Headline net income: SAR27.5mn, +203% Y-o-Y, +276% Q-o-Q, +20% vs. EFGe Revenue: SAR1,386mn, +9% Y-o-Y, +86% Q-o-Q, +1% vs. EFGe Operating profit: SAR44.1mn, +250% Y-o-Y, +271% Q-o-Q, +89% vs. EFGe   eXtra reported a strong set of 4Q16 results with headline earnings coming in at SAR27.5mn, up three-fold Y-o-Y (+203%, +276% Q-o-Q) on solid revenue growth and margin expansion. Earnings came in 20% ahead of our forecast mainly on a gross margin beat as we had expected increased pressure from promotional activity amidst weak consumer spending. Had it not been for a SAR15.6mn fixed asset impairment booked in the quarter, earnings would have come in even higher at SAR43.1mn (and beat by 88%).     Revenue rose 9% Y-o-Y (broadly in line) with the company citing growth across most categories as the company held its annual megasale during the quarter. During 2016, the company added only one showroom bringing its store count to 42 (none in the quarter), which indicates that 4Q16 LFL trends were likely positive.   Gross margin added c140bps reaching 15.3% (ahead of our 13.8% forecast) likely on an improved sales mix, and was the key source of the earnings beat. Accordingly, gross profit grew 20% Y-o-Y (+13% versus EFGe). Meanwhile, operating profit jumped nearly four-folds Y-o-Y (+250%, +89% vss. EFGe) to SAR44.1mn with the company exercising stringent SG&A cost controls (up only 2% Y-o-Y). EBIT margin widened c220bps Y-o-Y to 3.2% (versus 1.7% forecast).   Overall a solid results set, which, if sustainable, could signal a turning point for the company’s profitability, in our view. We are especially impressed by the company’s ability to improve margins in a tough environment and in the quarter where the mega-sale is held. We will be revising our forecasts to reflect the results. (company, Hatem Alaa, CFA , Nada S. Amin)   Extra: SAR25.24 as of 17 January 2017, Rating: Neutral, TP: SAR21.50 per share, MCap: USD242mn, EXTRA AB / 4003.SE