Last close As at 05/08/2026
GBP1.86
▲ 1.00 (0.54%)
Market capitalisation
GBP105m
Research: Industrials
At Solid State’s AGM earlier this month, management noted a positive start to FY19 in both divisions. The Manufacturing division is expected to benefit from contracts totalling £4.3m to supply power units for autonomous robots operating in cold climate conditions. The Distribution division has recently announced a $3.2m long-term supply agreement with the UK’s leading international defence, aerospace and security company for military-grade power supplies. These contracts underpin consensus estimates, which remain unchanged.
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Solid State |
Positive start to FY19
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Technology |
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18 September 2018 |
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Solid State is a research client of Edison Investment Research Limited |
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At Solid State’s AGM earlier this month, management noted a positive start to FY19 in both divisions. The Manufacturing division is expected to benefit from contracts totalling £4.3m to supply power units for autonomous robots operating in cold climate conditions. The Distribution division has recently announced a $3.2m long-term supply agreement with the UK’s leading international defence, aerospace and security company for military-grade power supplies. These contracts underpin consensus estimates, which remain unchanged.
Value-add capability secures $3.2m power contract
In April 2018 Solid State announced an exclusive distribution franchise for VPT, a global provider of power conversion solutions for the rapid deployment of critical power systems in avionics, military and space applications. The franchise was awarded because of Solid State Supplies’ existing client base, AS9120 certification and its proven ability to support military and aerospace customers in the choice of product throughout the design cycle. The recently announced $3.2m contract, which is for the supply of VPT’s military grade power supplies, extends over a three-year period with deliveries commencing later in calendar 2018.
Contract totalling £4.3m underlines battery expertise
In June the company announced the award of contracts totalling £4.3m for battery packs powering warehouse robots. Management expects deliveries under these contracts to start in H219 and continue into FY20, with additional recurring revenues from the supply of replacement cells as part of a support and maintenance offering. The contract wins result from the combination of Steatite’s engineering capability and investment in a centre of excellence for portable power and energy storage solutions in Crewkerne following the acquisition of Creasefield in June 2016.
Valuation: Trading at a discount to peers
The share price has picked up from the 241p low following the April trading update. At current levels, the shares are trading on prospective consensus P/E multiples that are at a discount to the mean for both our sample of specialist manufacturing companies (12.8x for Solid State vs 18.3x for peers) and our sample of value-added distributors (12.8x vs 19.1x). This indicates there is potential for share price upside once the group is able to demonstrate meaningful profit growth.
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Consensus estimates
Source: Company data, Bloomberg |
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Disclaimer
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Disclaimer
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Focusrite ends the year with revenue as forecast, continued profit growth in the second half and revenue in line with our expected slower second-half growth. Cash of £22.8m is 10% higher than we forecast and is now over half the balance sheet. US tariffs will likely apply to Focusrite’s business there and management has been considering its response, while risks associated to Brexit appear relatively minor to us. It seems the share price continues to discount a significant acquisition.