CGS International positive on Oriental Kopi's store roll-out in Malaysia

KUALA LUMPUR: CGS International Securities Malaysia Sdn Bhd remains constructive on Oriental Kopi Holdings Bhd's store roll-out as the group is on track to reach 40-41 Malaysian outlets by the end of 2026, up from 34 outlets as at July this year.

The brokerage said that with six mall locations already secured, Oriental Kopi's target of eight to 10 new outlets per annum looked achievable.

"With Oriental Kopi having already secured most high-footfall locations, it is now moving into second-tier malls.

"We think this should keep rental costs in check, while average paybacks of 10-12 months continue to support returns," said CGS International in a research note today.

The brokerage said Oriental Kopi's overseas segment would serve as a second growth engine, with its first outlet in Indonesia by end-November or early December this year, followed by Mauritius in the first quarter of next year, and two new outlets planned for Singapore in 2027, in addition to its three current outlets.

"We view execution risks as manageable given its measured rollout and potential use of local partners through a capital-light joint venture or franchise model in its overseas expansion," said CGS International.

The brokerage believed that its forecast of Oriental Kopi's core net profit of RM67.4 million for the financial year ended Sept 30, 2026, with a fourth quarter core net profit of RM22 million, driven by new-store contributions and stabilising gross profit margins, amid steady raw material prices.

Meanwhile, CGS International hosted Oriental Kopi's management and investors on Nov 3, 2026, to discuss its Oct 2026 menu language controversy.

"Management said that the matter has been resolved with its trilingual menus introduced in Nov 26 at a reprinting cost of RM150,000, with no material impact on footfall.

"The revised menu is now in use at the new Aman Central and Merdeka 118 outlets and should be rolled out to the remaining outlets by end-November this year," it said.

CGS International noted that Oriental Kopi's management said that it has not seen meaningful changes in traffic or customer mix following the controversy, and that the three outlets opened in the past 10 days in Sunway 163, Aman Central and Merdeka 118 have drawn long queues.