supplied industrial leading 9.248ndedem for SUV constructing an immersive audit experience.

Optics. In the second half, revenue was RMB 3.08 billion and the full year revenue was RMB 5.73 billion. And looking at the subdivided business line, first, micro lenses, the group secured multiple 7P projects and continue to optimize its product mix. Shipments of 7 element lessons, including 7P plastic lenses and 1G 6P hybrid lenses reached around 15 million units, further strengthening the group's positioning in the high-end optics segment. Secondly, module with a resolution of 32 megapixels and above accounted for over 40% and OS module shipments nearly doubled. And while the prescope modules achieved mass shipments for the first time secure a lot of customers.

Let's focus on the combined EMD and PM segment. In the second half, revenue increased by 17% to RMB 7.14 billion. For the full year, revenue was RMB 11.77 billion, mainly due to the continued volume growth of products such as access motors, innovative buttons and acceleration received. and the group actively expanded its market share in mobile phone motors with linear motor shipments and shipments achieving double digit year-on-year. The group's market share in mid- to high-end Android phones continue to expand.

And in PM, the heat dissipation business has made rapid progress with revenue of RMB 1.67 billion, an increase of over 400% year-on-year. And the group also break the upper limit of industry manufacturing efficiency and yield through its first fully automated production line. The revenue from metal frames for the smartphones was RMB 3.82 billion, an increase of 4.2%. And the group will continue to maintain leading market share in the flagship and foldable phones.

Finally, let's take a look at the sense and the semiconductor business. And in 2025, this business achieved a revenue of RMB 1.57 billion, a significant increase of 10.1%, mainly benefited from increased market share of the group's higher S&R microphones, and we have already secured mass production and delivered our products to major customers in Shenzhen.

After sharing this financial performance, let's focus on the core highlights and the development of the strategy. During the reporting period, we were committed to creating the ultimate experience and leading the upgrade of smart devices and also create the various interactive experiences for end consumers. In recent years, AI hardware has flourished. Small size and ease of interaction are common characteristics for future AI hardware with diverse forms. High-value AI innovative hardware jointly developed by the group and leading global players will be shipped in large quantities.

In terms of the heat diss business and the group empowers and upgrading to consumers these products. And you see that the group's shipments have a compound annual growth rate of nearly 90% from 2020 to 2025. And the group has sufficient production resources to meet high technical and process standards for its clients. In the future, it will continue to accelerate the introduction of heat opportunities for new product categories.

And in terms of the active cooling and leveraging innovative EMS and ultraprecision and secure its first products for the cooling fans. And we also have this different CTU and liquid cooling plate and many product cap. And we also have different customers and make breakthroughs. For example, the different customers like Baidu, Tencent, JD, Alibaba and PDD and the Chinese insurance Cathay Pacific and Haitong, et cetera.

Similarly, the group's WG-related products and us in breakthroughs and the group helped the domestic customers upgrade 1G 6P main camera and micro prisms of high-end flagship models, leading WG's important progress in high-end optics. In terms of the plastic lens, the group will strive for more market share and to expand the main camera and also the prescope lenses.

In terms of modules, the group has made the main camera and breakthroughs and milestone development in high-end module and through vertical integration advantages. In 2025, the group's brand system will be implemented the luxury model and they will be equipped with the group's full station solution and our high-end brand system. And also we will achieve the full coverage and on the car brand audio system of different grades such as 20,000 to 30,000 leading the way to a full station solution for automotive acoustics.

In terms of AR optics group's end-to-end vertical integration and global delivery, mobility have won the favor of leading customers, designated a number of overseas leading customers' optic energy modules and optical waveguide projects. And we also have the ability to supply with our customers the optical and one-stop full display module solutions. For example, the optical waveguides, light engines and the pool lenses and eye tracking and electronics.

Last but not least, let's talk about the group's complete global layout. R&D centers and the production basis have spread to nearly 20 countries and regions around the world and AAC technologies will also reach the new heights and bring higher returns to shareholders and customers.

The above is my introduction to the performance of the full year for 2025, and then we will enter the Q&A session.

And the first question is from Everbright Securities. Mr. Fu, you can start asking questions.

The pressure of the industry, we see that our group has still achieved a stable progress. So I have 2 questions. The first one is about the development about the mobile phones. And the second is about the acquisition. In terms of the first question, we see that in the year 2026 and many institutes have kind of a flat description prediction on the smartphones and its shipment. So I'd like to know more about your views of the global intelligent mobile phone and also its AI influence. So how do you see the dissipation business and its upgrade? And what's our advantage?

