Solid State Share Discussion Threads

[spectoacc] 27/3/2017 13:35

All true, but - if the profit shortfall is due to contracts slipping into the next year, it's hardly a bad reflection on trading.

[pugugly] 27/3/2017 12:45

Continuing to fall - Does not look good (imo) MC £35M Profit forecast "Underlying profit before tax for the year is expected to be broadly in line with expectations, being in excess of GBP3.1m

" HOWEVER will be impacted by "by one-off costs arising from the re-organisation of the manufacturing division and the Creasefield acquisition costs of approximately GBP0.2m, and the recent decision to cease development activity in Steatite's SEMS (Steatite Electronic Monitoring Systems) business unit. This unit will be treated as a discontinued activity in the year end accounts and is expected to have attributable losses of approximately GBP0.5m. In addition, there are non-cash amortisation charges of acquisition intangibles of GBP0.2m. Which if I have done my sums corectly add up to some £900K - Reducing FRS3 profit to some £2.2 million - Still a bit rich (imo)

Fallers for 5 days
EPIC Name Price Today Price Then Change Change %
SOLI Solid State 412.5 520 -107.50 -20.67%

[pugugly] 24/3/2017 17:47

rhomboid: Well done to get your price then. having got out of my small holding back on 23rd Feb - Knew nothing just felt over bought, am looking for a price to get back in. Just luck - Often sell too early and lose a potential packet - same holding too long on a falling market!!

[essential] 24/3/2017 16:16

Looking for support around the 200dma. Now oversold too. DYOR

[rhomboid] 24/3/2017 15:21

Nope was selling early @ 4.53 then backed off and did the rest in drips and drabs up until my post..so I reckon there's a buyer hoovering stock up in the background as I was in multiples of nms

[pugugly] 24/3/2017 13:38

rhomboid:> The early bird gets the worm I see - before 9:00 am then !!

[rhomboid] 24/3/2017 13:21

On reflection I've sold out, still think this a quality player with exceptional long term ROCE but I'm looking to hold stocks with top line growth & this now fails that test. There's definitely a canny buyer or 2 around as I've sold remarkably easily across 11 different trades at an average of 4.45 or so, the bid faded in and out over the morning but liquidity overall was far better than it is normally. Good luck to holders, I'm likely going to be back at some point!

[my retirement fund] 24/3/2017 11:08

I think on a bad day these may be got for under 3 quid come the summer lull for that reason I have them on my watch list again.

[glasshalfull] 24/3/2017 10:06

PUGUGLY. Lol, our posts crossed.

As you will see, I think these have further to fall.

Kind regards
GHF

[glasshalfull] 24/3/2017 10:04

Sorry SpectoAcc.
Yes, Glasshalfempty with SOLI & appreciate that you thought my comments balanced.

Anyway, now totally out. Very pleased to get my remaining holding away at >450p this morning.

As mentioned above, I don't believe SOLI deserves any higher than 10-12 PER so by that reckoning I see current fair value 310p-372p range.

I'm sure I'll reinvest, but for the timebeing, best wishes to holders.

Kind regards
GHF

[pugugly] 24/3/2017 10:00

GHF. Very fair summary - Then you expect a fair value between say 322 - 386 ? Subject to published accounts and forward looking statements?

[spectoacc] 24/3/2017 06:49

@GHF I fear you should be called GHE ;)

But fair comments & thanks.

SOLI deserves a higher p/e in part due to qualifying for the AIM IHT tax breaks - it's had a number of tips based on that & must be quite a few shareholders who are in it for life (literally!).

Otherwise, I largely agree with you, & continue to hold.

[glasshalfull] 23/3/2017 21:58

SOLI

Disappointing statement today.

Sold some recently when it popped up to 525p but still retain a slug (thanks Richard B for the Moneyweek tip).

Worth noting that WH Ireland previously had £3.3m PBT pencilled in and today's statement indicated that PBT would be broadly in line and, "in excess of £3.1m". So somewhere in the region of 3-7% shortfall I'd envisage.

In summary, closure of the SEMS business (electronic tagging) reduces SOLI's ability to claim R&D tax credits moving forward which consequently raises their tax rate expectations from 10% to 15% for the current year as they can no longer offset. This has the effect of reducing EPS more markedly than the smaller PBT reduction of between £100-£200k as today's statement implies.

WH Ireland have reduced EPS by (-13%) in the current year from 35.6p to 31.1p EPS ... or prospective PER of 14.8 (@460p).

2018 finds them reducing by (-14%) from 37.7p to 32.3p EPS ... or prospective 2018 PER of 14.2 (@460p).

However, in a positive note, WH Ireland indicate that gross margins will rise to 32% from expectations of 29.5%. They've also retained a 12p dividend forecast for the next couple of years.

Overall I think SOLI a decent company. It's been an interesting ride during the last 3 to 4 years. We've had the euphoria that surrounded the MoJ contract win announcement and tripling of the shareprice, to the cancellation & uncertainty that followed (through no fault of SOLI's). Then came the MoJ settlement & acquisition of Creasefield which saw the shares appreciate from lows, and today's statement looks like providing yet another speed-bump on the road.

