4Q20 results beat our forecast slightlyRevenue and net profit at AAC Technologies fell 10% and 0.1% YoY in 4Q20 to Rmb4.8bn and Rmb756mn, 4% and 8% higher than consensus and our expectation; GPM in 4Q20 rose 4.5ppt QoQ to 28.1%, thanks to the continuing improvement in GPM for plastic lenses and the shipment for new generation of iPhones.Maintainour OUTPERFORM rating and HK$56.0 TP. We believe that GPM at AAC will recover from the impact of COVID-19 and Huawei’s weakness in 2021. We still expect revenue at the optics business torise 48% YoY to Rmb2.4bn, driven by growth in plastic lenses, WLG (wafer-level glass) and CCM (camera compact module) business, benefiting medium-to-long-term growth. Trends to watchOptics: 2021 GPM continue improving. AAC reported that optics and other revenue rose 53% YoY (13% QoQ) in 4Q20 to Rmb538mn. The ASP of plastic lenses declined 7.6% QoQ to Rmb
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