KOPI's FY25 GP margin contracted 4.6%-pts vs. FY24 on higher FMCG input costs, though margins are expected to steady at c.26% in FY26 with high-margin menu items and better supplier terms.
Same-store sales growth (SSSG) improved to an average of 12.2% in FY25.
KOPI currently operates 25 cafés domestically and plans to open 3 new outlets by 1HFY26, while maintaining its full-year target of 8 openings for FY26.
FMCG demand has strengthened following SARA eligibility, while new distribution with myNews and 7-Eleven by 1HFY26 and ongoing plans to expand into international markets will broaden the segment’s market access.
We maintain our HOLD recommendation with an unchanged TP of RM1.26, based on 30x FY26F EPS of 4.2 sen.
We left KOPI’s briefing with the following key takeaways:
FY25 margins contraction. GP margin declined by 4.6%-pts to 25.3% in FY25 vs 29.9% in FY24, driven by higher FMCG input costs (santan and coffee). Margins may remain soft as KOPI continues to expand, but we expect GP margin to hold at c.26% in FY26, supported by its focus on retaining high-margin menu items and securing more favourable supplier pricing.
SSSG Trend. SSSG improved to an average of 12.2% in FY25, supported by stronger performances in Kuala Lumpur and Selangor, which recorded growth of 18.2% and 14.7% respectively. Johor was softer at 3.4%, mainly due to the Johor Jaya outlet, where sales were affected by the opening of the AEON Mall Tebrau City outlet just 2km away, shorter operating hours and lower in-store FMCG demand. Other Johor outlets continued to perform healthily.
Outlet Expansion Updates. Excluding Singapore, KOPI currently operates 25 cafés. The Group plans to open 3 outlets in 1HFY26 at Queensbay Mall Penang, KLIA 1 and Suria Sabah Shopping Mall. Beyond these, the pipeline includes KLIA Terminal 2 Departure Satellite, Sunway Velocity, Merdeka 118 and IJM Penang. The Group maintains its FY26 target of 8 new outlets, with site selection focused on high-traffic areas that attract both tourist and office crowds.
FMCG Outlook. KOPI’s FMCG segment has seen stronger demand since its products became SARA-eligible, with White Coffee and Kaya remaining the main contributors. The Group has secured distribution with myNews and 7-Eleven, expected to begin by 1HFY26, which will extend the availability of its FMCG products across more retail channels. The Group is also assessing opportunities to distribute into Hong Kong, Australia and New Zealand, offering additional markets for the segment in the longer term.
Central Kitchen Completion May Be Delayed. KOPI’s new operational facility, which will house its central kitchen, warehouse and office, is likely to see a delay from the initial FY26 completion target as the Group is still in the process of securing suitable land. The Group is negotiating for a site opposite the existing factory, which means commencement of the new operational facility would likely only take place in FY27. Once operational, the facility is expected to enhance production efficiency and improve cost control.
Earnings Revision. No change to our earnings forecasts.
Valuation and Recommendation. KOPI’s near-term outlook remains promising, but following the recent share price rally, we maintain our HOLD recommendation with an unchanged TP of RM1.26, based on 30x FY26F EPS of 4.2 sen, alongside a three-star ESG rating. We continue to favour KOPI for its (i) strong outlet expansion momentum, (ii) consistent product innovation with expanding menu and SKUs and (iii) commitment to product quality.
Risks. Quality control, shortage of labour, and supply chain disruptions.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 4.114699 | 4.148609 |
| EUR | 4.790453 | 4.802307 |
| CNY | 0.584257 | 0.584995 |
| HKD | 0.528376 | 0.532729 |
| SGD | 3.171551 | 3.197776 |