Oriental Kopi Holdings Bhd delivered strong top-line growth in 3Q26, with revenue rising 34.2% year-on-year (YoY) to RM156.6 million, although higher operating costs and taxation pulled core profit lower, according to Hong Leong Investment Bank Bhd (HLIB Research).
HLIB Research said core profit fell 5.9% YoY to RM17 million despite improving 13.1% quarter-on-quarter. For 9MFY26, core earnings rose 6.1% to RM49.1 million on revenue of RM443.1 million, but the result came slightly below expectations.
The research house noted that quarterly revenue growth was driven by an enlarged café network and a 66.1% jump in the FMCG segment, while gross margin recovered sequentially to 23.5% on better cost management and operating efficiency. However, raw material inflation, higher marketing expenses and an effective tax rate of 30.6% continued to weigh on profitability.
Nevertheless, HLIB Research remained constructive on Oriental Kopi’s medium-term outlook, supported by continued domestic outlet expansion, its RM240 million net cash position and growing international exposure. The group is targeting its first Jakarta outlet by end-2026 through a joint venture with Erajaya, while its Mauritius franchise provides an asset-light route to overseas growth.
The research house also highlighted the scalability of Oriental Kopi’s packaged food business, which posted a 26.7% segment margin in 3Q26 compared to 21.5% for the café segment.
Following the results, HLIB Research cut its FY26 and FY27 core earnings forecasts by 17% and 8%, respectively, to reflect higher costs from aggressive outlet expansion. It maintained its ‘Buy’ rating but lowered its target price to RM1.17 from RM1.28.
At HLIB Research’s reference price of RM1.05, the revised target implies 11.1% capital upside and a total expected return of 12.1% including dividends.
