Last close As at 05/08/2026
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GBP105m
Research: Industrials
Solid State’s H125 results are in line with consensus expectations and management’s guidance for the full year is unchanged. While trading has been affected by contract timing, the underlying growth and margin strategy remains intact, supported by Solid State’s recent acquisitions and investment in a new manufacturing facility.
Solid State |
Interim results
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Industrials |
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11 December 2024 |
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Solid State is a research client of Edison Investment Research Limited |
Solid State’s H125 results are in line with consensus expectations and management’s guidance for the full year is unchanged. While trading has been affected by contract timing, the underlying growth and margin strategy remains intact, supported by Solid State’s recent acquisitions and investment in a new manufacturing facility.
Interim results
Solid State’s first half was affected by a weaker electronics market, an FX headwind of £0.7m and a contract (£10m revenue and £3m profit) that was pulled forward into H224. Revenue was £61.8m, with headline of -29.9% but -3.5% underlying. Gross margin was flat at 31.1% (30.0% previously) and operating margin was 5.1% (down from 9.2%) as it was affected by negative operational gearing from the lower volumes. Solid State had an adjusted PBT of £2.5m (H124: £7.3m), an EPS of 17.5p (H124: 46.8p) and a dividend of 0.83p (H124: 1.40p). Cash flow was positive, with net debt reduced from £3.9m to £2.0m, assisted by a working capital inflow of £4.7m due to the lower activity level. Components Division sales of £26.8m (-14.6%) reflect Solid State’s destocking and a slowdown in the industrial and transport sectors. Systems Division sales of £35.0m (-38.2%) were affected primarily by the pulled-forward contract, with underlying organic sales growth of c 6.4%. Both divisions experienced delays in investment programmes, particularly in the UK, with uncertainty from the Strategic Defence Review and a potential re-nationalisation of the railways. Opportunities have been identified in road transportation and traffic management, while the US defence arena remains positive, offering future opportunities. Other operational highlights include a cost reduction programme generating c £1.0m of savings, while investment in the new facility (c £2.0m) continues to schedule with production due to start at the beginning of the next financial year.
Outlook and guidance
Management believe that the electronics sector has bottomed as highlighted by the improving order book, £85.5m at 30 November (£76.6m at 30 September), and significant orders for battery systems. New design wins, a key forward indicator, remain strong. Assisted by the acquisitions of Gateway Electronic Components and Q-PAR Antennas USA, management’s guidance for full-year profits is unchanged.
Valuation: Recovery upside
Solid State’s recent share performance has reflected the more difficult trading environment. However, the shares trade on an EV/sales multiple of 0.65x for a business with positive underlying growth dynamics and double-digit margin potential (FY24: 10.4%), which can be supplemented by acquisition, supported by the strong balance sheet.
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Consensus estimates
Source: Company reports, broker consensus estimates |
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Research: Metals & Mining
After the bell on 5 December, Wheaton Precious Metals (WPM) announced that it had entered into a definitive Precious Metals Purchase Agreement (PMPA, or stream) with Allied Gold regarding the Kurmuk gold project in Ethiopia. Under the terms of the stream, WPM will pay US$175m to acquire 6.7% (subject to conditions – see below) of the payable gold produced from Kurmuk at 15% of the spot price of gold until 220koz has been delivered, at which point, the percentage will drop to 4.8%.