Last close As at 05/08/2026
GBP1.85
▲ −7.00 (−3.65%)
Market capitalisation
GBP105m
Research: TMT
Solid State’s H123 results show strong revenue growth (51% y-o-y) and order intake (up 32% vs end-FY22) reflecting 31% organic growth in constant currency, as well as the acquisition of United States-based Custom Power and currency tailwinds. Trading since the period end has been ahead of management expectations, so consensus EPS estimates have been raised by 9% and 3% for FY23 and FY24, respectively.
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6 December 2022 |
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Solid State is a research client of Edison Investment Research Limited |
Solid State’s H123 results show strong revenue growth (51% y-o-y) and order intake (up 32% vs end-FY22) reflecting 31% organic growth in constant currency, as well as the acquisition of United States-based Custom Power and currency tailwinds. Trading since the period end has been ahead of management expectations, so consensus EPS estimates have been raised by 9% and 3% for FY23 and FY24, respectively.
Acquisition complements strong organic growth
As flagged in the October trading update, H122 revenues jumped by £20.0m y-o-y to £59.4m. Components revenues increased by £11.2m to £35.3m, supported by substantial investment in inventory to secure product. Systems revenues rose by £8.8m to £24.0m, boosted by the Custom Power acquisition, which completed in August. Adjusted PBT rose by 60% y-o-y to £5.2m. Group reported gross margin declined by 1.1pp to 31.6% as underlying margin improvements from sales of larger, complex solutions and own brand products were offset by rising input costs because component purchases are typically denominated in US dollars. Net debt increased by £10.9m during the period to £16.1m (excluding finance leases) at end-September 2022, primarily because of a £9.8m increase in deferred consideration payable. In July the group raised £27.0m (net) through an oversubscribed placing and open offer at 1,025p/share, part of which was to cover the initial consideration payable (c £24.0m) for Custom Power.
Strong order intake
The order book at end-September 2022 totalled £112.5m vs £85.5m at end-March 2022, representing like-for-like organic growth of c 12%. Since the period end, the group has received a £7.3m defence contract from NATO for delivery in FY23 and a follow-on contract worth £9.8m for delivery in FY24. Having benefited from strong trading so far in Q323, management expects the group to be ahead of consensus FY23 estimates. It also notes further potential upside during H222, delivery of which depends on the impact of supply chain constraints.
Valuation: Trading at a discount to peers
The shares are trading on a year one P/E multiple at a significant discount to both the mean of our sample of specialist manufacturing companies (16.3x for Solid State vs 22.0x for peers) and the mean for our sample of value-added distributors (16.3x vs 24.4x).
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Consensus estimates
Source: Company data, broker consensus. Note: *Adjusted for acquisition amortisation, share-based payments and non-recurring charges. |
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Research: Healthcare
In an encouraging pipeline development, Context Therapeutics has announced the selection of a final clinical candidate for its second R&D program, a CLDN6xCD3 bispecific antibody. The nominated candidate CTIM-76, which was introduced at the recent R&D webinar, was selected from partner Integral Molecular’s CLDN6xCD3 library for its high CLDN6 binding and specificity and strong safety profile to date (low immunogenicity risk) at the selected dose. We reiterate that the therapeutic benefits of targeting CLDN6 (expressed on a variety of malignant tumor cells but rarely in healthy tissue) are well recognized, although development has been challenged by a lack of selectivity. Context asserts that its CLDN6 candidate has superior selectivity and activity, presenting a compelling upside case, provided there is successful clinical progression.