United Electronics Co. (eXtra) reported a net profit of SAR 63 million for Q4 2018, broadly in-line with Al Rajhi Capital and consensus estimates of SAR 65 million and SAR 66 million, respectively, the brokerage said in a note on Tuesday.
The retailer’s market share increased by 21 percent to stand at 16.5 percent from 13.6 percent in 2017).
“We believe that the company is well positioned to continue gaining market share on the back of Saudization and higher penetration into e-commerce sales channel,” it noted.
Revenue remained flat on an annual basis at SAR1.62 billion, missing the brokerage's estimate SAR1.7 billion amid gains in market share and year-end mega sale event.
However, gross profit margin rose 16.5 percent, as the company focused on the year-end sales festival and launching their discounts festival on noon.com.
“We expect the company to continue to gain market share on the back of faster store roll-outs and more focus on online sales through Extra website and Noon.com, which we believe to be a key catalyst for further upside in the stock price,” the brokerage said, adding it expects two to three store opening in FY19.
Al Rajhi Capital maintained its “neutral” rating on the stock, but revised the target price upwards to SAR 60 a share.
“For 2019, we remain cautious due to shrinkage in the overall market amid economic uncertainty. However, starting from 2020 we expect Extra’s growth to recover underpinned by expansion in the instalment program ‘Tasheel’ and elevated digital sales which will drive higher LFL sales,” it added.
Comments
{{DisplayName}}
{{ElapsedTime}}