RE: SOLI tipped by Simon Thompson5 Dec 2025 14:35
Tip continued part 2:
"Importantly, the order book looks increasingly robust, having increased by 14 per cent to £87.3mn year on year, of which more than 60 per cent is scheduled for delivery in the second half to de-risk full-year revenue estimates (£145mn). Furthermore, since the half-year end, the group has secured an initial order worth $10.8mn (£8.1mn) under Project CAIN, a major defence programme, for a UK government end user. The order represents a significant milestone in Solid State’s strategy to deliver cutting-edge, mission-critical technologies to the UK’s armed forces and security community. Delivery of these initial systems is scheduled for the first half of 2026.
In addition, the group’s power division, Custom Power, has recently won several major orders with a total value of $7.4mn. These relate to the supply of specialist power packs for applications across unmanned aerial vehicles, maritime technologies, portable medical devices, industrial applications and the energy sector.
In the US, Custom Power has secured repeat and new demand from customers in the defence, air and maritime domains, as well as from commercial customers for advanced battery technologies used in autonomous vehicles. In the UK, follow-on orders have been secured from key customers in the medical device, industrial and energy sectors.
Earnings estimates de-risked
The current order book is now £97.4mn, which helps to de-risk revenue expectations of £149mn for the 2026-27 financial year, too. Brokerages Cavendish and Zeus Capital have pencilled in 44 per cent growth in full-year pre-tax profit to £7.2mn, rising to £8mn the following financial year, to produce consensus earnings per share (EPS) of 9.5p and 10.4p. On this basis, the shares are rated on forward price/earnings (PE) ratios of 15.5 and 14.2, respectively, an 11 per cent discount to Solid State’s closest peer and a modest rating for a modestly leveraged business targeting growth markets.
Moreover, the board has identified a strong pipeline of acquisition opportunities to internationalise the group and replicate its established UK technology and expertise in new locations. This is a lower-risk way of accelerating regional growth and a sensible strategy. Analysts anticipate current net debt of £7.1mn falling to £3.8mn-4.8mn (March 2026) and £2.1mn-2.6mn (March 2027), so the group has the funding available to make acquisitions. The projected deleveraging reflects cumulative free cash flow of £10mn across the two financial years, a healthy sum in relation to the group’s market capitalisation of £84mn."
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