Last close As at 05/08/2026
GBP1.85
▲ −7.00 (−3.65%)
Market capitalisation
GBP105m
Research: Industrials
As flagged in its October trading update, during H122 Solid State realised strong year-on-year growth in revenues (19%) and adjusted profit before tax (28%), with both metrics reaching record levels. Management continues to see potential for upside during H2, dependent on careful management of constraints due to supply chain challenges, and is confident that the group will meet the consensus estimate for FY22 adjusted profit before tax. Consensus estimates remain unchanged for now.
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Solid State |
Record performance in H122
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7 December 2021 |
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As flagged in its October trading update, during H122 Solid State realised strong year-on-year growth in revenues (19%) and adjusted profit before tax (28%), with both metrics reaching record levels. Management continues to see potential for upside during H2, dependent on careful management of constraints due to supply chain challenges, and is confident that the group will meet the consensus estimate for FY22 adjusted profit before tax. Consensus estimates remain unchanged for now.
Benefitting from acquisitions and organic growth
Reported revenues rose by 19.0% year-on-year in H122 to £39.4m and by 8%, excluding the two acquisitions completed in March 2021, where performance exceeded management’s expectations. Management notes that like-for-like revenues would have shown strong double-digit growth had it not been for component shortages which have affected both the Systems (formerly Manufacturing) and the Components (formerly Value Added Supplies) divisions. Reported revenues were also adversely affected by a weaker US dollar, though, as component purchases are denominated in dollars, the FX movement was beneficial for gross margin. Operating margins also benefited from a favourable project mix as well as continued emphasis on own brand products and value-added activities. Adjusted profit before tax jumped 28.2% y-o-y to £3.3m. Net cash increased by £0.2m during H122 to £3.3m (ex-IFRS 16 leases and deferred consideration) at the end of the period.
Record order book indicates FY22 upside
The order book at end November 2021 was up 70% year-on-year compared with end March 2021 at a record £70.3m. This reflects a combination of increased underlying demand from customers, particularly from the recovering aerospace and oil and gas markets, as well as customers placing orders covering longer periods to address concerns about critical component availability. The group has invested in inventory to mitigate the impact of component shortages and in some instances committed to longer order schedules to secure parts. Management notes this is likely to lead to working capital cash outflow in H222 versus £1.2m inflow in H122.
Valuation: Shares close to highest level for five years
The shares are trading on a year one P/E multiple at a discount to the mean of our sample of specialist manufacturing companies (18.4x for Solid State versus 21.1x for peers) and a larger discount to the mean for our sample of value-added distributors (18.4x versus 35.7x).
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Consensus estimates
Source: Company data, broker consensus. |
Solid State is a research client of Edison Investment Research Limited
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Research: Industrials
Carr’s Group’s FY21 results were ahead of management’s improved expectations, with increased profits across both the Speciality Agriculture and Agricultural Supplies divisions offsetting weaker performance from the Engineering division caused by low oil prices during Q121. Noting continued strength in livestock prices in the United States and the UK, stable farmgate milk prices in the UK and a strong Engineering order book, we raise our FY22 and FY23 PBT estimates by 4.7% and 2.2% respectively.