Extra
Retail Sector
EXTRA AB - 4003.SE
October 26, 2016
United Electronics Co. (EXTRA)
Recommendation
Overweight
Fair Value (SAR)
00.22
Price as of October 26, 2016
80.21
Expected Return
20.0%
Tadawul Symbol
4003.SE
Company Data
52 Week High (SAR)
49.00
52 Week Low (SAR)
15.50
YTD Change
-59.0%
3-Month Average Volume (Thousand Shares)
227
Market Cap. (SAR Million)
615
Market Cap. (USD Million)
164
Outstanding Shares (Million Shares)
36
Major Shareholders ( > 5% )
Al Fozan Holding Company
45.42%
Abdulaziz Alsghyir Commercial Investment Co.
14.93%
52-week Stock Price Movement
Extra
Retail Sector
Tadawul Index
120
Q3 2016
United Electronics Company - EXTRA reported a net profit of SAR 7.3 million in
Q3 2016 plunging from SAR 12.2 million in Q3 2015 and Q2 2016. Accordingly,
the company's net loss languished at SAR 25.4 million in 9M 2016 compared to
a net profit of SAR 40.1 million in 9M 2015.
With respect to sales, the figure amounted to SAR 744 million in Q3 2016 up
3.4% YoY, while the nine-month sales hit SAR 2,366 million compared to SAR
2,470 million for 9M 2015 plummeting by 4.2% as the performance of the comparable period was boosted by the two-month extra salaries.
The plunge in net income in Q3 2016 compared to Q3 2015 and Q2 2016 was
mainly driven by the impact of a non-recurring expense of SAR 5.2 million representing consultant fees as announced on July 31 2016. It is worth noting that
after excluding the non-recurring item in Q3 2016, net profit will be adjusted to
SAR 12.5 million with a 2.5% rise compared to Q3 2015.
In addition, the company attributed the net loss in 9M 2016 compared to the
decrease in sales of most of the company’s categories, the increase in SG&A
expenses and the opening of three new stores, a provision of SAR 9 million for
commercial claims and the impact of a consultant fees.
On the other hand, the operating profit in Q3 2016 stabilized at SAR 11.9 million unchanging from Q3 2015. Accordingly, the company incurred an operating
loss of SAR 20.4 million in 9M 2016 compared to an operating profit of SAR
42.6 million in 9M 2015.
100
80
60
40
20
Source: Tadawul
Quarterly Sales (SAR mn) and ROS
Sales
ROS
1,400
4%
1,200
2%
1,000
0%
800
-2%
600
-4%
400
-6%
200
-8%
Source: Company Filings, Albilad Capital Research Estimates
Turki Fadaak
Research & Advisory Manager
[email protected]
Ahmed A. Hindawy, CFA
Financial Analyst
[email protected]
EXTRA maintained a reasonable rate of growth in revenues in Q3 2016, factoring
in the adverse economic shifts, and achieved an operating profit margin of 1.6%
which is the highest quarterly margin since Q3 2016 which coincided with
1.65% operating margin. We believe the governmental decisions to trim some
financial incentives to state employees will drag down growth potentials in 2017
especially as EXTRA has not recovered from the economic downturn resulting
from the decline in oil prices. The third-quarter earnings missed our estimate of
SAR 17 million. Our valuation is downgraded from SAR 31 to SAR 26 per share.
