Introduction

In this regional morning note, UOB Kay Hian dives deep into the financial and operational performance of Oriental Kopi Holdings, Malaysia’s largest homegrown public-listed café chain, alongside an analysis of its industry peers. The report provides a comprehensive breakdown of growth strategies, market positioning, and financial projections. Here’s everything you need to know about the companies covered and their investment potential.

Oriental Kopi Holdings: Rising to the Top

Oriental Kopi Holdings, trading under the ticker KOPI MK, is Malaysia’s largest homegrown café chain offering local cuisine and Halal-certified packaged food products. The company operates 20 outlets nationwide, with plans to expand aggressively in the coming years. UOB Kay Hian has initiated coverage with a “BUY” recommendation and a target price of RM0.88, representing a 100% upside from its current share price of RM0.44.

Key Strengths and Differentiators

Oriental Kopi emphasizes quality and consistency by avoiding a franchise model, opting instead for fully-owned cafes. Its flagship offerings, including signature coffee, egg tarts, and polo buns, have earned widespread acclaim and awards. Head Chef and shareholder Ho Poh Chian leads a strong recipe creation team to ensure consistent innovation and quality.

Customer Sentiment

With an impressive average Google rating of 4.3 stars across its 20 outlets, Oriental Kopi has resonated well with customers. The company’s focus on locally inspired dishes, menu standardization, and in-house tastings has contributed to its popularity. The ongoing process to certify its stores as Halal by May 2025 further broadens its appeal across diverse demographics.

Growth Opportunities

The company plans to increase its outlet count to 32 by FY25-26, representing a two-year CAGR of 33.3%. Additionally, Oriental Kopi is expanding its FMCG segment by widening distribution channels and increasing its retail presence. Five specialty FMCG stores are planned by FY26, up from one currently. FMCG revenue share is projected to rise from 7% in FY22 to 19% by FY27.

Financial Projections

Revenue is expected to grow at a CAGR of 30.4% from FY25-27, driven by outlet expansion and FMCG growth. Net profit CAGR is forecasted at 33.1%, with margins improving from 15.6% in FY24 to 16.6% by FY27. The company’s EBITDA margin is set to increase from 24.2% in FY24 to 26.3% in FY27, underscoring its operational efficiencies.

Valuation and Recommendation

UOB Kay Hian values Oriental Kopi at 25.9x its 2025F PE, justifying a premium due to its early-stage growth potential and robust expansion plans. The stock offers a compelling investment case with a three-year earnings CAGR of 33.1%, far exceeding peer averages of 11.4%-13.7%.

Environmental, Social, and Governance (ESG) Initiatives

• Environmental: Utilizes biodegradable materials and reduces single-use plastics in its packaging.
• Social: Pursues Halal certification to enhance inclusivity and address diverse community needs.
• Governance: Maintains a board with at least 50% Independent Non-Executive Directors, ensuring robust decision-making and diversity.

Industry Peer Analysis

The report also provides a comparative analysis of Oriental Kopi’s performance against other F&B service outlets in Malaysia, offering insights into market positioning and profitability.

Performance Metrics

Google Ratings

Based on customer reviews, Oriental Kopi and Hometown Hainan Coffee lead the pack with average ratings of 4.3 stars, demonstrating strong customer satisfaction.

Conclusion

Oriental Kopi stands out as a high-potential investment in Malaysia’s F&B sector, with strong growth prospects, a focus on quality, and a commitment to ESG principles. Coupled with robust financial metrics and a clear expansion strategy, the company offers an attractive opportunity for investors. As the F&B market continues to evolve, Oriental Kopi’s innovative approach and market positioning make it a standout player.