Solid State Share Discussion Threads

[eastbourne1982] 23/4/2018 10:03

I've been buying these recently around the £2.78 mark, share price is down nearly 50% since August 2017, fall looks well overdone imho.

A market cap of 30 - 35 million would be realistic here.

[spectoacc] 13/4/2018 08:45

Thanks @Glasshalffull, good analysis.

Question for me is whether Comms Division problems can be overcome, or whether it's the new normal. £'s recovery won't have helped.

They also sound like they've more acquisitions in mind.

Only thing I'd add to your analysis is the "IHT premium" - deserves a higher p/e because of it (eg ASC, FEVR to take two extreme examples).

I've averaged a few down here, back close to original buy price, but wouldn't argue it's much better than fair value here (with a decent yield). But if I'm right re IHT it could yet drift back higher - should be a fair few holders for whom selling isn't an option.

[glasshalfull] 12/4/2018 21:40

Evening everyone

I last posted my concerns about SOLI’s raiting following H1 results released at the end of October 2017 (post 260).

Hoped to have bought back in by now on a return to growth or valuation coming back to a more realistic 10-12 PER...IMHO. Sorry for holders to see the stock down 25% today.

Both finnCap & WH Ireland have released updates essentially maintaining 2018 forecasts but cutting 2019 estimates by 25%...hence magnitude of today’s drop.

I currently hold a fair chunk of APC (APC Technology) so was delighted to read that the Distribution Division is firing on all cylinders with +18% growth in the period. Wonder if there would be any value in a combination of SOLI’s Distribution arm & APC??? Clearly the Communications Division is SOLI’s Achilles heel.

On forecasts for 2019 finnCap indicate,

“...we reduce our adjusted PBT by £0.9m to £2.5m, with EPS reduced from 33.6p to 25.1p, a 25% reduction. As such, we also now adjust the dividend to 12.0p, from 12.5p. The balance sheet remains comfortable, and we look for net debt to rise from £0.1m to £0.9m in 2019.”

- - -

Best wishes to holders. SOLI remains on my watchlist for the timebeing with a view to reinvesting should there be structural change (not convinced by the Comms Division) or resumption of growth.

Kind regards,
GHF

[varies] 12/4/2018 12:04

I still think the shares are cheap but I am a little concerned that we may see a cut in the dividend in 2018/19 unless profits rise.
In the Annual Report for 2016/17 we were told that the dividend of 12p was covered 2.25 times and that from now on the directors would be looking for cover of 2.50/2.75.
This implies a reduction in the dividend to about 10p if profits remain at the same level.

[cockerhoop] 12/4/2018 12:03

Very surprised you were unable to sell into the USA with your people skills MRF :-)

[my retirement fund] 12/4/2018 11:22

To be fair you cant just rock up and expect to sell anything in the USA even if you have a unique product. You need a business model that either has an established distribution base or a highly credible, established and revered distribution agent.The former is very expensive to set up and takes a long time and the later smashed your margin to prices.(Having ran a manufacturing business and having tried to crack the USA)Europe is were its easier. I guess with brexit on the horizon theres considerable political risk now.

[lodgeview] 12/4/2018 11:14

Bought in on that ridiculous drop. Guidance still in line even though the comms department suffering. I expect this to bounce considerably over next couple of weeks!

[cockerhoop] 12/4/2018 09:56

Varies,

The Q-Par division which produces the antenna is quite small in revenue terms £2.5m-£3m but is highly profitable £430k in 2016, £690k in 2015.

So it is easy to see how margins have been compressed by under performance in the division this year and next. Other businesses appear to be ticking on fine.

Interestingly SOLI as a whole only did £900k in the US in YE17.

[ernestsyngen] 12/4/2018 09:21

Way oversold, easy 20% return over next week or two here. Im in!

[spectoacc] 12/4/2018 07:21

The usual mixed t/s. Always worries me when a board says they're "delighted" to meet expectations - I'm delighted if they exceed.

Seems continuing problems in one division being made up for by others, but neutral at best I'd say.

Edit - down a quarter says the market.

[spectoacc] 05/2/2018 15:56

Can't be much more than 7,000 shares reported going through today - ftse down 87 points - never takes much (selling or buying) to shift SOLI.

[pugugly] 05/2/2018 15:27

Am I talking to myself - Falling faster - Stop losses being triggered or something worse ?

[pugugly] 24/1/2018 14:40

2 month high volume and share price falling fast - Anyone seen a SELL or AVOID tip in the market ? or just a result of sterling strengthing against the euro ?

[spectoacc] 24/10/2017 06:56

ST will talk it up is my guess - not a man to easily admit to being wrong.

[pugugly] 23/10/2017 20:44

GHF - Thanks - In particular for the WHI forecasts - Will be very interesting to see ST's comments - None as yet as at time of posting. If he turns negative then your target could well be reached or exceeded. (imo)

[albanyvillas] 23/10/2017 20:41

Looking forward, the Board remains confident ..The Group has delivered significant organic growth in the first half, maintained product line margins, and can report an open order book at 30 September 2017 of GBP18.0m (2016: GBP14.8m).

[glasshalfull] 23/10/2017 20:03

I revisited my post from 7 months ago when I sold out @ c.460p

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23 Mar '17 - 21:58 - 218 of 259

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

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Well, they rose to 520p following a Simon Thompson tip with the market clearly ignoring short-term negligible growth & awarding them a PER 17 when I thought a PER 10-12 more in-line with performance at that stage.

Following today's update WH Ireland have downgraded EPS by 7% & PBT by a further 8% in 2018...that's a downgrade from an original 37.7p in March 2017 to 30.8p now for an overall earnings downgrade of 18% since March.. PBT now forecast at £3.0m & forecast dividend retained at 12p (est. 12.5p)

There are also some small downgrades to 2019 estimates with PBT reduced from £3.6m to £3.3m & forecast EPS reduced from 35.8p to 33.9p.

So, on these reduced forecasts, SOLI's earnings will fall 4% in the current year before growing at 10% next.

As I mentioned in my March 2017 write-up, I believe SOLI a decent company but IMHO believe it should only be valued on a PER 10-12 until the anticipated growth emerged. I thought fair valuation c.380p back in March & the market carried them up to 520p...so take my comments with a pinch of salt!

Shares are now back to 425p, so on a prospective PER of 13.8 for 2018.
I'll either await a further pullback before jumping on board or alternatively willing to pay up when they start delivering decent earnings growth.

Kind regards,
GHF

[nw99] 23/10/2017 08:22

Support at 400 Buy there ?

[nw99] 23/10/2017 07:57

A case of buy and hold I think now

[nw99] 23/10/2017 07:39

Looking forward, the Board remains confident that the prospects for the Group remain strong. The Group has delivered significant organic growth in the first half, maintained product line margins, and can report an open order book at 30 September 2017 of GBP18.0m (2016: GBP14.8m).