Last close As at 05/08/2026
GBP1.85
▲ −7.00 (−3.65%)
Market capitalisation
GBP105m
Research: Industrials
Solid State is developing from a component manufacturer into a value-added electronics partner offering engineered solutions. Management expects this to drive additional growth and margin expansion, particularly in target markets, such as healthcare and defence, underpinning management’s objective for a c 20% CAGR in shareholder returns to 2030.
Solid State |
Record FY24; medium-term targets retained
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Industrials |
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10 July 2024 |
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Solid State is a research client of Edison Investment Research Limited |
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Solid State is developing from a component manufacturer into a value-added electronics partner offering engineered solutions. Management expects this to drive additional growth and margin expansion, particularly in target markets, such as healthcare and defence, underpinning management’s objective for a c 20% CAGR in shareholder returns to 2030.
FY24: A record year
Solid State delivered a record PBT of £15.6m, up 44%, with underlying operating profit of £17.0m, up 47%. This was driven largely by organic growth of 27%, assisted by significant NATO business along with some contract pull-forwards, and adjusted operating margin of 10.4%, up 120bp from 9.2%. Systems division sales increased 80% (to £103.5m) due to the NATO business and the Custom Power acquisition, with margins expanding from 13.9% to 18.7%. Components division sales declined by 13% after an exceptional FY23 led to customer destocking, particularly in the industrial and rail sectors, as confidence in the supply chain returned. EPS increased by 24% to 99.8p. The dividend was raised by 7.5% to 21.5p per share (4.6x covered). Net debt reduced from £8.1m to £4.7m despite higher working capital requirements to support sales growth (£5.6m outflow). Return on capital employed increased to 26.4% from 20.1%. The order book was down 26% from £120.1m to £88.4m (31 May: £89.2m), reflecting the large contracts which worked their way through the business in FY24, leading to management guiding that the exceptional H124 will not be repeated in FY25. Order cover stands at a solid 62% of consensus FY25 sales and management’s view for the year is unchanged.
FY25: A year of consolidation
Headwinds from the lower order book and destocking in the broader industrial sector are reflected in the conservative, yet we believe realistic, consensus forecasts for FY25 after the record FY24. Growth is expected to return in FY26, assisted by the increasing value-added strategy, which helped deliver the record FY24, and the company’s investment in capabilities and sales.
Valuation: High returns anticipated
Management is targeting 20% compound shareholder returns out to 2030 from a combination of internally driven organic growth supported by investment (note the investment in a new manufacturing facility in Tewkesbury), margin expansion to 12.0% and further corporate activity. The hiatus after the exceptional FY24 will limit short-term sales and profit growth but we believe investors should take confidence in achieving such targets given that Solid State has delivered a CAGR in shareholder returns of c 26% over the last five years.
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Consensus estimates
Source: Company reports, broker consensus estimates |
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Research: Healthcare
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