PETALING JAYA: Oriental Kopi Holdings Bhd
saw its same-store sales growth (SSSG) in its third quarter ended June 30, 2026 (3Q26) weaken sharply on softer tourist traffic and temporary mall disruptions.
Despite this, analysts remain positive on the group, citing higher-margin fast-moving consumer goods (FMCG) segment and continued expansion momentum as longer-term growth drivers.
The group’s SSSG for the first nine months of the financial year 2026 (FY26) slowed to 0.5%, compared to 12.6% for the same period the year before.
The drop largely reflects weaker consumer sentiment and tourist numbers amid geopolitical tensions and flight disruptions, particularly at tourist-centric outlets, Phillip Capital Research said in a note to clients following the company’s 3Q26 results briefing.
“We expect SSSG to recover in the coming quarters as geopolitical conditions normalise and tourist arrivals improve,” it said.
Oriental Kopi’s management anticipates material costs normalising as global conflict tensions ease, bringing some upside to gross profit margins.
However, the research house opined that higher operating costs from continued outlet expansion will likely partially offset this, limiting potential margin recovery.
The group has expanded its network to 35 outlets as at August 2026, with eight outlets currently in the pipeline and a further five to six outlet openings set for FY27, keeping it on track for management’s 40-outlet target by end-2026, and in line with Phillip Capital Research’s FY27 assumption of 48 outlets.
It noted that non-deductible start-up losses for new outlets led to a higher 3Q26 effective tax rate (ETR) of 31%, and projected ETR to stay above 24% as expansion-related non-deductible expenses persist.
“While near-term margins are likely to remain pressured by the ongoing expansion, we expect profitability to progressively normalise from FY27 as new outlets begin contributing more meaningfully and progressively mature,” the research house said.
Phillip Capital Research has retained a “buy” rating on the stock with a 12-month target price of RM1.26.
Hong Leong Investment Bank (HLIB) Research highlighted that the group’s management also attributed the weakened SSSG to renovation works at City Square Johor Baru, resulting in one of its top-performing outlets operating through April to June with fewer than 10 tenants in the mall.
It said tourist-heavy outlets should recover from 4Q26, with arrivals reportedly returning from July. However, it noted that City Square does not reopen until October, delaying a lift until 1Q27 onwards.
“We, therefore, do not expect a clean SSSG recovery in the coming quarter, and see 1Q27 as the more meaningful read on the mature base,” it said.
Meanwhile, HLIB Research opined that FMCG’s structurally higher margins, widening distribution footprint, and the upcoming ready-to-drink launch provides further upside.
“With a 44.7% gross margin versus 21.5% for cafe chains, FMCG growth should be structurally margin-accretive at the group level,” it said.
Additionally, the research house said Oriental Kopi’s overseas ventures offer longer-term optionality.
As its first Indonesia outlet is targeted for launch in end-2026 and its first Mauritius outlet is set to open in five to six months, HLIB Research expects both to be immaterial to FY26 to FY27 earnings.
The research house has reiterated a “buy” rating on the stock with a target price of RM1.17 per share.
“We 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 halal-certified status across the majority of its outlets.”
