eXtra likely to continue steady growth on multiple levers: Al Rajhi Cap

United Electronics Co. (eXtra) reported an impressive set of results in Q1 2019, with net profit rising 57 percent year-on-year (YoY) to SAR 34 million, Al Rajhi Capital said in an earnings note.

The home appliance retailer’s revenue also jumped 22 percent YoY to SAR 1.05 billion, backed by higher online stales, new stores, Tasaheel instalment program and the continued shift to organized retail.

“We expect steady growth to continue (sales up ~10 percent in FY 2019) led by multiple levers,” the brokerage firm added.

The aggressive promotion of Tasheel instalments program will be a key driver as it would help accelerate further shift to organized market, boost margins, and tap into newer customer segments.

“Structural growth factors remain healthy with increasing consumption of electronics devices, favorable demographics, pick up in homeownership and economic recovery,” the report said.

The brokerage firm said eXtra’s earnings are forecast to grow at a CAGR of 11 percent until 2020, driven by its high operating leverage, thanks to the growing business of eXtra, the earnings from Tasheel, growth from online sales withNoon.com partnership and stores expansion in Saudi Arabia as well as the GCC region.

Al Rajhi Capital remained “neutral” on the stock, upping its target price to SAR 70 from SAR 60.