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Equity Bottom-Up

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 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

Fundamental Analyses, Contrarian Cashflows

Contrarian Cashflows

Fundamental Analyses

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<ul><li>Solid State (SOLI) is a British electronics manufacturer and distributor specializing in mission-critical components and systems for industries with high regulatory barriers.</li><li>The founding families still lead the company, owning over 13% of outstanding shares. Since 2010, the CEO has driven annual sales and EPS growth of 18%.</li><li>Despite this strong track record, the shares trade at a normalized 7.3% owner earnings yield and an 11.1 adj. EV/EBIT.</li></ul>

Solid State (SOLI) is a British electronics manufacturer and distributor specializing in mission-critical components and systems for industries with high regulatory barriers.The founding families still lead the company, owning over 13% of outstanding shares. Since 2010, the CEO has driven annual sales and EPS growth of 18%.Despite this strong track record, the shares trade at a normalized 7.3% owner earnings yield and an 11.1 adj. EV/EBIT.

Solid State: Compounding Shareholder Capital in Industries with High Regulatory Barriers to Entry

Solid State’s trading update affirms the sustained strength in demand throughout H224, resulting in record FY24 revenue and adjusted PBT ahead of prior consensus of £155m and £12.5m, respectively. This is attributable to the earlier-than-expected delivery of a NATO contract. As a result, consensus FY24 revenue and adjusted PBT estimates have been raised by c 6% and c 20%, with respective FY25 estimates declining commensurately.

Solid State’s trading update affirms the sustained strength in demand throughout H224, resulting in record FY24 revenue and adjusted PBT ahead of prior consensus of £155m and £12.5m, respectively. This is attributable to the earlier-than-expected delivery of a NATO contract. As a result, consensus FY24 revenue and adjusted PBT estimates have been raised by c 6% and c 20%, with respective FY25 estimates declining commensurately.

Solid State - Anticipating record adjusted PBT in FY24

Solid State has confirmed the strong H124 performance, boosted by a full period contribution from Custom Power combined with the benefit of delivering the NATO contract. Despite the continuing challenges we expect organic growth to resume from the lower trend level of profit excluding the NATO uplift from H224. Following the recent 5% uplift for both revenue and PBT, FY24 guidance and market consensus estimates are unchanged.

Solid State has confirmed the strong H124 performance, boosted by a full period contribution from Custom Power combined with the benefit of delivering the NATO contract. Despite the continuing challenges we expect organic growth to resume from the lower trend level of profit excluding the NATO uplift from H224. Following the recent 5% uplift for both revenue and PBT, FY24 guidance and market consensus estimates are unchanged.

Solid State has made an excellent start to FY24 with strong continuing organic growth in H124 enhanced by a full period contribution from Custom Power. As a result, management anticipates better-than-expected revenues and PBT for the full year with market consensus rising by c 5% to £155m and £12.5m, respectively.

Solid State has made an excellent start to FY24 with strong continuing organic growth in H124 enhanced by a full period contribution from Custom Power. As a result, management anticipates better-than-expected revenues and PBT for the full year with market consensus rising by c 5% to £155m and £12.5m, respectively.

Solid State - Strong organic development in H124

United Kingdom

Gooch & Housego plc researches, designs, engineers, and manufactures photonic systems, components, and instrumentation for aerospace and defense, industrial, and medical system manufacturers in the United States, continental Europe, the United Kingdom, and the Asia Pacific. The company operates in four segments: Aerospace & Defence, Life Sciences, Industrial, and Scientific Research. It offers acoustic products, including beam deflectors, fiber-coupled devices, frequency shifters, model lockers, modulators, multi-channel modulators, pulse pickers and cavity dumpers, Q-switches, RF drivers, tunable filters, and accessories; crystal optics, such as LN wafers, nonlinear optics, lithium niobate, and wave plates; and fiber optics, such as fused fiber optic components, fiber coupled AOM, fiber optics assemblies, booster erbrium-doped fiber amplifiers, single mode pump lasers, multi-mode pump lasers, high speed 20GHz detectors, DFB laser modules, DFB and DBR lasers, laser packaging, and benchtop laser controllers. The company also provides electro-optic products comprising BBO lightgate, CdTe IRX, KD*P, and aperture pockels cells; EO Q-switch drivers; lithium niobate Q-switches; and pockels cell alignment for single pass systems. In addition, it offers life science and instrumentation products, including CR-100 and CR-200 tristimulus colorimeters/photometers, detectors, LMK imaging photometer systems, integrating spheres, precision constant current sources, radiometers/photometers, diffuse and specular reflectance standards, spectral imaging and synthesis products, spectral irradiance and illuminance standards, spectral radiance and luminance standards, and spectroradiometers. Further, the company provides precision optics, optical components, and optical assemblies. Gooch & Housego plc was founded in 1948 and is headquartered in Ilminster, the United Kingdom.

