Solid State

Battery power to specialist electronics firm Solid State (SSP) has boosted its interim dividend by 25% to 2p, thanks to strong demand for its products.

AIM listed Solid sells into niche markets, which are largely defensive, but despite the wider economic gloom it is holding its own and winning new business. In the six months to September, pre-tax profits increased 28% to £704,000 as sales jumped 10% to £11.4m.

The change in the sales mix dented margins by one percentage point to 26.5%, but this should recover following the acquisition of ruggedized computer and hand-held devices minnow Blazepoint in October. It enjoys high margins, though the deal was completed post the period-end - it will also lead to some some restructuring charges.

Components arm Solid State enjoyed a 24% hike in bookings, as billings soared 44%, which is a performance well ahead of its peers. It secured the Microsemi franchise, helping to increase sales and, against a flat market, expects to deliver a good second-half.

Battery pack division Steatite also achieved an improved performance, and has a healthy pipeline of potential new business. The overall order book at Solid is at a record £11.6m, having added £2m since the last count in October. Speaking to Growth Company Investor chief executive Gary Marsh said 'there are a number of potential contracts in the oil and gas market' also adding that acquisitions were still 'very much on the agenda'.

House broker WH Ireland predicts 2012 sales of £25m, pre-tax profits of £1.25m, EPS of 14.2p and a 6.5p a share dividend. We highlighted the attractions of Solid back in July at 104.5p, so the price performance since then is pleasing. On a low rating, and with current trading good, there is no reason to change our advice. Buy.