PETALING JAYA: Oriental Kopi Holdings Bhd
’s growth momentum is expected to be supported by continued cafe network expansion, broadened fast-moving consumer goods (FMCG) distribution, and resilient consumption at high-traffic locations.
That said, near-term margin pressure may persist as the group absorbs labour costs, foreign worker levy expenses and pre-opening costs tied to its accelerated rollout strategy.
Raw material cost visibility remains stable, however, Oriental Kopi’s management highlighted short-term supply issues in vegetables and chicken due to flooding in Thailand.
MBSB Research in a note to clients said while the group’s operational fundamentals remained strong, the execution of its expansion plan will be the key determinant of margin normalisation and earnings scalability moving forward.
Oriental Kopi’s management at its recent financial year 2025 (FY25) highlighted another year of record revenue and profit, supported by strong cafe traffic and growing FMCG traction.
However, profitability was moderated by higher operating overheads stemming from accelerated outlet expansion, increased administrative expenses, and a higher effective tax rate due to non-deductible pre-opening and start-up costs.
“As these developments are consistent with our existing assumptions, we maintain our earnings forecasts,” it added.
The research house has also kept a “sell” call on the stock with an unchanged target price of RM1.03 per share.
“While we hold a positive view on Oriental Kopi’s fundamentals, we opine that the current valuation is stretched.
“As such, we believe that it is an opportunity for investors to lock-in any gains,” added MBSB Research.
Hong Leong Investment Bank Research (HLIB Research) in a report said Oriental Kopi exited FY25 with a 28-store footprint, continuing to skew toward mall-based sites (23 outlets), supplemented by airport locations (three) and shop lot cafes (two).
Singapore operations remain steady at three stores, with management engaged in active discussions for strategic expansion once suitable high-traffic sites are secured.
For FY26, HLIB Research noted the management targets eight to 10 new openings, with several key sites already identified – Queensbay Mall, Kuala Lumpur International Airport (KLIA) 1, KLIA2 Departure Satellite, Sunway Velocity, Merdeka 118, IJM Penang and Sabah.
“The planned foray into Sabah marks a meaningful geographic extension, positioning the brand within the state’s thriving domestic and inbound tourist ecosystem, which we view as a constructive medium-term growth lever.”
The research house, which expects Oriental Kopi’s expansion momentum to remain intact, has maintained a “hold” call on the stock with an unchanged target price of RM1.22.
HLIB Research added that the valuation incorporates Oriental Kopi’s scarcity premium within Malaysia’s listed food and beverage universe, its early-stage but scalable growth profile, and catalysts from its syariah-compliant status.
“That said, we note that the recent share price appreciation has pushed valuations toward the upper end of the justified range, leaving a more balanced risk-reward profile at current levels.”
Meanwhile, Apex Securities in a report said Oriental Kopi’s near-term outlook remains promising, but following the recent share price rally, it maintained a hold with an unchanged target price of RM1.26.
It continues to favour Oriental Kopi for its strong outlet expansion momentum, consistent product innovation with an expanding menu and stock keeping units and commitment to product quality.
In the fourth quarter ended Sept 30 (4Q25), Oriental Kopi posted a net profit of RM15.9mil, or 0.8 sen per share, while full-year earnings came in at RM60.7mil, or 3.25 sen per share.
Quarterly revenue stood at RM133.2mil, with total revenue for FY25 amounting to RM450.9mil.
Compared with the preceding quarter, revenue in 4Q25 was 14.06% higher, up from RM116.75mil previously.
However, the group’s net profit fell 11.46% to RM15.89mil from RM17.9mil in the preceding quarter, mainly due to a higher effective tax rate arising from non-deductible pre-commencement and start-up expenses for new outlets.
