BAAN rebalances income sources, targets high-return locations

Fahad Al-Obailan, CEO of BAAN Holding Group Co.

Fahad Al-Obailan, CEO of BAAN Holding Group Co., said Q1 2026 financial results were in line with the group’s strategy to reorganize income streams and restructure operations. However, some sectors were affected by the seasonal impact of Ramadan and geopolitical developments in the region.

Speaking on the sidelines of the Argaam Summit, Al-Obailan said the company had shut down several nonviable income sources by the end of 2025 and exited its stake in Tourism and Real Estate Development Co. (Touresco), with gains booked in the first quarter.

He added that the decline in first-quarter revenue was partly seasonal, particularly across catering, entertainment, and hotels outside Makkah and Madinah. BAAN remains focused on optimizing income streams and prioritizing higher-margin activities.

On capital increase, Al-Obailan said the company completed this week the transfer of assets worth SAR 830 million ($221.3 million) to BAAN Holding, and issued shares to new shareholders, following shareholders’ approval of the transaction in the first quarter of 2026.

He added that shareholders’ equity rose to around SAR 850 million from nearly SAR 3 million before the asset transfer.

The company also plans to transfer nearly SAR 525 million in issuance premium to retained earnings at an extraordinary general meeting scheduled for next June, ahead of fully offsetting accumulated losses and removing the “red flag” status on Tadawul.

Al-Obailan said the group will focus going forward on economically viable locations, while expanding in the entertainment sector and high-footfall sites in major cities, alongside strengthening its hotel portfolio and expanding in Makkah and Madinah.

He added that the company had established a dedicated asset management division to represent investors seeking exposure to the tourism sector, noting that several agreements had been signed over the past year under this strategy.

In catering, the company posted improved profitability, generating around SAR 5 million profit in the first quarter, while continuing efforts to grow and diversify the segment’s revenue streams, he said.

The entertainment business continues to expand, with growth expected to accelerate during the upcoming Eid and summer seasons, which mark the sector’s peak periods.

The group is diversifying its customer base in the hotel segment to reduce exposure to fluctuations in business tourism and political developments, adding that broader income diversification would support operational resilience in the coming periods, the CEO concluded.

According to Argaam data, BAAN Holding delivered a net profit of SAR 49.1 million for the first quarter of 2026, compared with a loss of SAR 16.8 million a year earlier. The company also booked exceptional gains of SAR 69.52 million from the sale of its stake in Touresco.