Stock Analysis & Valuation Solid State plc (SOLI.L)

• Previous Close: £162.50
• Sector Valuation Confidence Level: Low

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	103.17	-37
Intrinsic value (DCF)	74.39	-54
Graham-Dodd Method	0.10	-100
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

Solid State plc (LSE: SOLI) is a UK-based leader in the design and manufacture of high-reliability electronic components and systems, serving critical industries such as defense, medical, industrial, and transportation. Operating through its Components and Systems divisions, the company provides specialized solutions for 5G, IoT, embedded processing, power management, and advanced communication systems. With a strong focus on innovation, Solid State plc supplies opto-electronic components, custom battery packs, and rugged industrial computing systems, positioning itself as a key player in the global electronics supply chain. Headquartered in Redditch, the company has a diversified geographic footprint, serving markets across Europe, North America, and Asia. Its expertise in high-value electronic solutions makes it a trusted partner for OEMs and contract manufacturers in demanding environments. Solid State plc’s commitment to R&D and niche applications ensures resilience in competitive markets.

Investment Summary

Solid State plc presents a compelling investment case with its diversified revenue streams across defense, medical, and industrial sectors, supported by strong cash flow generation (GBp 10.95M operating cash flow in FY 2024). The company’s low beta (0.785) suggests relative stability compared to broader tech markets. However, investors should note its modest net income (GBp 8.87M) and leverage (GBp 16.69M total debt), which could constrain aggressive growth. The dividend yield (~2.5% based on GBp 3.73/share) adds appeal, but reliance on defense spending and supply chain risks in electronics components may pose cyclical challenges. Its niche focus and high-value manufacturing could drive long-term upside if IoT and 5G adoption accelerates.

Competitive Analysis

Solid State plc competes in the specialized electronics manufacturing sector by leveraging its dual-division model: Components (high-margin designed-in solutions) and Systems (customized industrial hardware). Its competitive edge lies in vertical integration, serving defense and medical markets with stringent reliability requirements, where larger players often lack agility. The company’s UK base provides proximity to European defense contracts, though it faces pricing pressure from Asian manufacturers. Unlike commoditized component suppliers, Solid State emphasizes proprietary designs (e.g., custom battery packs, rugged computers), creating sticky customer relationships. However, its scale is limited compared to global giants, restricting R&D budgets. The Systems division’s focus on low-volume, high-margin products insulates it from mass-market competition but exposes it to project delays. Supply chain localization post-Brexit is a strength, but dependence on semiconductor availability remains a risk. Competitors with broader portfolios may outperform in economies of scale, but Solid State’s niche expertise in harsh-environment electronics provides defensible positioning.

Major Competitors

• Associated British Foods plc (ABF.L): ABF’s subsidiary Premier Farnell (element14) competes in electronic component distribution but lacks Solid State’s manufacturing depth. Its global reach is superior, but it focuses on commoditized parts rather than high-reliability solutions. ABF’s diversified conglomerate structure reduces electronics segment visibility.
• Renishaw plc (RSW.L): Renishaw’s precision measurement and healthcare technology overlap with Solid State’s medical sector offerings. Renishaw has stronger R&D capabilities but is less diversified in industrial electronics. Its higher-margin products could pressure Solid State in niche instrumentation markets.
• TTM Technologies, Inc. (TTMI): TTM’s advanced PCB and RF components compete with Solid State’s Systems division. TTM’s scale and aerospace/defense focus are strengths, but its US-centric operations lack Solid State’s European defense ties. TTM’s commoditized production contrasts with Solid State’s custom solutions.
• Vishay Precision Group (VPG): Vishay’s sensors and strain gauges compete in industrial markets. Its broader product line and US presence are advantages, but it lacks Solid State’s integrated systems capability. Vishay’s commoditized components face higher price competition.
• KEMET Corporation (KEM): KEMET’s capacitors and electronic components overlap with Solid State’s offerings. Acquired by Yageo, KEMET benefits from Asian manufacturing scale but lacks Solid State’s UK/European defense specialization. Its focus on passive components is less differentiated.