Last close As at 05/08/2026
GBP1.85
▲ −7.00 (−3.65%)
Market capitalisation
GBP105m
Research: Industrials
Solid State’s trading update states that FY21 adjusted profits are likely to be ahead of consensus estimates and FY20, which was itself a record performance. Noting the potential impact of global semiconductor supply chain issues and continued customer uncertainty related to the coronavirus pandemic, management expects FY22 performance to be comparable with this year.
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Solid State |
FY21 set to be another record
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Technology |
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23 February 2021 |
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Solid State’s trading update states that FY21 adjusted profits are likely to be ahead of consensus estimates and FY20, which was itself a record performance. Noting the potential impact of global semiconductor supply chain issues and continued customer uncertainty related to the coronavirus pandemic, management expects FY22 performance to be comparable with this year.
Profits expected to grow in FY21 despite pandemic
At the half-year point, Solid State’s revenues and adjusted profits were similar to those for the prior-year period, despite the coronavirus pandemic. Trading since then has continued to be robust, so management expects FY21 revenues to be broadly in line with the consensus forecast of £65.0m (at the time of announcement; now updated) and profits not only ahead of the consensus adjusted profit before tax estimate of £4.4m, but ahead of FY20, when adjusted profit before tax was a record £4.7m. While revenue is expected to be lower than FY20, part of the reduction is attributable to currency headwinds, which have little impact on profits because of in-built hedging, and demand for higher value-added products, services and solutions has helped maintain margins.
FY22 performance expected to be similar to FY21
Management is cautious about the prospects for further growth in FY22 and expects performance to be ‘comparable’ with FY21. The semiconductor plant shutdowns this time last year have caused issues with the global supply of some semiconductors. Solid State has increased its own stock levels to protect delivery of systems made in-house, but it is still vulnerable to delays in programmes where customers are unable to source components. In addition, the shortening of client order scheduling related to the uncertainty caused by the pandemic continues.
Valuation: Trading at a discount to peers
The shares have fully recovered from the pandemic induced sell-off in March 2020 and are now at their highest level for five years. They are trading on a year 1 P/E multiple that is at a small discount to the mean for our sample of specialist manufacturing companies (16.5x for Solid State vs 18.3x for peers) and a much larger discount to the mean for our sample of value-added distributors (16.5x vs 35.1x).
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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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Research: TMT
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