(From left) Oriental Kopi Holdings Bhd head chef Ho Poh Chian, executive director Sean Koay Song Leng, executive director Callie Chan Yen Min, managing director Datuk Chan Jian Chern, Alliance Bank Malaysia Bhd group chief executive officer Kellee Kam Chee Khiong and Alliance Islamic Bank Bhd chief executive officer Rizal IL-Ehzan Fadil Azim at the prospectus launch of Oriental Kopi in conjunction with its upcoming initial public offering and listing on the ACE Market of Bursa Malaysia. The company is scheduled to be listed on Jan 23.
PETALING JAYA: Analysts are generally positive on ACE market-bound food and beverage (F&B) chain operator Oriental Kopi Holdings Bhd, on the back of sustained growth and future business potential.
Setting the group at a fair value of 62 sen, up by 40% from its initial public offering (IPO) price of 44 sen, TA Research said in a report that it anticipates higher earnings, net profit and net gearing for Oriental Kopi from the financial year 2025 (FY25) onwards.
Oriental Kopi saw an increase in revenue by two folds to RM277.3mil in FY24. Similarly, its revenue for FY23 also doubled as compared with the previous year, which was attributed to its rapid expansion and higher in-store sale of packaged products (FMCG).
TA Research has also projected to group’s revenue to increase by 60.9% in FY25, 13.4% in FY26 and 8.2% in FY27 respectively. The projections were underpinned by expectations of profit after tax improvement due to an increase in outlets and higher contributions from the FMCG segment, rising disposable income as well as increase in average monthly household consumption.
Meanwhile, the group’s net profit is projected to increase by 66.9%, 14.4% and 10.5% for the three consecutive years. Net gearing is also expected to improve from 0.05 times to 0.001 times post-utilisation of IPO proceeds.
TA Research noted the group’s aggressive expansion throughout four years of operations as well as selected locations were among the reasons behind its rapid growth.
“The group has strategically selected high-foot-traffic locations to enhance brand visibility, driving impressive revenue growth with a three-year compounded average growth rate of 280.8%, reaching RM277.3mil in FY24,” TA Research stated.
The research house added that the group’s halal certification initiatives are also expected to support topline growth, as the group plans to certify all existing cafes by the second quarter of financial year 2025.
Mercury Securities in a note to clients said Oriental Kopi’s average daily sales have sustained at a high level despite its rapid expansion. As of December 2024, the group has 19 cafes in Peninsular Malaysia, with 16 additional cafes to come, locally and internationally.
“Most outlets experience near-full patronage consistently, and the impressive average daily sales can also be attributed to the substantial contribution from in-store sales of packaged foods as well as deliveries via GrabFood,” the research house said.
Mercury Securities is also of view that the group has vast potential for FMCG, stating that; “We are optimistic and believe Oriental Kopi has an ambitious growth plan for its FMCG segment, as evidenced by the sizeable RM46mil working capital set aside for materials purchase”.
While still being a relatively young FMCG brand, Mercury Securities said sales are likely to continue increasing once brand awareness increases.
“All in, we forecast 55% and 21% revenue growth for FY25 to FY26 respectively. In terms of margins, we believe Oriental Kopi can sustain its 30% gross margins and 15% to 16% net margins,”.
Mercury Securities set a fair value of 68 sen per share on Oriental Kopi with a target price earnings valuation of 10 times.
