Boycott calls yet to dent Oriental Kopi sales

PETALING JAYA: Oriental Kopi Holdings Bhd is expected to sustain its earnings momentum and expansion plans despite recent calls to boycott the Malaysian cafe chain over the language used in its menus, with overseas growth also set to widen its market reach.

The cafe chain operator has kept its target of opening about 10 new outlets annually from financial year ending Sept 30, 2027 (FY27), with its first Jakarta outlet scheduled to open ahead of its original timeline.

Following a meeting with management, Hong Leong Investment Bank (HLIB) Research said sales had remained resilient despite the controversy, with no significant changes in customer footfall reported so far.

“We remain constructive on Oriental Kopi, as our call with management suggests the recent boycott calls over its menu language have, thus far, not impacted sales.

“Critically, we gather that sales have held up thus far, with no significant changes in customer footfall at its outlets,” it added.

The controversy began in early October after a social media user highlighted the absence of Bahasa Melayu translations in the group’s menus in response to its patriotic “Maka Kami” social media post.

Management has completed the design of a new trilingual menu, with the reprinting cost estimated at RM150,000 for about 2,000 menu books.

HLIB Research said the expense was immaterial, representing about 0.2% of its FY26 core earnings forecast. Oriental Kopi is also in talks with media outlets and social media influencers to feature the revised menus once they are introduced.

Management clarified that the Chinese-language menu had not been withdrawn, as separate English and Chinese menus had always been available.

“Management noted the attention partly reflects the significant broadening of its customer base this year, which we view positively as it underscores the brand’s nationwide appeal,” it said, noting that Oriental Kopi’s management has reacted proactively and constructively to rectify the situation.

HLIB Research expects Oriental Kopi’s FY26 core net profit to meet its forecast of RM67mil, implying fourth quarter of FY26 (4Q26) core earnings of about RM18mil, compared with RM17mil in 3Q26. It noted that management also expressed confidence in its full-year earnings trajectory, while raw material prices remained stable following discussions with major suppliers.

The minimum wage increase to RM2,000, effective June 2027, is expected to have a limited impact, as most local employees already earn above that level.

HLIB Research estimates that even if all foreign workers, who account for 30% to 40% of the workforce, are paid at the current minimum wage, the gross cost would amount to about 1% of Oriental Kopi’s FY27 core net profit forecast before mitigation.

Expansion remains on track, with Aman Central, Merdeka 118, KL Midtown, Sutera Mall and Genting among the locations scheduled to open over the next two months.

Recent openings at Ombak KLCC and NU Sentral are performing in line with expectations. Overseas, the Jakarta outlet is targeted to open in 4Q26, ahead of the 12-month window announced in August.

Mauritius is expected to follow in the first half of FY27, while negotiations are under way to enter additional countries next year.

The group’s fast-moving consumer goods exports to China also began in September, with encouraging initial orders.

HLIB Research reiterated its “buy” rating on Oriental Kopi with an unchanged target price of RM1.17 a share.