Last close As at 05/08/2026
GBP1.85
▲ −7.00 (−3.65%)
Market capitalisation
GBP105m
Research: Industrials
Solid State has issued a post-close trading update stating that FY21 performance is expected to be ahead of the consensus forecasts, which were upgraded in February to reflect positive trading up to that point. Broker consensus FY21e EPS has been raised by 8%. Consensus FY22 estimates, which were raised twice in March to reflect two separate acquisitions, have not been changed to reflect yesterday’s announcement.
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Solid State |
Continued FY21 outperformance
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Technology |
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23 April 2021 |
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Solid State has issued a post-close trading update stating that FY21 performance is expected to be ahead of the consensus forecasts, which were upgraded in February to reflect positive trading up to that point. Broker consensus FY21e EPS has been raised by 8%. Consensus FY22 estimates, which were raised twice in March to reflect two separate acquisitions, have not been changed to reflect yesterday’s announcement.
Strong finish to FY21
Performance during March was higher than management expectations. Customers pulled forward component orders amid concerns about future availability and severe lengthening of lead times, leading to outperformance. Demand otherwise across the group was generally strong and gross margins are holding up.
Impact of component shortages on FY22 uncertain
On a like-for-like basis, the order book at end FY21 was down 16% year-on-year at £33.7m (£41.3m including acquisitions completed in March 2021) because customers are placing orders covering shorter periods as they are still unsure of future demand in their own markets. However, the open orders scheduled for delivery between April and June 2021 are 10% higher than the 0–3-month open order low point of May 2020, showing resilience in customer demand, and order intake since end FY21 has been particularly strong. In our opinion, the key risk is not demand but component availability, which could potentially affect both the Manufacturing and Value Added Supplies divisions. The group’s balance sheet, with c £3.1m cash at end FY21, no debt other than finance leases and an unused £7.5m bank facility puts the group in a good position to withstand any unusual working capital requirements related to supply chain issues. Encouragingly, we note that cross-selling initiatives involving the two new acquisitions are already generating new business, although the main benefit of this will not be felt until FY23.
Valuation: Trading at a discount to peers
Solid State’s shares are now at the highest level they have been for five years. Nevertheless, they are still trading on a year 2 P/E multiple at a small discount to the mean for our sample of specialist manufacturing companies (16.0x for Solid State versus 17.1x for peers) and a much larger discount to the mean for our sample of value-added distributors (16.0x versus 33.5x).
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Consensus estimates
Source: Company data, broker consensus. Note: *Adjusted for exceptionals, share-based payments and amortisation of acquisition intangibles. |
Solid State is a research client of Edison Investment Research Limited
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