Okay. Let me talk about briefly. I think there have been a lot of waves in the smartphone market from the second half of last year to present, meaning the entire AI influence, which has indeed created some impact on the supply chain and it caused the memory price increase. So it's true that some of the recent turmoil in the industry has been relatively large from our point of view. The pressure is still relatively good. The high-end models can actually foreseeable. So we see this as a new opportunities for the high-end products because memory price for this high proportion of the memory in this high end is relatively not as high as that of the low end. So that's one aspect.

Number two, because of the memory problems in the low-end smartphones and some market predictors it's kind of difficult to survive in this kind of influence for us is very limited because dissipation mean their choice is especially in the mid to high end and upgrading. And our observation is that our customers are choosing products with better performance. In this way, the high-end models can be able to compete in this market have a better pricing.

So I think the mid- to high end smartphone will be increased, and this will become the main force. And of course, the competitive landscape will become more fierce. So this is about the entire mobile phone market. In the next 3 years, -- we think this is a very important period, and we will have more integrated vertical integration of our business and we will increase the products for further development, continue to improve its penetration rate.

And in addition, we will also, for example, upgrade the wireless charging and the magnetic section to help our customers to do the vertical integration and let them have a better competitive price and also have a higher cost performance we increased function and with more efficient product upgrade. This is a very efficient product upgrade routes we can provide to our customers through our motors and mechanic to optics. And this is that we continue to apply in our to provide custom AI still very important topic. We see that voice interaction and anticipation demand is ramping up of the growth for the VC cooling sector. And this is very important to help our customers stop computing power and battery life problems.

In addition, we also see other new categories and exploration in the industry. For example, the MWC, they launched new products apart from the traditional functions and whether there will be new functions. And another perspective is from the brand new perspective. For example, the AR and AI glasses. Based on interaction with our top customers and there will be more customers launch the products of AI and AR technologies. This is a very important development track. And this optical waveguide and the unit price will be very high because this is a different concept with the traditional products.

Number three, we see the smartphones and other companies are doing AI business and of course, some AI companies. And we are cooperating with several leading AI companies and customers from the large language models and the large scale new models, our microphones and our motors will be very important core technologies. And starting from next year, we believe our products and its value will be much higher than that of the regional and mobile phones in the next three years.

Another important potential is in the automotive acoustics. And after the acquisition of PSS and also the PSG, we are fully equipped with the full range of the sound systems and capabilities. And last year, the corporation with the names systems has already proved its capabilities in terms of its public opinion, and it's still relatively flagship level influence system. So we think our autonomous layout has gone from a series of mergers of acquisition to the current system level capabilities. And recently, our focus was on China. And in the next 2 to 5 years and our automotive system will also be expanded to the overseas market and the growth space is still very considerable.

Thank you very much. we also believe that AI continues to have a lot to offer. My second question is about the about EMD Far East technologies. So how do you consider this valuation? I remember it's in the supply chain of NVIDIA. So any synergy we can create? So this is the second question.

Thank you for your question. The acquisition of Far East and we see that the revenue for this year is estimated above RMB 200 million. And based on this, we have completed acquisition. So this is a very reasonable pricing. this company is very important in its cooling liquid cooling system in the industry and its package includes all the main domestic Internet customers. So this will help us to lay out this business in the market and to gain a fast-growing domestic market and obtain the overseas market share.

Next question is from Andy Meng from Morgan Stanley.

And we see that the results exceeded expectation. But I may pick the bones in and ask a question here. If you look at the sector of this acoustics business, the gross margin feels slightly lower than the expectation. So may I know the reason and any improvement in 2025? And my second question is what's the guidance for the business segments?

Thank you very much for your question. You talked about the gross margin of acoustics is lower than the expectations. As mentioned by Kelvin. In recent years, our group has expanded our product mix and the product layout. From the early years, maybe the focus is on the speakers of master classic levels. It's more focusing on the single box or the product form. And up to now, we have actually integrated the whole concept of a large module, including some progress and they implement it in the results. So the overall gross profit margin has changed compared to before. And in the second half, we see the gross margin is steadily going up. And in the 2026, we will see the stable growth.

