|09 July, 2019

Saudi Arabia's Extra shares rally after rise in Q2 estimated profit

Extra reported a 58.99% increase in Q2 net profit to SAR72.5mln

A Saudi trader monitors stocks at the Saudi Bank in Riyadh November 22, 2008. Image used for illustrative purpose.

A Saudi trader monitors stocks at the Saudi Bank in Riyadh November 22, 2008. Image used for illustrative purpose.

REUTERS/Fahad Shadeed

Saudi Arabia’s United Electronics Company (Extra) reported a rise in Q2 2019 earnings, triggering a surge in the company’s shares.

Extra’s estimated net Q2 profit after zakat and tax amounted to 72.5 million Saudi riyals ($19.3 million), compared to 45.6 million riyals in Q2 2018, a 58.99 percent increase.

Extra had also announced earlier this week that it has securitised 166 million riyals of its receivables from the sales of its Tasheel Installment Program”. The receivables were sold to Al Rajhi Bank in exchange for the cash inflow. (Read more here)

“Earnings were boosted by a net gain of SAR17.2 million related to the securitisation deal with Al Rajhi Bank (44 percent of total installment portfolio as of Q1 2019), generating cash proceeds of SAR160 million to deleverage,” Alaa Tolba, senior research analyst at CI Capital, told Zawya.

“This should help improving the company’s balance sheet and support future growth plans of consumer finance operations,” Tolba said.

The company’s Q2 sales rose 13.73 percent to 1.16 billion riyals in Q2 2019, from 1.02 billion riyals in Q2 2018.

“Revenue sustained the growth momentum, driven by accelerated market share gains across all categories, particularly within the white goods market, as well as a rising contribution from the consumer finance programme,” she added.

The company’s board of directors proposed a 1 riyal per share dividend for the first half (H1) of, compared to a 0.75 riyal per share for H1 2018, beating CI Capital’s estimate of 0.75 riyals per share.

Extra’s shares were last trading 2.77 percent higher at 74.1 riyals by 13:07 GST and have added 15.78 percent so far in 2019.

“We like Extra and believe that the company is well-positioned to garner more market share, displacing unorganised expat players, post enforcing 70 percent Saudisation in stores selling electrical and electronic appliances,” Tolba added.

The Saudi Ministry of Labour and Social Development (MLSD) announced last year a new list of jobs and activities that will be off-limits to expatriates in the kingdom. (Read more here)

Reporting by Gerard Aoun; Editing by Seban Scaria)

(gerard.aoun@refinitiv.com)

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© ZAWYA 2019

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