Last close As at 05/08/2026
GBP1.86
▲ 1.00 (0.54%)
Market capitalisation
GBP105m
Research: Industrials
Solid State confirmed record revenues and adjusted PBT in FY23. The positive momentum is continuing into FY24 with a consequent increase in guidance for revenue growth of c 15% and adjusted PBT of c 10%. As a result, consensus estimates for FY24 revenue have increased by 11% to £147m and adjusted PBT has been raised by c 5% to £11.9m.
Written by
Solid State |
Positive trading momentum carried into FY24
|
Industrials |
QuickView
10 July 2023 |
Share price graph
Share details
Business description
Bull
Bear
Analysts
|
Solid State confirmed record revenues and adjusted PBT in FY23. The positive momentum is continuing into FY24 with a consequent increase in guidance for revenue growth of c 15% and adjusted PBT of c 10%. As a result, consensus estimates for FY24 revenue have increased by 11% to £147m and adjusted PBT has been raised by c 5% to £11.9m.
Record performance delivered in FY23
Strong growth continued in FY23 with revenues up by 18% organically (£15.6m); this was enhanced by the initial £16.6m contribution from Custom Power, acquired for £32.6m in August 2022, which performed to plan. The FX tailwind added £9.3m. Adjusted operating margin continued to develop positively, reaching 9.2% (FY22: 8.7%) and return on capital employed started to recover to 14.2%, even as Solid State continued to invest to support growth. The order book increased by 34% to £120.1m (FY22: £85.5m) with positive organic development and Custom Power adding $18.6m (£14.6m). Cash flow was better than originally expected with net debt only increasing to £8.1m (FY22: £5.2m) despite the acquisitions and increased working capital to support growth. Net debt included the remaining contingent considerations for acquisition of £5.7m that should be paid in H124.
Strong start to FY24
The strong organic growth has continued into Q124 boosted by new contracts and augmented by a first-time contribution from Custom Power, driving a further record revenue performance. By nature, some of the organic development, such as the NATO communications contract signed in November 2022, carry lower initial margins with shipments commencing in Q124. In addition, there are other challenges to be faced as FY24 progresses. The normalisation of customer order cycles as confidence in the supply chain slowly returns requires proactive management and FX fluctuations seem likely to be a revenue headwind. Management’s FY24e guidance is for a healthy revenue increase with a modest margin squeeze, implying limited progress for EPS (due to higher share count).
Valuation: Progressively challenging the discount
Having delivered total shareholder returns (TSR) averaging 29% annually since FY19, management is seeking to maintain a CAGR of 20% to 2030. Augmenting organic development with strategic M&A should continue to support expansion in Solid State’s fast-growing market segments, with a broadening geographic footprint and increasing products and applications. Successful delivery of the strategy should see the FY25e P/E discount to peers of c17% progressively diminish.
|
Consensus estimates
Source: Company reports, broker consensus estimates |
|
|
Research: Energy & Resources
On 5 July Canacol Energy issued an operating update that included gas sales and drilling results. June 2023 gas sales were 186mmcf/day, down from 199mmcf/day last year, but within guidance. Management also explained progress at the Lulo-2 and Chimela-1 wells. This confirms the company is on track to meet guidance.