This article first appeared in The Edge Malaysia Weekly on July 27, 2026 - August 2, 2026

LONG queues continue to snake outside the outlets of Oriental Kopi Holdings Bhd (KL:KOPI), underscoring its status as one of the must-visit dining destinations for tourists to Malaysia. Among locals, the Nanyang-style kopitiam continues to enjoy strong patronage, supported by its consistent food quality and new menu offerings, including the recently introduced nasi ayam gepuk that taps into the latest food trend.

For investors, however, the key question is whether the stock has room to climb after a significant retreat from last October’s record high.

While analysts remain broadly positive over Oriental Kopi’s growth prospects, they caution that investors may need to take a longer-term view as the group’s outlet expansion could continue to weigh on margins in the near term, particularly as it moves beyond prime locations into secondary markets.

On the other hand, the group’s dividend payout could surprise on the upside if its earnings outperform expectations.

Founded in Johor Jaya in December 2020, Oriental Kopi now operates more than 30 outlets across six states in Malaysia as well as in Singapore, with about 90% of its local stores halal-certified.

The group was listed on Bursa Malaysia’s ACE Market in January 2025 at an initial public offering price of 44 sen per share. Investor enthusiasm subsequently drove the stock to a record RM1.61 on Oct 17 last year, valuing the group at RM3.22 billion and lifting its price-earnings ratio (PER) to about 45 times, compared with a market value of RM880 million at listing.

The stock has since retreated by more than 40% from that peak, reducing Oriental Kopi’s trailing 12-month PER to 28.6 times. While the valuation has become less demanding, the group still trades above the Bursa Malaysia consumer sector average of about 20 times. Its forward 12-month PER stands at 26.6 times.

Among the six analysts covering the stock, four have “buy” recommendations, one a “neutral” and the other a “sell”. The consensus target price is RM1.14, implying a 25.3% potential upside against its last Thursday’s closing price of 91 sen that valued the group at RM1.82 billion.

Bloomberg consensus expects Oriental Kopi to post a net profit of RM73.12 million for the financial year ending Sept 30, 2026 (FY2026), before rising to RM91.55 million in FY2027.

For 1HFY2026, Oriental Kopi reported a 19.2% year-on-year increase in net profit to RM32.08 million from RM26.91 million but the net profit margin narrowed to 11.2%.

That compares with a net profit margin of 13.5% in FY2025, when it posted a net profit of RM60.8 million on revenue of RM450.9 million. Net profit margin was higher at 15.6% in FY2024, based on a net profit of RM43.1 million on revenue of RM277.3 million.

On a quarterly basis, the group’s net profit eased to RM15.03 million in 2QFY2026 from RM17.05 million in 1QFY2026.

To justify the consensus target price of RM1.14 based on a PER assumption of 28.6 times, Oriental Kopi would need to deliver roughly RM79.72 million in FY2026 earnings, which is above current consensus forecasts.

In other words, Oriental Kopi will need a significantly stronger second half, given that its 1HFY2026 earnings accounted for only about 40% of the RM79.72 million required. Investors will be watching its 3QFY2026 financial results closely next month.

Tradeview Research, which has the most cautious view with a “sell” call and a target price of 83 sen, lowered its valuation multiple to 23.3 times FY2026 earnings from 30 times previously, citing rising execution risk and softer consumer sentiment.

While remaining positive on the group’s long-term expansion prospects, the research house has turned more conservative on near-term execution as Oriental Kopi accelerates its outlet rollout — opening roughly one outlet a month — which could pressure margins and create uncertainty over store payback periods, customer traffic and the sustainability of same-store sales growth (SSSG).

“As expansion moves beyond prime locations, we see limited rerating potential until newer stores demonstrate a smoother ramp-up and quicker margin normalisation,” Tradeview Research says in a May 28 note.

It also questions whether new outlets can replicate historical productivity as Oriental Kopi expands into progressively “less-prime locations”.

“We expect margins to remain under pressure over the next few quarters as newer stores mature and pre-opening costs remain elevated, with key areas of focus centred on footfall resilience, payback period and SSSG sustainability,” it adds.

Oriental Kopi’s SSSG came in lower at 14.7% in 1HFY2026, from 15.5% in 1HFY2025.

According to MBSB Research, management expects to open four to six outlets in FY2026 while FY2027 expansion may focus on the northern region, east coast, Selangor and southern region as well as one to two more locations in East Malaysia.

The research house notes that the typical payback period remains attractive at around 10 to 12 months, though this varies by location, with new cafés generally taking five to six months to mature.

Besides expanding its café network in Malaysia, the group is exploring new overseas markets while broadening its menu and packaged food offerings. In FY2025, packaged food contributed 6.5% of total revenue, against 4.1% in FY2024.

The group is engaging overseas distributors to market its packaged food products internationally, extending the Oriental Kopi brand beyond its café business and strengthening its distribution network locally.

In an interview with The Edge earlier this year, founder and managing director Datuk Calvin Chan Jian Chern said the group will expand at a “measured pace”, rather than relying on the franchise model commonly used by F&B chains, as this will enable it to retain control of its outlets.

One potential upside catalyst could be dividends.

Phillip Capital, which initiated coverage on Oriental Kopi last month with a target price of RM1.26, says there could be a higher-than-expected dividend payout if earnings and operating cash flow outperform expectations.

The research house projects a three-year profit compound annual growth rate of 22% between FY2025 and FY2028, following an 88% profit CAGR achieved from FY2022 to FY2025.

Oriental Kopi has maintained a net cash position since FY2021 and held RM54 million net cash as at end-March 2026. Based on management guidance of RM2.5 million to RM2.8 million capital expenditure per outlet, Phillip Capital forecasts annual capex of RM22 million to RM29 million over FY2026 to FY2028, which should be comfortably financed through the group’s strong net cash position.

The group declared a one sen dividend per share in FY2025, translating into a payout ratio of 32.9% and a trailing 12-month dividend yield of 1.1%.

Meanwhile, MBSB Research recently upgraded Oriental Kopi to “buy”, saying that the recent pullback in share price has brought valuations to more attractive levels. Its target price of RM1.06 is pegged at 30 times FY2026 PER.

Calvin is Oriental Kopi’s largest shareholder with a 42.2% stake. Executive directors Callie Chan Yen Min and Sean Koay Song Leng own 15.57% and 10.92% respectively. Callie is the sister of Calvin and the spouse of Sean.

Operationally, Oriental Kopi remains one of Malaysia’s strongest consumer brands. The question for investors is whether the café chain — best known for local favourites such as nasi lemak, char kuey teow, kaya toast, hand-brewed kopi and signature egg tarts — can continue translating packed outlets into stronger earnings growth while sustaining returns on its expanding store network.

That challenge comes amid a softer consumer backdrop. According to Retail Group Malaysia, the café and restaurant category contracted 4.6% in 1Q2026 — its first decline since 2Q2023 — versus industry expectations of 1.9% growth. Overall retail sales grew 3.7% y-o-y during the quarter, below the projected 4.4% increase.

Beyond its expansion plans, Visit Malaysia 2026 could provide a further boost to Oriental Kopi’s growth prospects. The group has collaborated with Tourism Malaysia under the “Rasa Malaysia” initiative to showcase its signature products as iconic Malaysian offerings, potentially benefiting from increased tourist arrivals. 

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