Last close As at 05/08/2026
GBP1.85
▲ −7.00 (−3.65%)
Market capitalisation
GBP105m
Research: Industrials
Solid State’s post-close trading update states that it expects to announce strong year-on-year growth in both revenues (18%) and adjusted profit before tax (27%) for its first half to 30 September 2021. While management sees potential for upside during H2, dependent on successful navigation of supply chain challenges, and is confident that the group will meet the FY22 consensus adjusted profit before tax estimate, the consensus estimates remain unchanged at present.
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Solid State |
Trading on track with potential H2 upside
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Technology |
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22 October 2021 |
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Solid State’s post-close trading update states that it expects to announce strong year-on-year growth in both revenues (18%) and adjusted profit before tax (27%) for its first half to 30 September 2021. While management sees potential for upside during H2, dependent on successful navigation of supply chain challenges, and is confident that the group will meet the FY22 consensus adjusted profit before tax estimate, the consensus estimates remain unchanged at present.
Strong growth in revenue and profit during H122
Management expects that H122 revenues will be c £39.0m (H121: £33.1m) generating adjusted profit before tax of c £3.3m (H121: £2.6m). Sales benefited from the two acquisitions completed in March 2021, where performance exceeded management’s expectations, and strong underlying trading tempered by currency headwinds from a weaker US dollar. Since all component purchases are effectively denominated in US dollars, the effect was positive for gross margin percentages. Operating margins benefited from a favourable project mix, continued emphasis on own brand products, and value-added activities and careful control of costs. Net cash increased slightly during the period from £3.2m at end FY21 (ex-IFRS 16 leases and deferred consideration) to £3.3m at end September 2021. The group also has a £7.5m unused revolving credit facility.
Order book at record levels
The order book at end September 2021 was up 48% year-on-year compared with end March 2021 at a record £61.5m. This is primarily because customers are placing orders covering longer periods to address concerns about critical component availability. It also reflects a partial recovery in demand from the energy and aerospace sectors, both of which were adversely affected by the coronavirus pandemic. Since component availability could potentially affect both manufacturing and value-added supplies sales, the group has invested in inventory to mitigate this and in some instances committed to longer order schedules to secure parts.
Valuation: Trading at a discount to peers
Solid State’s shares are now almost at their highest level for five years. Nevertheless, they are trading on a year one P/E multiple at only small premium to the mean of our sample of specialist manufacturing companies (19.3x for Solid State versus 18.9x for peers) and a large discount to the mean for our sample of value-added distributors (19.3x versus 34.3x).
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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: Investment Companies
The board of JPMorgan Global Growth & Income (JGGI) has announced that it has signed heads of terms with the board of Scottish Investment Trust (SCIN) in respect of a proposed combination. Following the transaction, JGGI’s assets would total at least £1.2bn. This announcement follows a review of SCIN’s investment management arrangements undertaken by its board after a period of underperformance, which was due at least in part to its contrarian and value bias. SCIN’s board selected JGGI because of its style-agnostic investment strategy, which focuses on stocks with both attractive growth and value attributes. The decision is no doubt also a reflection of JGGI’s strong performance; it has delivered strong absolute returns and outperformed its benchmark over both the short and long term. JGGI’s dividend policy, which pays a dividend equal to 4% of NAV at the end of the previous financial year, will remain unchanged. The fund estimates that the ongoing charge will fall by 11bp. Subject to approval by both JGGI and SCIN shareholders, and the debt holders of both trusts, the transaction is expected to complete in Q122.