And your second question is about the guidance for 2026. So apart from acoustics and in terms of PM and in this year and the revenue growth will be about 5% to 10% and the gross margin will maintain at a very stable level. And in terms of the PM, and this will maintain a very high growth rate in 2026 and the revenue growth will be more than 30%. And the gross margin will also rise steadily on the basis of 2025. So this another business is about the optics and ASP annual growth is about 10%. And this year, we will also see growth on the ASP and we have the confidence to see the stable growth in optics.

With regard to the gross margin, you see that in terms of our yield and efficiency and our R&D have made significant improvement. So we will see this gross margin will be steadily growing on the basis of 11.5% of 2025. In terms of sensors and semiconductors and it's about double-digit growth. It's about 15% to 20%. Kelvin also talked about the automotive. It's an upgrading business. We have already acquired some brands and the revenue will be maintained double digits. And the gross margin is relatively stable as well despite the fluctuation of the industry, there are different growth drivers in the industry, and we have the confidence to realize the stable growth of our revenue and not lower than our 2025 revenue. And of course, the gross margins will maintain steady rising.

Wish the company will achieve better results in 2026.

And next question is from William Yang from JPMorgan.

I'd like to know, for example, the CSP or the new CSP, they seem to be interested or stepping into the hard growth so I'd like to more about the collaboration of the group with those big CSP and what is your expectations in the next 1 or 3 years? What's the revenue contribution they will make?

Okay. I will take the question. And from the perspective of AI, we see some big international AI companies, and they have different trials in the AI terminal devices. A more typical case, it has its own model and then it has Rayban glasses and have display AI on them and those are some simple AI features. And we also collaborated with our customers and we help them to develop lightweight and also the light engine. So this value is not just some simple functions. This is the lightweight and the light engine cost tens of dollars, right? So if we started we estimate at least USD 30 to USD 50 for each and for a pair of glasses, it would be worth at least $100. So we see it reach to the large scale and the value of this is very considerable.

And some domestic companies in the industry, including, for example, some overseas companies, they are developing AI wearables, devices like portable camera inside and there will be some motors embedded in the equipment. And they will also recommend based on the customers' behavior and in those functions. And those kind of equipment and devices without the screen and many injections are based on the voice and the actions. So the most valuable part in those products will be the motor and also sensor. And we strengthened our collaboration with the customers for a long time. And if they have mass production, and this will boost our ramping up of the products.

And of course, on hardware, the pricing of its hardware is different of its mobile phones because the focus of the products is not only screen or battery, it will become a motor. And this price will be much higher than the smartphone kind of considerable value. So we think in the second half of this year and next year, and this will become very good and important opportunity for us. If you compare for example, if they have a subscription and it's not only about several hundreds of thousands or million and at least it will be over 10 million. So no matter from the volume or the value and this is also -- both of them are very considerable.

And this will be reflected in the second half and next year. And this good phenomenon in the industry, AI server, AI algorithm and AI models have been invested large amount with big fund and it has to return to the application scenarios return to the terminals, and we welcome this equipment and devices. And it's also a very good layout for us.

Next question is from [indiscernible].

First of all, congrats to the company's performance in 2025. I have 2 questions. The first question is about the optics. I'd like to know about the shipment guidance of the WLG and also the revenue estimation and this is about WLG. And the second question is about modules and plastic lenses and Joyce also mentioned about this camera supply prescope. So I'd like to know the shipment plan as well as the detail of the gross margins.

I'd like to answer the question. As mentioned by Ms. [ Huadong ] in 2025, our optics have achieved certain results. And our gross profit is also reached more than 30%. And in 2026 in the plastic lenses and this will maintain at this level to about 35%. And in terms of the shipment volume, we will keep flat, but ASP will be increased by 5% to 10%.

And in 2025, the shipment volume has exceeded 10 million units. And this is a very important milestone to us. And we also launched the use of prescopes as well as the 3-in-1 Christmas lens. And this kind of application will be continued in 2026. And other applications, for example, the application of non-smartphones like the drones applications, we also achieved some good projects. And also win some projects in overseas market, and we are very confident to the promotion of our business in this regard.

So you talk about lenses. What about modules?

I may add a little here. This year, mentioned in PBT, the overall revenue of RMB 5.7 billion and overall gross profit margin level is 11.5%. About the ASP in lens and in 2026, we think the ASP in lens will be maintained same level last year on ASP or even 10% higher and we realized, as mentioned by Mr. [indiscernible] about the above 30% gross margin. And in 2026, we are very confident to improve our yield and efficiency and to the 35%. Regarding modules in 2025, we see that the gross margin is 4% to 5%. And in 2025, based on this basis, and we can achieve a stable growth. So that's my supplement.

