Last close As at 05/08/2026
GBP1.85
▲ −7.00 (−3.65%)
Market capitalisation
GBP105m
Research: Industrials
Solid State’s trading update this morning notes that the strong performance achieved in both the Systems and the Components divisions during H122 has been maintained so far during H2 despite continued supply chain disruption. Consensus FY22 and FY23 adjusted PBT estimates have both been raised by 10%.
Written by
Solid State |
Successfully negotiating supply chain issues
|
Technology |
QuickView
10 February 2022 |
Share price graph
Share details
Business description
Bull
Bear
Analyst
|
||||||||||||||||||||||
Solid State’s trading update this morning notes that the strong performance achieved in both the Systems and the Components divisions during H122 has been maintained so far during H2 despite continued supply chain disruption. Consensus FY22 and FY23 adjusted PBT estimates have both been raised by 10%.
Securing components to fulfil demand
At the interims in December, management noted potential for upside during H222, dependent on careful management of constraints due to supply chain challenges. In the event, the group has been able to secure scarce components and has not needed to delay some shipments into FY23, as had previously seemed likely. Moreover, Active Silicon, which the group acquired in March 2021, performed very strongly, reflecting demand for board level solutions for high-performance digital image capture, processing and transmission driven by increased automation. However, supply chain issues have meant that, as flagged at the interims, the group has absorbed cash in working capital as it has invested in inventory to mitigate the impact of component shortages and in some instances committed to longer order schedules to secure parts. Net cash (ex-IFRS leases and deferred consideration) has dropped from £3.3m at end September to £0.4m at end January 2022. The group has a £3.0m overdraft facility and a £7.5m revolving credit facility.
Record order book supports FY23 growth
The order book at the end of January 2022 reached a record £74.1m, ahead of £70.3m at end November 2021. The increase is partly attributable to two significant contract awards: a $2.1m order for radio frequency components from new customer CyanConnode and a multi-million-pound contract from BAE Systems to design, develop and qualify computer consoles for maritime platforms. The increase also reflects additional customers placing orders covering longer periods to address concerns about critical component availability.
Valuation: Shares close to highest level for five years
The shares are trading on a year one P/E multiple at a modest discount to the mean of our sample of specialist manufacturing companies (17.5x for Solid State versus 19.0x for peers) and a larger discount to the mean for our sample of value-added distributors (17.5x versus 31.4x).
|
Consensus estimates
Source: Company data, broker consensus. |
Solid State is a research client of Edison Investment Research Limited
|
|
Research: TMT
Edel’s FY21 results (to 30 September) showed the benefits of continuing strong demand for the group’s wide range of digital content, alongside the sustained demand for physical vinyl. H221 revenue was 26% ahead of the prior year, delivering overall FY21 revenue growth of 17% to €251m, well ahead of management’s guided range of €220–230m. Inflation and supply chain issues ate into H221 margins and this is set to be an ongoing feature through FY22, with guidance on revenue and net income broadly flat year-on-year. The very strong 12-month share price performance has eroded, but not closed, the discount to Edel’s publishing and entertainment peers.