Oriental Kopi sales intact despite boycott calls, says HLIB

KUALA LUMPUR: Oriental Kopi Holdings Bhd's sales have remained resilient despite recent boycott calls over the absence of Bahasa Melayu translations in its menus, according to Hong Leong Investment Bank Bhd (HLIB).

Following a discussion with the company on Oct 21, HLIB said customer footfall had not changed significantly, suggesting the controversy had yet to materially affect its business.

Oriental Kopi is preparing to introduce trilingual menus, with the cost of reprinting about 2,000 menu books estimated at RM150,000, equivalent to about 0.2 per cent of HLIB's core earnings forecast for the financial year ended June 2026 (FY26).

The controversy began in early October after a social media user highlighted the absence of Bahasa Melayu translations in Oriental Kopi's menus in response to the group's patriotic "Maka Kami" social media post.

The company clarified that it had always offered separate English and Chinese menus, adding that the perception that its Chinese-language menu had been withdrawn stemmed from a misunderstanding.

HLIB said Oriental Kopi had responded proactively to address the issue, while the increased public attention also reflected the brand's expanding customer base and nationwide appeal.

On earnings, HLIB expects Oriental Kopi to record core profit after tax (PAT) of RM67 million in FY26, implying fourth-quarter core PAT of about RM18 million, compared with RM17 million in the third quarter.

The forecast is supported by an expected easing in the effective tax rate from 30.6 per cent in the third quarter and the absence of further one-off expenses in the current quarter.

Oriental Kopi remains confident of meeting its full-year earnings expectations, while raw material prices have remained stable following discussions with major suppliers.

HLIB also expects the impact of the minimum wage increase to RM2,000, effective June 2027, to remain manageable.

Even if all foreign workers, who account for 30 to 40 per cent of the workforce, are currently paid the minimum wage, the gross cost impact is estimated at about one per cent of HLIB's FY27 core PAT forecast before mitigation measures.

Meanwhile, Oriental Kopi is maintaining its target of opening about 10 new outlets annually from FY27 onwards.

Following the opening of its Sunway 163 Mall outlet, the group plans to open outlets at Aman Central, Merdeka 118, KL Midtown, Sutera Mall and Genting over the next two months.

Recent openings at Ombak KLCC and NU Sentral are performing in line with expectations, while its Johor Bahru City Square outlet, affected by mall renovation works, is expected to reopen in November in a larger unit.

Overseas expansion is also progressing ahead of schedule, with the group's first Jakarta outlet targeted to open in the fourth quarter of 2026, earlier than the 12-month timeframe announced when its joint venture was unveiled in August.

Mauritius is expected to follow in the first half of 2027, while the group is in the final stages of negotiations to enter several more countries next year.

Beyond its restaurant operations, Oriental Kopi began exporting its fast-moving consumer goods products to China in September 2026, with initial orders described as encouraging.

HLIB cautioned that start-up costs from new outlets could weigh on first-quarter FY27 earnings before the outlets mature and contribute more meaningfully.

It identified the group's fourth-quarter FY26 results, expected in late November, and the opening of its international outlets as key catalysts.

HLIB maintained its "Buy" recommendation on Oriental Kopi with an unchanged target price of RM1.17, viewing the recent share price decline as an attractive entry opportunity.