PETALING JAYA: Near-term margin pressures have continued to persist for Oriental Kopi Holdings Bhd
due to expansion costs, staff expenses, marketing spend and higher costs of sales.
In a report, MBSB Research said the cafe chain operator’s second quarter of financial year 2026 results came in below expectations as strong topline growth from café expansion and packaged food distribution was diluted by weaker margins and higher operating costs.
Oriental Kopi posted a revenue of RM147.3mil for the quarter and a profit of RM15mil, bringing its first half of financial year 2026’s (1H26) profit to RM32.1mil.
“Results accounted for only 41% of our full-year forecast and 38% of consensus estimates.
“There was no dividend for the quarter.”
It downgraded the group to ‘neutral’ with a lower target price (TP) of RM1.06 from RM1.18, based on 30 times the price-to-earnings ratio pegged to financial year 2026 (FY26) earnings per share (EPS) of 3.5 sen.
Apex Securities Research said it will remain cautious in near-term earnings execution as softer operating leverage and ongoing margin normalisation continue to offset strong top-line momentum.
“We believe rising operating costs, increasing competitive intensity and expansion-related dilution may continue to weigh on profitability in the near-term.
“In addition, persistent geopolitical uncertainties in the Middle East could pressure consumer sentiment, fuel costs and discretionary spending behaviour, potentially moderating overall consumer spending momentum going forward.”
However, it also pointed out it is constructive on Oriental Kopi’s longer-term growth aspects, underpinned by resilient domestic consumption trends, continued outlet expansion and improving tourism activity ahead of the Visit Malaysia 2026 (VM2026) campaign.
Furthermore, expansion into packaged food offerings and overseas markets could provide additional medium-term growth opportunities as well.
Apex Securities Research said it will maintain a hold call on the group with a lower TP of RM1.04 from RM1.20, based on 27 times FY27 EPS of 3.8 sen.
The research house said it will trim its earnings forecasts for FY26, FY27 and FY28 by 13%, 14% and 16%, respectively, to RM70.5mil, RM76.5mil and RM82.3mil.
“This is mainly to reflect lower margin assumptions following softer operating leverage and weaker earnings scalability despite strong revenue growth.”
Meanwhile, one research house upgraded the stock’s call to buy with a higher TP of RM1.28.
Hong Leong Investment Bank (HLIB) Research said it was constructive on Oriental Kopi’s medium-term prospects, backed by minimal exposure to an increase in fuel and raw material prices caused by the US-Iran conflict and strong brand equity amongst domestic consumers.
HLIB Research pointed out the group was also on track with its expansion strategy.
“International expansion is gaining momentum as the group engages overseas distributors to seed its fast-moving consumer goods brand, with an additional international outlet slated for 2026.
“We believe VM2026 still remains a meaningful top-line catalyst for 2H26 given the group’s strategic partnership with Tourism Malaysia and strong presence in major tourist-centred malls and airports to capture foreign demand, which historically accounts for 5% to 10% of group sales.”
HLIB Research concluded that since Oriental Kopi’s share price declined in January this year, they felt its risk-to-reward profile had turned more favourable.
“We continue to like Oriental Kopi for its scarcity premium within Malaysia’s listed food and beverage universe, early-stage but scalable growth profile both domestically and overseas, and its halal-certified status across majority of its outlets.”