TT electronics plc manufactures electronic and electrical components for the automotive, telecommunication and industrial engineering sectors.  The Group's products include electronic components and systems, electrical cables, uninterruptible power supplies and generators.  TT has manufacturing facilities in the UK, Continental Europe, USA and low labor cost countries.

accesso Technology Group plc provides technology solutions to the attractions and leisure industry worldwide. It offers queuing and ticketing solutions to support various attractions, including various paid admission operations ranging from theme parks, water parks, and zoos to cultural attractions and sporting events. The company?s solutions include accesso LoQueue, a virtual queuing solution that allows guests to make ride reservations throughout their day, instead of waiting in line, and spend more time in the venue. It also provides accesso Passport ticketing suite, which provides streamlined ticketing point of sale, season pass processing, group sales, access control, branded content, GPS enabled maps, and mobile ticketing services; and accesso Siriusware, which offers software modules comprising ticketing and admissions, memberships and passes, reservations, resource scheduling, retail, food service, gift cards, kiosks, ecommerce, and others. The company was formerly known as Lo-Q plc and changed its name to accesso Technology Group plc in November 2013. accesso Technology Group plc was incorporated in 2000 and is based in Twyford, the United Kingdom.

Digital Barriers plc provides visually intelligent solutions for the surveillance, security, and safety markets in the United Kingdom and internationally. It specializes in zero-latency streaming and analysis of secure video and related intelligence over wireless networks, including cellular, satellite, IP mesh, and cloud. The company provides EdgeVis Live, a wireless distribution platform based on TVI video-compression technology that provides real-time video streaming; and EdgeVis Shield, an integrated surveillance platform for real-time video streaming and early warning intrusion alerts in remote locations, as well as for the protection of isolated assets. It also offers ThruVis, a compact people screening camera and software to detect person-borne threats; and SmartVis, which provides video analytic solutions and automation tools, such as intrusion detection and facial recognition. In addition, the company provides CloudVis, a suite of cloud-hosted video analytics that offer intrusion detection, automatic video-alert verification, camera-tampering alerts, face detection, and image enhancement from a cloud service. Digital Barriers plc serves law enforcement and first responders, defense, security borders, safe cities and public safety, automotive, energy and utilities, construction, facility and site security, and transportation industries. The company was founded in 2009 and is headquartered in London, the United Kingdom.

Zytronic plc, together with its subsidiaries, develops and manufactures various touch sensor products in the United Kingdom and internationally. It offers a range of projected capacitive technology touch interactive products, which are used in electronic displays for information kiosks, ATMs, touch tables, and ticketing and gaming machines, as well as by military, computer, telecommunications, and medical manufacturers. The company sells its products directly to customers, as well as through a network of agents and distributors. Zytronic plc was incorporated in 1999 and is based in Blaydon-on-Tyne, the United Kingdom.

Newmark Security PLC develops integrated monitoring systems and access control security products for the United Kingdom security market. The Company's software driven products include the ParSec and Controlpoint ranges.  Newmark also offers the VeRa Lock system to such customers as prisons and banks.

Midwich Group plc distributes audio visual (AV) and document solutions to the trade market in the United Kingdom, Ireland, France, Germany, and Australasia. The company provides a portfolio of audio visual categories, such as large format displays, projectors, digital signage, and printers. It serves professional AV integrators and IT resellers in corporate, education, retail, residential, hospitality, commercial, and marine sectors. The company was formerly known as Jade 320 Limited and changed its name to Midwich Group plc in April 2016. Midwich Group plc was founded in 1979 and is based in Diss, the United Kingdom.

Concurrent Technologies Plc, together with its subsidiaries, designs, develops, manufactures, and markets single board computers for system integrators and original equipment manufacturers in the United Kingdom, other countries in Europe, North America, and internationally. It offers embedded computer products covering a range of central processing unit boards and complementary accessory boards. The company also provides various commercial off-the-shelf products, such as processor boards, switch fabric boards, XMC/PMC carriers, transition modules, mass storage, carrier boards, VPX systems, GPGPU boards, graphics adapters, microTCA systems, serial adapters, and Ethernet, as well as XMC/PMC expansion products. In addition, it offers fabric switch configuration software tool, a software package that allows configuring and controlling of various features of concurrent technologies Ethernet switch fabric board and PCI express switch fabric board products; fabric interconnect networking software, a family of software packages that enables applications on multiple boards to communicate across a backplane fabric; built-in test firmware and software, which provides various self-test diagnostics; board level security package; and fast boot software, an alternative boot loader firmware image. The company serves the telecommunication, defense, aerospace, transportation, scientific, and industrial markets. Concurrent Technologies Plc was founded in 1985 and is based in Colchester, the United Kingdom.

