United Electronics Co.'s (eXtra) net profit of SAR 27.2 million for Q3 2019 missed NCB Capital and consensus’ estimates of SAR 36 million and SAR 37.5 million, respectively, the research firm said in an earnings report.
The deviation was primarily due to lower gross margins and higher opex impacted by its fully-owned start-up United Company for Financial Services, it said.
“We believe the new consumer finance subsidiary will support earnings growth in 2020; however, lower than expected gross margins in Q3 2019 is a key concern,” the report projected.
Sales met the forecast, increasing 15.7 percent year-on-year to SAR 1.035 billion, the highest Q3 top-line on record, supported by opening six new stores, higher e-commerce sales and positive LFL growth.
NCB Capital recommended a “Neutral” rating on the stock with a target price of SAR 59.7 per share.
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