Next question is from Zheng Bingyi from HSBC.

I have 2 questions. And the first question is about heat dissipation product. The growth of shipment volume is quite amazing. So I want to ask the heat dissipation product side of a major customer in the U.S. what about the percentage in 2026 and 2027? And what's the upgrade trend of this product? And this kind of product upgrade to other categories. So if we see the next 3 years development and what kind of revenue growth will this product bring to the company? This is my first question.

Let me ask my second question. The second question is about the automotive acoustics business after the M&A in the next 3 years and what's the development strategy? So under this development strategy, what's the long-term strategy? For example, in 2027, 2028, what's the growth expectation?

I'd like to answer the first question. The big clients in the U.S. is always sensitive. So in terms of the heat dissipation I'd like to give a roughly comprehensive evaluation. The figures we see of 2025 is just our recent achievements and it's just the beginning. In the future, in the next 5 years, we're thinking some high-end products with the AI function strengthening and this penetration will be improved.

And on the chip side, for example, in data centers and some storage, all the memories and VCs will gradually penetrate as well. the whole the premium products. And many people say it could be benchmarked against RMB system. So we think this is not only a success in single case, but also necessary for the high end of Chinese brands into this business and industry. And this is a very good route for the value integration for our customers. So in the future, we will continue our collaboration with [indiscernible].

Secondly, we can help our customers to create more value for some brand systems. You can imagine that today with the penetration of different ASP of different products in different brands and our ASP can be still going up because our customers have higher requirement demand on speakers and amplifiers and sensors. So this great potential in next 3 to 5 years every year, we can achieve a very sound double-digit growth. And with the penetration, for example, this year, we have already achieved over 10%. And in the future, there will be above 10% and higher the opportunities and also our brand system and actually has a lot of room for growth.

[ TJ ], do you want to add a little more?

And actually, I think I quite agree with what Kelvin said, and we have a lot of brands apart from, we also have the second categories. So through different company and different brands and we can achieve the revenue scale of RMB 10 billion.

Due to the time constraint, we'd like to invite the last speaker.

I'm from Huatai. My name is [indiscernible]. Congratulations to the company for achieving very good results. I have 2 questions, mainly about the robotics and XR business. And we visited the CES exhibition and see that also the company's exhibition of the robotics and XR products. My first question is how do you evaluate the robotic business because it's already in the rapid development period. So do you have a detailed commercial plan? And what's your plan in some testing projects with the different companies.

My second question is about XR and its business layout. I'd like to know more about the lightweight guide and also know more about the direction of this technology and its contribution for the long-term revenue of the company.

Happy to talk about robotics. We actually regard robotics as an AI and the terminal device. And we also see, for example, this is a kind of robotics and as well as different products. For example, the speakers and microphones and the aggregation equipment and AI devices can only interact with those devices and communicate with people and includes a lot of high performance devices, for example motors and heat dissipation. And those are important requirements and demand for robotics. And then they also need the optical devices and those are the interaction demand for the robotics. So AAC has a great potential in those products.

Last year, also this year, we have been with leading customers in China and startup customers. In the recent years and even half and half and even a year and a half, there are many versions in the integration. And we use different devices, for example, motors or speakers, microphones and to strengthen our collaboration with different customers. So we have relatively sufficient layout in this area.

Number two, at present, there is no definite models or development models. And how to meet commercial scenarios or whether they are only being used in the industrial scenarios. Some standards are not fixed and our effort is to help customers in upgrading. And apart from this, we also have the capability to help them in the mass product and we are experienced in the automotive business and electronics.

So your question is about the revenue contribution. For the fixed and as you mentioned, it depends on our customers' hand. They haven't made a very specific plan. Therefore, we didn't have a specific guideline. Robotics and some smaller robotics and we also have the opportunities, we have been laying out optics and the motors and the microphones, and we also see it as progress. This is more visible than robotics. We are also preparing, for example, the high-perform products and some we are constantly interacting with our big customers, the top customers and some start-up companies. And we are reserving our capabilities. And I believe in the future when this market is further commercialized and we will have our core competitiveness and can deliver high-value products.

