Solid State demonstrated fast growth in recent years. Will the growth continue?
12 Jul 2016 • About Solid State (
$SSP) • By InTwits
Have you thought about Solid State as a growth stock? It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
Solid State showed fast growth in the last financial year. Solid State's revenue surged on 20.6% in FY2016. Together with revenue growth Solid State also managed to keep EBITDA growth. EBITDA grew 38.7% for the same period.
In the longer period the company showed fast revenue growth of 11.9% from FY2013 to FY2016 annually. EBITDA surged on 35.4% from FY2013 to FY2016 annually.
Solid State ($SSP) financials for the last 5 years
| mln. £ | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Revenue | 26 | 31 | 32 | 37 | 44 |
|---|
| Revenue growth, % | | 21.7% | 1.9% | 13.9% | 20.6% |
|---|
| Gross margin, % | 27.8% | 26.1% | 29.2% | 30.5% | 31.8% |
|---|
| SG&A, % | | | 22.2% | 22.2% | 22.0% |
|---|
| EBITDA | 2 | 2 | 6 | 4 | 5 |
|---|
| EBITDA growth, % | | 14.5% | 178.9% | -35.8% | 38.7% |
|---|
| EBITDA margin, % | 6.71% | 6.32% | 17.3% | 9.74% | 11.2% |
|---|
| Net Income | 1 | 1 | 2 | 3 | 4 |
|---|
| Net Income margin, % | 5.09% | 4.72% | 5.85% | 7.91% | 9.45% |
|---|
| |
| CAPEX | 0 | 0 | 0 | 1 | 1 |
|---|
| CAPEX/Revenue, % | 1.12% | 0.997% | 1.26% | 1.44% | 2.04% |
|---|
| Debt | 2 | 3 | 3 | 4 | 4 |
|---|
| Cash | 0 | 1 | 1 | 2 | 1 |
|---|
| Net Debt/EBITDA | 1.4x | 1.2x | 0.4x | 0.7x | 0.7x |
|---|
| |
| ROIC, % | 22.3% | 19.7% | 44.5% | 20.0% | 23.0% |
|---|
| ROE, % | 29.1% | 26.1% | 22.5% | 25.4% | 29.6% |
|---|
Profitability and return on investment
EBITDA growth was partly attributed to margin expansion. Solid State's EBITDA margin surged on 1.50 pp from 9.70% to 11.2% in FY2016. In the last 3 years Solid State's EBITDA margin surged on 4.90 pp from 6.30% in FY2013 to 11.2% in FY2016.
Solid State shows attractive ROIC at 23.0% for the last 12 months which assumes stable development model. During the last three years it surged - it was 19.7% in FY2013. It's average level of ROIC for the last three years was 29.2%.
Net Income margin surged on 1.60 pp from 7.90% to 9.50% in FY2016. In the longer period Net Income margin surged on 4.80 pp from 4.70% in FY2013 to 9.50% in FY2016.
Solid State operates at ROE of 29.6%. Average ROE for the last three years was 25.8%.
Capital expenditures (CAPEX)
In FY2016 Solid State had CAPEX/Revenue of 2.04%. The company showed fast CAPEX/Revenue growth of 1.04 pp from 0.997% in FY2013 to 2.04% in FY2016. Average CAPEX/Revenue for the last three years was 1.58%.
Leverage (Debt)
Solid State has low debt level at 0.7x Net Debt/EBITDA - at the same time with high growth. In the last 3 years Solid State's leverage dropped on 0.47x from 1.16x in FY2013 to 0.69x in FY2016.
Valuation vs. comparable companies
The company trades at 5.9x EV/EBITDA which is 76.3% lower than 25.0x Electronic & Electrical Equipment industry avearge calculated based on 44 companies. The company trades at 6.2x P/E which is 40.2% lower than 10.3x Electronic & Electrical Equipment industry avearge calculated based on 2 companies.