SRT Marine Systems plc, together with its subsidiaries, develops and supplies automatic identification system based maritime domain awareness technologies, derivative products, and system solutions in North America, the United Kingdom, the Middle East, rest of Europe, and internationally. Its automatic identification system is a ?mesh? network communications system technology, which uses a combination of GPS and VHF radio to enable real time, simultaneous data communication between multiple, independent entities providing information, such as identity, position, course, speed, and other customized data. The company also provides technology and OEM product and display solutions to marine electronics brand owners; AIS transceivers to a dealer network addressing price conscious commercial and leisure boat owners; and turn-key maritime tracking, safety and security system solutions to system integrators. In addition, it is involved in the development, sale, and licensing of maritime communication products; and development and supply of real time maritime domain data and traffic movements into interactive 3D display presentation. The company?s solutions are used in a range of maritime applications from safety and security to fishery management and environment protection. The company was formerly known as Software Radio Technology Plc and changed its name to SRT Marine Systems plc in July 2016. SRT Marine Systems plc was founded in 1987 and is based in Bath, the United Kingdom.

Oxford Instruments plc produces advanced instrumentation equipment.  The Company's products are used for scientific research, chemical analysis, patient monitoring, semiconductor processing, and diagnostic imaging.  Oxford conducts manufacturing operations in the United Kingdom and the United States.

NIHON DEMPA KOGYO CO., LTD. manufactures quartz crystals products used for telecommunication and industrial equipment.  The Company's products include quartz resonators, oscillators, saw devices, crystal filters, artificial quartz. Nihon Dempa Kogyo operates overseas production facilities in Malaysia and China.

SUN-WA TECHNOS CORPORATION. sells electronic equipment and parts, such as mechatronics and semiconductors.  The Company's products include motors, sensors ,industrial robots, numerical control systems, semiconductors, programmable  controllers, connectors, small fans, switches, and printers,

Aichi Tokei Denki Co., Ltd. manufactures, repairs, and markets measuring equipment such as water and gas meters, gas leakage alarms, magnetic sensors, and flow meters.  The Company also makes measuring and control systems, parts used for a machine tool, and precision metal molding.

V Technology Co., Ltd. develops, manufactures, and sells inspection systems and measuring machines for semiconductor and printed circuit boards (PCB).  The Company also makes display panels such as plasma display panel (PDP), liquid crystal display (LCD), and shadow masks.

Utechzone Co Ltd. researches, develops, and markets of AVI (Automated Visual Inspection) facilities and PKP (Process Knowledge Platforms).

Shinko Shoji Co., Ltd. sells electronic parts and equipment such as integrated circuits (IC) and semiconductor devices.  The Company's products include liquid crystal (LC) display modules, condensers, ferrite cores, coils, power supplies, thin film transistor (TFT) thermal printers, head magnets, transformers, motors, sensors, and connectors.

D-Link India Ltd. designs and manufactures networking, broadband, digital, voice, and data communications products.  The Company produces switches, routers, modems, voice over Internet protocol products, surveillance equipment, print servers, ethernet cards, and broadband equipment.  D-Link's specialty is ethernet connectivity.

Robostar Co., Ltd. was founded in 1999. The company's line of business includes the manufacturing of general industrial machinery.

AzureWave Technologies Inc. research, develop, produce and distribute wireless communication and digital image processing related module products.

Teapo Electronic Corporation manufactures and markets capacitors and related parts.  The Company's main products are aluminum electrolytic capacitors, metallized polyester capacitors, and metallized polypropylene capacitors.

Solid State PLC distributes electronic components for use in the industrial, automotive, mobile phone, computer and military markets of the United Kingdom. The Company also provides technical support to its customers.  The Company has agreements to supply products to nine electronic components manufacturers, mainly into the UK market. ... More

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Solid State PLC (SOLI LN)

Solid State - Record FY24; medium-term targets retained

Solid State is developing from a component manufacturer into a value-added electronics partner offering engineered solutions. Management expects...

Edison Investment Research

Solid State: Compounding Shareholder Capital in Industries with High Regulatory Barriers to Entry

Solid State (SOLI) is a British electronics manufacturer and distributor specializing in mission-critical components and systems for industries...

Contrarian Cashflows

Solid State - Anticipating record adjusted PBT in FY24

Solid State’s trading update affirms the sustained strength in demand throughout H224, resulting in record FY24 revenue and adjusted PBT ahead of...

Edison Investment Research

Solid State - Returning to trend growth

Solid State has confirmed the strong H124 performance, boosted by a full period contribution from Custom Power combined with the benefit of...

Edison Investment Research

Solid State - Strong organic development in H124

Solid State has made an excellent start to FY24 with strong continuing organic growth in H124 enhanced by a full period contribution from Custom...

Edison Investment Research

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