Flash note: Ability to maintain profits confirmed
Solid State has announced that trading results for FY16 at the group’s core businesses should be in line with market expectations. This confirms that it’s diversified platform will deliver another year of results at FY15’s record profit levels, despite general market weakness and the unexpected termination of the Ministry of Justice (MoJ) contract. This strong result excludes compensation for the terminated contract, which we will treat as an exceptional item. The healthy order book at the start of FY17 supports our forecasts showing modest profit growth, so we leave our estimates and indicative valuation of 505p/share unchanged. The dividend (3.7x cover) represents an attractive yield at the current price.Solid State manufactures electronic equipment and distributes electronic components and materials. Co. has two divisions: Distribution, which is a distributor serving the needs of the electronics original equipment manufacturer community in the U.K. and products provided include those for the internet of things, embedded processing, control, wireless and wired communications, power management, and light-emitting diode lighting from manufacturers; and Manufacturing, which is engaged in the design, development and supply of rugged and industrial computers, portable power and energy storage solutions, communication systems, antennas and high bandwidth video transmission products.
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