Peers in Electronic & Electrical Equipment
Below we provide Solid State benchmarking against other companies in Electronic & Electrical Equipment industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Stadium Group ($SDM) | -8.8% | 3.0% | -1.1% | 29.0% | |
| Flowgroup ($FLOW) | -92.9% | 125,263.6% | 141.9% | 21.1% | |
| Zytronic ($ZYT) | -0.3% | -15.4% | 9.3% | 12.6% | |
| Apc Technology Group ($APC) | -5.4% | 58.7% | -4.7% | 10.4% | |
| Volex ($VLX) | | -8.6% | -15.4% | 5.8% | -13.2% |
| |
|---|
| Median (13 companies) | -5.4% | -5.6% | -3.8% | -1.4% | -4.6% |
|---|
| Solid State ($SSP) | | 21.7% | 1.9% | 13.9% | 20.6% |
Top companies by Gross margin, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Zytronic ($ZYT) | 36.3% | 30.8% | 36.6% | 41.9% | |
| Elektron Technology ($EKT) | 40.6% | 37.5% | 34.8% | 35.6% | 37.2% |
| Maruwa Co Ltd ($MAW) | 31.6% | 28.6% | 32.8% | 30.0% | 35.9% |
| Lpa Group ($LPA) | 28.3% | 27.2% | 29.6% | 27.4% | |
| Holders Technology ($HDT) | 24.6% | 29.3% | 24.1% | 25.0% | |
| |
|---|
| Median (11 companies) | 27.3% | 27.2% | 24.1% | 23.2% | 35.9% |
|---|
| Solid State ($SSP) | 27.8% | 26.1% | 29.2% | 30.5% | 31.8% |
Top companies by EBITDA margin, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Zytronic ($ZYT) | 25.3% | 18.8% | 22.9% | 27.8% | |
| Maruwa Co Ltd ($MAW) | 22.3% | 17.7% | 17.8% | 14.7% | 19.6% |
| Dewhurst ($DWHA) | 12.9% | 12.6% | 13.7% | 14.7% | |
| Morgan Advanced Materials ($BA29) | 13.7% | 13.1% | 9.8% | 12.8% | 14.6% |
| Stadium Group ($SDM) | 6.1% | 7.1% | 9.9% | 12.1% | |
| |
|---|
| Median (13 companies) | 6.6% | 5.3% | 4.5% | 4.4% | 11.4% |
|---|
| Solid State ($SSP) | 6.7% | 6.3% | 17.3% | 9.7% | 11.2% |
Top companies by CAPEX/Revenue, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Morgan Advanced Materials ($BA29) | 2.9% | 3.8% | 3.7% | 7.0% | 4.0% |
| Maruwa Co Ltd ($MAW) | 23.8% | 15.3% | 7.6% | 6.5% | 4.4% |
| Zytronic ($ZYT) | 3.6% | 2.8% | 1.4% | 4.7% | |
| Stadium Group ($SDM) | 1.0% | 0.8% | 0.5% | 2.7% | |
| Dewhurst ($DWHA) | 2.7% | 1.3% | 0.9% | 1.9% | |
| |
|---|
| Median (13 companies) | 3.0% | 2.7% | 1.4% | 1.4% | 2.9% |
|---|
| Solid State ($SSP) | 1.1% | 1.0% | 1.3% | 1.4% | 2.0% |
Top companies by ROIC, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Dewhurst ($DWHA) | 29.2% | 20.7% | 24.5% | 27.3% | |
| Zytronic ($ZYT) | 23.0% | 11.9% | 17.0% | 22.7% | |
| Stadium Group ($SDM) | 16.5% | 17.6% | 17.3% | 19.3% | |
| Morgan Advanced Materials ($BA29) | 17.9% | 16.3% | 10.9% | 18.4% | 21.9% |
| Elektron Technology ($EKT) | 24.1% | 7.9% | 3.3% | 9.9% | 7.0% |
| |
|---|
| Median (13 companies) | 13.8% | 6.7% | 4.7% | 3.9% | 8.0% |
|---|
| Solid State ($SSP) | 22.3% | 19.7% | 44.5% | 20.0% | 23.0% |
Top companies by Net Debt / EBITDA
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Walsin Lihwa Corp ($WALS) | 5.3x | 8.7x | 3.9x | 4.6x | |
| Lpa Group ($LPA) | 1.9x | 0.7x | 1.5x | 3.8x | |
| Morgan Advanced Materials ($BA29) | 1.4x | 1.5x | 2.3x | 1.8x | 1.7x |
| Elektron Technology ($EKT) | 0.7x | 1.7x | 3.8x | 0.8x | 0.5x |
| Stadium Group ($SDM) | -0.0x | -0.0x | 1.2x | 0.3x | |
| |
|---|
| Median (9 companies) | 0.3x | 0.3x | 1.4x | 0.3x | 0.4x |
|---|
| Solid State ($SSP) | 1.4x | 1.2x | 0.4x | 0.7x | 0.7x |