In terms of AI, do you want to add something?

So after the acquisition of the waveguide, and this help us to unleash our advantages. And in terms of the light waveguide, we have started our in-depth cooperation with customers of Android. It is expected that by the end of this year and the beginning of next year, there will be mass production of the shipment. And apart from the Android customers, we also started our cooperation with some leading customers in the U.S. And apart from this light waveguide products, we also have the collaboration on the light engine. And after 2 years or 3 years and the mass production will be realized.

So this is not only our plan in the domestic market. We also have our business plan in the overseas market, and this will be realized in A1 and X3.

And next, I would like to welcome Benjamin Pan, Executive Director and CEO of AAC to give a summary.

Thank you very much. Thank you, all the investors for participating in today's meeting. I'd like to make a brief summary here. I think the transition of the group started from 2020, and we experienced 5 years and the results and effect is obvious. First of all, from the financial side, our current scale gradually establishing and through a definite growth of multiple product lines. The whole group is not subject to the original mobile phone and we also secure our growth from other products.

So you see we have set our target of 2026. It's about 16%. And of course, this is the effort made by the team led by Kelvin. In terms of the profit margin, we want to maintain 42% with a stable growth. The average gross margin with steady growth. In terms of the net profit, with management improvement structure and also lean management, we will achieve higher net profit and it will be higher than the gross margin. And our free operating cash flow was RMB 7.3 billion and CapEx is RMB 2.8 billion. So after deduction, we have almost RMB 4.5 billion positive cash flow.

We have purchased [ PS4 ] in recent years as well as some other acquisition, but the operating cash flow is still positive. This is a very good position, cash position and the positive cash flow of RMB 4.5 billion. And we never have achieved this level since 2017. This is the pickup of revenue and as a CEO, I'm very happy to see the steady growth trend in this positive cash flow momentum.

In addition, I want to remind you that our company is mainly on the mobile phone. acoustics and haptics through the transformation of the past few years and the changes in the external technologies. AI is actually a foundation that brought about the growth, of multiple product lines. Consumer electronics is also another case. And AI glasses will become the future demand as well. And we also announced today that we've acquired the Far East company and our equity share is about 55%.

And the is on the data center. And we want to have quicker entry in the data center and CDO. And apart from this, we are also doing the liquid cooling plate. And we are still seeking the M&A opportunities. We also secured some U.S. customers in the precision mechanics this year definite can achieve 10 million to 20 million sales. So with the development from the consumer electronics to data centers to the liquid cooling and we laid a very good foundation.

In addition, robotics, as mentioned by Kelvin, we are developing the direction of a very positive trend. First of all, we have acoustics and optical sensors with a precise transmission and mechanics and also heat dissipation and many products layout. And we have both connections with domestic market as well as overseas. And we want to have a comprehensive competitive advantage in this direction. In the 5 to 6 product lines, we want to at least one product line to be secured with the substantive customer. to connect with our customers.

At the beginning, we only doing speaker and then expanding to the wider range and to 6 products and to robotics. So with our specialty, we also want to explore and expand on our competitiveness in other areas and a few competitive relationship with a few robot companies. And with the customers demand and with our negotiation with the customers, we gradually see the profitability from robotics in the next 5 to 8 years. I believe when the market is ramping up and our product line will be over RMB 10 billion.

Of course, this is the outlook. As Kelvin said, the client and the customers have not yet established this real demand, but we want to establish a strategic layout and the plan. Once the demand arises, we can ensure our precision. Okay. And that's the summary.

For me, I'm very happy to see the transformation of the company, no matter in the financial side, but also the new product lines and also technology layout. Thank you very much.

Due to time constraints, the AAC Technologies 2025 annual results presentation is now concluded, and the roadshow materials have been updated to the company's official website. If you have any questions, please feel free to contact us. Thank you for your support. See you.

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.

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

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?

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.

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?

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%.

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?

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.

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.

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

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?

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.

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?

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.

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.

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].

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.

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.

Next question from the China merchant. [indiscernible]

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].

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].

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

Next question is from [indiscernible].

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.

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.

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?

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.

[indiscernible] what's about margin?

[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.

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

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.

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.

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]?

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.

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

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?

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.

Next we would like to invite Cherry Ma from Macquarie.

[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.

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.

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?

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.

Okay last 2 questions from [indiscernible].

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?

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.

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].

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]?

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.

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].

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].

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.

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.

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.]