Notwithstanding a bid materialising for the company, I think the share price will at best stagnate for the next 6 months or so. It's certainly not rated like some on the market, but if WH Irelands forecasts are on the money, then I think it more deserving of a prospective PER 10-12 on negligible growth in the short term. Others may disagree.

My initial thoughts FWIW. Please DYOR.

Kind regards,
GHF

[spooky] 23/3/2017 09:49

I agree CH.

[cockerhoop] 23/3/2017 09:42

Disappointing that the SEMS unit is being closed down at a cost of £0.5m. It's been treated as a discontinued operation but assuming the R&D was planned (and not capitalised) wouldn't that suggest adjusted PBT of £2.6m rather than £3.3m forecast? I don't think this result would have qualified for a 'broadly in line statement'.

[rhomboid] 23/3/2017 09:38

I'm holding as they're generally conservative and contract based businesses are inherently subject to timing issues, as they grow such lumpiness irons out and the co. re rates to reflect consistency...that's the theory and I'm sticking around to test it out. I'd have bought more on the initial drop but was elsewhere engaged.

[pj 1] 23/3/2017 09:11

'Broadly in line'= slightly below imo, if it had been 'slightly ahead' then they would have said so.

I was looking to sell some on the Bell but the mark down prevented that, and have now decided to hold for a while longer, giving them the benefit of doubt that the contracts are delayed and not lost

[martinthebrave] 23/3/2017 09:07

No great dash for the exit here unless MM's are not yet showing the Sell's. A lot more Buy's showing up on LSE. AS profit warnings go this was a nice one. "Broadly in line" and "contract delays" are never good for the share price of a growth stock but this could recover quite quickly IMO.

[crazycoops] 23/3/2017 09:06

T/s "mixed" at best, if I'm reading it right. "Broadly" in line means "barely" in line but if it's genuinely due to high-margin projects delayed into next period, then they're in-line without them & they will benefit future periods.

If we take the TS on face value, I agree with this assessment. This said, I don't have enough experience of this company to form a firm view.

Edit #2 - bought more, I think the market's wrong. Usually a dangerous position to take, but I don't see a mixed t/s as deserving worth 15% off the shareprice.

I normally sell out on profit warnings (which is how the market has reacted to this news) but "in line" with deferred higher margin business doesn't seem too bad to me. This share is very illiquid and difficult to get out of if they ever deliver really bad news. Also, I struggled to buy over the past few weeks for this reason, so I've had a little nibble but this is only a small holding for me, so prepared to take a little risk on today's news.

[spectoacc] 23/3/2017 09:01

Happy so far. What will be interesting is to see whether there was genuinely a pre-market sell, reported later, eg 20k at £4 or something. My guess is not - the MMs just marked it down. But the jury's out.

[spectoacc] 23/3/2017 07:27

T/s "mixed" at best, if I'm reading it right. "Broadly" in line means "barely" in line but if it's genuinely due to high-margin projects delayed into next period, then they're in-line without them & they will benefit future periods.

But like I say - mixed.

"Underlying profit before tax for the year is expected to be broadly in line with expectations, being in excess of GBP3.1m with revenue in excess of GBP39m. The final quarter has seen a number of projects within the higher margin antenna division being delayed, consequently contribution from these projects is expected in future periods. The other areas of the manufacturing business unit have performed broadly in line with management's expectations and the distribution business has performed slightly ahead of management's expectations.
Reported profit before tax for the year will be impacted by one-off costs arising from the re-organisation of the manufacturing division and the Creasefield acquisition costs of approximately GBP0.2m, and the recent decision to cease development activity in Steatite's SEMS (Steatite Electronic Monitoring Systems) business unit. This unit will be treated as a discontinued activity in the year end accounts and is expected to have attributable losses of approximately GBP0.5m. In addition, there are non-cash amortisation charges of acquisition intangibles of GBP0.2m."

Edit - -15% says I've misinterpreted it?

Edit #2 - bought more, I think the market's wrong. Usually a dangerous position to take, but I don't see a mixed t/s as deserving worth 15% off the shareprice.

[spectoacc] 23/2/2017 13:51

Ta.

Still trying to break out by the looks - a few decent small buys (eg 5k at 510 earlier).

[cockerhoop] 22/2/2017 21:05

It should also be pointed out for balance that the organic order book was reduced at the time of the interims and they stated that the normal H2 weighting would be diminished.

[battlebus2] 22/2/2017 20:52

31-Mar-17 44.05 3.27 33.90p 14.7 n/a -32% 12.75p 2.7%
31-Mar-18 45.82 3.50 36.15p 13.8 2.1 +7% 13.25p 2.8%

Solid State forecasts

Edit...I don't hold.

[wjccghcc] 22/2/2017 20:44

I think the first stockopedia figure is wrong. Edison has 32.7p for 2017 while WH Ireland has 36.5p. The 2018 figure seems right.