Oriental Kopi remains on track operationally despite menu language controversy

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Oriental Kopi operations remain stable

Highlights

Oriental Kopi has seen no decline in customer traffic following the menu controversy, with the cost of reprinting menus in three languages at around RM150,000 and completion due by the end of this month.
Oriental Kopi shares have fallen nearly 8% since early October, down almost 40% year to date on disappointing earnings and narrowing margins, although 6 of 8 research firms recommend a buy.
CGS International forecasts Oriental Kopi will achieve net profit of RM67.4 million in FY2026 and cites an average target price of RM1.21, 46% above the last traded price of 83.5 sen.

This article was translated from the original. Read the original version by our correspondent here.

Impact of the menu controversy and implementation costs

As reported by The Edge Malaysia, CGS International said Oriental Kopi has so far seen no significant impact on customer traffic or customer mix following the controversy over its English- and Chinese-only menus. In a note following a joint investor briefing with the company, the research house said the menus had been reprinted in three languages at a cost of approximately RM150,000 and would be rolled out across all outlets by the end of this month.

CGS International also said that three outlets opened in the past 10 days continued to draw long queues. The issue erupted on social media last month, prompting Oriental Kopi founder and managing director Datuk Calvin Chan to apologise and pledge to address the matter by including Bahasa Malaysia on the new menus.

Market outlook and expansion plans

Oriental Kopi shares have fallen nearly 8% since early October, bringing their year-to-date decline to almost 40% amid disappointing earnings and continued margin contraction due to aggressive expansion. However, six of the eight research firms still believe the worst is likely over and recommend a buy, while the other two maintain hold ratings.

According to Bloomberg data cited in the report, the average target price is RM1.21, implying 46% upside over the next 12 months from the last traded price of 83.5 sen. CGS International remains constructive on Oriental Kopi’s outlook, as the company is on track to meet its store-opening plan, which could support net profit of RM67.4 million for the financial year ending 30 Sept 2026.

Oriental Kopi is targeting up to 10 new outlets a year and had 34 stores at the end of July. Having established a presence in most high-traffic locations, the company is now moving into second-tier shopping malls, a step that CGS International says could help control rental costs. Meanwhile, the current valuation does not yet fully reflect the value of its hybrid business model, which combines discretionary spending-based cafe operations with a scalable fast-moving consumer goods platform.

In our earlier report on FBM weakness KLCI, the benchmark index fell as concerns over inflation and the U.S. interest rate outlook once again weighed on sentiment, with continued foreign selling adding to the pressure. We also highlighted declines in technology stocks such as YTL Power and ViTrox amid a wave of selling in semiconductor and AI stocks, as well as investors’ focus on U.S. economic data as the next catalyst.

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