FY - Ending December
0282A
0282A
0280E
0280F
EV/EBITDA
3.50
5.70
11.57
5.25
EV/Sales
0.16
0.15
0.15
0.13
P/E
5.08
12.50
-
15.40
14.6%
5.4%
0.0%
2.9%
P/BV
1.19
1.16
1.17
1.12
P/Revenue
0.17
0.16
0.17
0.16
Current Ratio
1.13
1.19
1.20
1.27
Revenue Growth
8.9%
1.5%
(1.0%)
2.1%
Dividend Yield
Source: Company Filings, Albilad Capital Research Estimates
1
Extra
Retail Sector
EXTRA AB - 4003.SE
October 26, 2016
Income Statement (SAR mn)
2013A
0282A
0282A
2016E
2017F
Total Revenues
3,387.7
3,689.4
3,744.8
3,706.2
3,785.9
COGS
2,786.1
3,068.6
3,166.9
3,139.2
3,186.0
SG&A
391.15
451.02
476.38
519.20
503.60
EBITDA
210.4
169.7
101.5
47.8
96.3
EBITDA Margin
6.2%
4.6%
2.7%
1.3%
2.5%
Depreciation and amortization
38.1
43.9
46.4
49.7
52.2
EBIT
172.3
125.8
55.1
-1.9
44.1
EBIT Margin
5.1%
3.4%
1.5%
-0.1%
1.2%
Net Interest Income
(0.82)
(3.38)
(2.73)
(0.61)
0.00
Others (Net)
0.51
2.07
0.93
(0.76)
(0.78)
Pre-Tax Income
172.0
124.5
53.3
-3.3
43.3
4.7
3.4
4.2
3.3
3.4
Net Income
167.3
121.0
49.2
-6.6
39.9
ROS
4.9%
3.3%
1.3%
-0.2%
1.1%
Balance Sheet (SAR mn)
2013A
0282A
0282A
2016E
2017F
Cash and Marketable securities
34.8
70.5
66.2
71.9
109.1
Accounts Receivables
15.8
23.5
31.8
23.7
24.5
Inventory
480.0
665.4
651.8
641.1
653.2
Others
63.2
59.6
69.1
68.4
69.8
Total ST Assets
593.9
819.0
818.9
805.1
856.7
Net Fixed Assets
459.0
498.4
477.8
468.9
455.1
0.3
0.5
7.0
7.3
7.7
459.3
499.0
484.8
476.2
462.8
1,053.2
1,318.0
1,303.6
1,281.3
1,319.5
Short Term Debt and CPLTD
40.0
20.0
20.0
10.0
0.0
Accounts Payable
333.5
590.8
557.8
552.0
563.9
Others
152.5
112.9
110.9
109.8
112.1
Total ST Liabilities
526.0
723.7
688.7
671.8
676.0
0.0
30.0
10.0
0.0
0.0
Other Noncurrent Liabilities
39.14
47.04
73.31
84.45
96.49
Equity
488.1
517.3
531.6
525.1
547.0
Total Liabilities and Equity
1,053.2
1,318.0
1,303.6
1,281.3
1,319.5
Cash Flow (SAR mn)
2013A
0282A
0282A
2016E
2017F
152.8
250.4
62.8
64.4
101.3
Financing Cash Flow
(59.3)
(134.3)
25.2
(17.5)
(25.3)
Investing Cash Flow
(106.9)
(80.7)
(30.5)
(41.2)
(38.7)
(13)
35
58
6
37
Tax and Zakat
Others
Total LT Assets
Total Assets
Total Long Term Debt
Operating Cash Flow
Change in Cash
Source: Company Filings, Albilad Capital Research Estimates
Presentation of financial statements may differ from the company’s presentation. However, there is no impact on the final results.
2
Extra
Retail Sector
EXTRA AB - 4003.SE
October 26, 2016
Albilad Capital Rating Methodology
Al-Bilad Capital uses its own evaluation structure, and its recommendations are based on quantitative and qualitative data collected by the analysts. Moreover,
the evaluation system places covered shares under one of the next recommendation areas based on the closing price of the market, the fair value that we set
and the possibility of ascent/descent.
Overweight:
The Target share price exceeds the current share price by ≥ 10%.
Neutral:
The Target share price is either more or less than the current share price by < 10%.
Underweight:
The Target share price is less than the current share price by ≥ 10%.
To be Revised:
No target price had been set for one or more of the following reasons: waiting for more analysis, waiting for detailed financials , waiting
for more data to be updated, major change in company`s performance, change in market conditions or any other reason from Albilad Capital Research.
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