Good afternoon!

It's been such a hectic week, charging around going to meetings & investor lunches, etc, that I missed a few company updates. So to clear my conscience, thought I would write a bonus report this weekend, to catch up.

Solid State (LON:SOLI)

Share price: 457p
No. shares: 8.5m
Market cap: £38.8m

Trading update - nothing to worry about here, it's an in line with expectations market update;

The Group expects to announce results for the half year;

  • ahead of the equivalent period in 2015, and
  • consistent with market expectations for the year as a whole, and
  • a strong debt free balance sheet.

The Group had an order backlog at 30 September 2016 of £14.8m, comprising £12.7m of underlying revenue and £2.1m of Creasefield revenue, acquired in June 2016, (30 September 2015: £14.2m - excluding discontinued SEMS division Ministry of Justice revenue of £3.5m).

The £12.7m underlying order backlog seems to be down against the equivalent £14.2m last year.

Note that the agreement with the MoJ over the cancelled contract, has all been settled now, which resulted in SOLI gaining an undisclosed cash amount.

The group has made some small acquisitions, which are going well;

The Board is pleased to announce that both acquisitions made in the 2015/2016 financial year are substantially integrated, performing well in their own markets and demonstrating synergy benefits with the other divisions in the Group.

Valuation - broker consensus EPS forecast seems to have settled down, after some large reductions in the last 12 months, due to the MoJ contract ceasing;


Based on the current share price of 457p, that equates to a PER of 10.8 - that seems reasonably good value, in a generally quite pricey market right now.

Balance sheet - I've checked back to the last published accounts, and note that SOLI has a reassuringly strong balance sheet, which moved into a net cash position after the MoJ settlement.

So no concerns there at all, it's a soundly financed business.

Dividends - there's a well-covered (about 3.5 times) yield of about 2.6%.

My opinion - overall I think it looks priced about right. This type of business isn't an exciting growth stock, it's a fairly dull contract manufacturer & distributor. So to my mind that means a PER of about 10 is probably right. Every now and then there's likely to be…

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