Oriental Kopi Holdings Bhd - Expecting Stable 3QFY25
Mon, 25-Aug-2025 09:12 am
by Research Team • Apex Research

Counter

KOPI (0338)

Target Price (RM)

0.91

Recommendation

Hold

  • We project KOPI’s 3QFY25 core earnings to come in at the range of RM15-16m (flat to +9% QoQ), bringing FY25F forecast to RM59-60m.

  • The anticipated stable 3QFY25 earnings are attributed to revenue growth from new outlet openings, partly offset by temporary margin dilution from ramp-up costs and the absence of festive seasonality.

  • We have revamped our financial model and reintroduced FY25F–FY27F earnings at RM59.2m/RM90.5m/RM96.5m.

  • We believe valuations are already fair relative to peers and growth prospects. Maintain HOLD rating but with a higher TP of RM0.91, pegged to a 20.0x PE multiple on FY26F EPS of 4.5 sen, alongside a three-star ESG rating.

 

Expecting stable 3QFY25. We project KOPI’s 3QFY25 core earnings to come in at the range of RM15-16m (flat to +9% QoQ), bringing FY25F forecast to RM59–60m, representing 109–111% of our current FY25F forecast. The anticipated stable 3QFY25 earnings are attributed to revenue growth from new outlet openings, partly offset by temporary margin dilution from ramp-up costs and the absence of festive seasonality.

 

FY25 Expansion on Track. Management had guided for 12 additional outlets by FY26 and the rollout is progressing as planned. The three outlets initially slated for 4QFY25 — Aeon Melaka, Sunway Putra Mall, and Sunway Carnival Mall — have already commenced operations, alongside recent launches at Alamanda Shopping Centre, Senai Airport, and the NEX outlet in Singapore. With six outlets remaining to meet the internal target, these early openings are expected to drive FY25 earnings growth.

 

Innovation in Motion. KOPI continues to innovate its menu offerings and expand its range of packaged food SKUs, including seasonal items such as the Taro Polo Bun and Mid-Autumn Mooncakes. Higher footfall at café outlets is expected to enhance brand visibility, reinforce customer loyalty, and drive incremental sales in the packaged food segment. We view these initiatives as contributing to a stronger earnings trajectory for FY25.

 

Resilient Consumer Base Supports Spending. Despite the SST expansion and the anticipated rationalisation of RON95 fuel subsidies, we believe consumer spending at KOPI will remain resilient. Malaysia’s GDP growth held steady at +4.4% YoY in 2QFY25 (1Q25: +4.4%), underpinned by robust domestic demand, with private consumption expanding +5.3% YoY and services +5.1% YoY. While the SST hike may indirectly raise operating and living costs, KOPI’s core middle-to-high-income customers possess greater discretionary spending power and are less sensitive to moderate cost pressures. This positions the brand to sustain steady footfall and sales even amid broader macro adjustments.

 

Forecasts. With the change in analyst, we have revamped our financial model and reintroduced FY25F–FY27F earnings at RM59.2m/RM90.5m/RM96.5m, representing upward revisions of +9%/+12%/+2% against our previous forecasts. The upgrade reflects (i) stronger-than-expected 1H25 results, (ii) rapid outlet expansion, and (iii) higher FMCG contribution expected in the remaining quarters. 

 

Valuation. Post-earnings revision, we maintain our HOLD rating with a higher TP of RM0.91 pegged to a 20.0x PE multiple on FY26F EPS of 4.5 sen, alongside a three-star ESG rating. While fundamentals have improved on the back of stronger earnings visibility, the risk–reward profile remains balanced as valuations are already fair relative to peers and growth prospects.

 

Risks. Quality control, shortage of labour, and supply chain disruptions.

Read more details in:

Disclaimer

The report is for internal and private circulation only and shall not be reproduced either in part or otherwise without the prior written consent of Apex Securities Berhad. The opinions and information contained herein are based on available data believed to be reliable. It is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered by this report.

Opinions, estimates and projections in this report constitute the current judgment of the author. They do not necessarily reflect the opinion of Apex Securities Berhad and are subject to change without notice. Apex Securities Berhad has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.

Apex Securities Berhad does not warrant the accuracy of anything stated herein in any manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against Apex Securities Berhad. Apex Securities Berhad may from time to time have an interest in the company mentioned by this report. This report may not be reproduced, copied or circulated without the prior written approval of Apex Securities Berhad.

Market Mover
Settlement Rates
Currency Buy Rates (RM) Sell Rates (RM)
USD 4.216494 4.249912
EUR 4.923595 4.928588
CNY 0.592163 0.592763
HKD 0.540426 0.544215
SGD 3.273679 3.296901