Itqan initiates eXtra with ‘Neutral’ rating, TP at SAR 77.30

Itqan Capital has initiated coverage on United Electronics Co. (eXtra) recommending a “Neutral” on the stock with a target price of SAR 77.30 a share.

eXtra had exceptional revenue growth in the first nine months of 2019, reporting double-digit year-on-year growth every quarter.

“We expect further growth for eXtra for the rest of 2019/2020e; supported by the company’s new consumer finance business, e-commerce growth, and annual mega sale in Q4 2019,” Itqan said in a note.

The company’s geographic expansion, and the like-for-like sales growth are also other support factors, the brokerage added.

Penetration in the consumer finance business is also expected to be a key catalyst in the coming years. Moreover, eXtra’s peak season is yet to come in Q4 2019, where the company will hold an annual mega sale event.

The key growth catalysts are credit sales growth, penetration of the consumer finance sector and the partnership with Noon.com.

Meanwhile, the key risk factors are a downtrend in the electronics market and the lack of geographical dispersion of stores.