Al Rajhi Capital says eXtra’s Q1 2021 profit beats estimates, raises TP to SAR 134

Logo of United Electronics Co.

United Electronics Co.’s (eXtra) net profit of SAR 81 million in Q1 2021 beat Al Rajhi Capital’s estimate of SAR 48 million.

This was driven mainly by strong contribution from the consumer finance business, which improved the overall gross margins, the brokerage said in a new report.

Al Rajhi Capital remains optimistic on eXtra as the consumer finance business supports the retail business growth and improves the margins of the consolidated business.

It further expects the lending portfolio of eXtra’s subsidiary, United Company for Finance, to reach SAR 1.6 billion by 2022. It also projected the unit’s net profit would grow at a compound annual growth rate (CAGR) of 10% between 2021 and 2025.

Al Rajhi Capital maintained an “Overweight” rating for the stock, raising the target price to SAR 134, from SAR 116 per share.

The “Overweight” rating means the target price is more than 10% above the current share price and the share price is expected to reach the target within 12 months.