United Electronics Co. (eXtra) second-quarter net profit of SAR 45.6 million was below Al Rajhi Capital and consensus estimates by 4.1 percent and 3 percent, respectively, the financial advisory firm said in an earnings review.
“The deviation can be primarily attributed to weaker than estimated top-line, which is most likely due to lower-than-expected sales volume,” the report said.
In Q2, the electronics market was likely impacted by significant sales promotions by smaller players on the back of implementation of Saudization.
“However, eXtra’s flattish top-line on the back of reduced market size implies likely market share gains by the company,” Al Rajhi Capital said.
eXtra announced SAR 0.75 per share dividends for H1 2018, which translates to an annualized dividend yield of 2.5 percent.
Going forward, Al Rajhi Capital expects eXtra to continue to gain market share as the market structure shifts towards the organized players.
Al Rajhi Capital revised its rating on eXtra to “neutral” with an unchanged target price of SAR 60.3 per share.
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