Press Commentary - Unveiling Opportunities: What's the Appetite for Oriental Kopi’s IPO?

By Ken Low, Head of Dealing, Moomoo Malaysia

An Overview of Oriental Kopi’s IPO

Oriental Kopi Holdings Bhd's (Oriental Kopi) upcoming listing on the ACE Market has brewed excitement among retail investors, as the third listing of 2025 within the first month alone. Priced at RM0.44 per share, the IPO aims to raise RM183.96 million to support the brand's expansion plans, with their prospectus revealing earmarked proceeds for working capital, the setting up of a new head office, central kitchen, and warehouse, domestic expansion, as well as marketing activities such as the expansion of its packaged food segment.

According to Executive Director Sean Koay Song Leng, the new 108,448 square feet operational facility aims to centralise management functions, optimise food and beverage operations, and enhance storage and distribution capabilities, reducing staff workload at individual outlets. First established in December 2020, Oriental Kopi has since expanded to 20 cafes in Malaysia and 1 in Singapore, with the brand maintaining full control over all outlets rather than adopting a franchise model. On cafe expansion, Koay added that the company aims to further expand 13 local outlets, 2 more cafes in Singapore, and additional plans for business expansion to other neighbouring countries.

This IPO comes at a time when Malaysia's F&B industry is poised for growth, with the domestic F&B industry recording a revenue of RM228.66 billion in 2023, with growth forecasts at a compound rate of 7.95% from 2023-2027. Key indicators signal to the potential for Oriental Kopi to further establish themselves as a major player in the local cafe and packaged foods sector.

Financial Health and Market Position

From a financial perspective, Oriental Kopi has demonstrated steady growth. Over the past three years, revenue has grown from RM5.02m in 2021 to RM277.28m in 2024, with the company achieving a compound annual growth rate (CAGR) of 15% in revenue, driven by consistent customer demand for its signature offerings. According to their IPO prospectus, as of 2024, dine-in revenue accounts for 81.11% of total revenue, followed by packaged products sold in-store (12.97%), via third-party distributors such as supermarkets and other retailers (4.16%), and the trading of materials, consumables, and equipment (1.76%). Overall, their profit margins, currently averaging 18%, reflect efficient cost management and a robust supply chain.

However, prospective investors should also be mindful of potential risks. Key business and operational risk factors highlighted in the prospectus include (but are not limited to) rising commodity prices and potential supply chain disruptions which could impact profit margins, changes in consumer preferences and behaviours, as well as inflationary pressures or other costs increases.

One such cost pressure is coffee bean prices, which have recently grabbed headlines as adverse weather conditions and supply shortages have seen Arabica beans reach $3.50 per pound as of December 2024, marking a whopping 83% increase. However, according to Executive Director Callie Chan Yen Min, Oriental Kopi has locked in their supply of coffee beans through supportive supplier pricing due to their high volume purchases, reflecting proactive hedging against record-high coffee futures.

Why Oriental Kopi Stands Out to Investors

Investors eyeing this IPO will be drawn to Oriental Kopi’s robust track record and its ability to maintain customer loyalty through consistent quality and innovation. The funds raised are earmarked for strategic growth initiatives as well as both vertical and horizontal growth, reflecting a clear roadmap for future success. At their listing price of RM0.44, this represents a price-to-earnings (PE) ratio of 20 times. Initial target price valuations for Oriental Kopi vary amongst analysts, though all predict upside from its initial IPO price, range from RM0.62 to as high as RM0.81, justified by the company's solid fundamentals and positive future outlook.

Furthermore, its positioning as a “modern traditional” café chain gives it a unique appeal, blending nostalgia with contemporary convenience. This duality resonates strongly with Malaysia’s urban millennials and Gen Z, who are key drivers of the F&B market, while also attracting baby boomers who cherish its nostalgic offerings. Additionally, Oriental Kopi has announced a dividend policy to distribute 30% of profits attributable to owners as dividends, providing an added incentive for shareholders seeking steady returns.

IPO Landscape in 2025: A Look Back and Ahead

The IPO market in Malaysia has been on a remarkable trajectory. In 2024, Malaysia recorded 55 IPOs, the highest number in ASEAN, collectively raising the most substantial value of funds within the region, with this outstanding performance not only boosting investor confidence but also contributing significantly to the economy.

Looking ahead, 2025 is shaping up to be another strong year for IPOs. Experts forecast that Bursa Malaysia will onboard approximately 50 new listings this year, with optimism mainly underpinned by Malaysia’s robust economic fundamentals and the growing diversity of sectors entering the market, from technology and renewable energy to consumer goods and logistics.

Moving into the year, several trends are expected to define Malaysia's IPO market in 2025. For instance, the technology sector, particularly startups leveraging artificial intelligence and fintech innovations, continues to attract investor interest. Renewable energy firms focusing on solar power and electric vehicle infrastructure are also gaining traction amid global sustainability goals.

Meanwhile, consumer goods companies catering to post-pandemic lifestyle shifts and wellness trends remain on investors’ radars. These dynamics present diverse opportunities for retail investors, and staying informed about upcoming IPOs and aligning investments with long-term growth sectors can help investors capitalize on these trends.

Investors eager to stay tuned to the latest updates on Oriental Kopi’s IPO can follow their official account on the moomoo platform, with supporting stock information such as prior announcements, related news, and community comments available on their official stock ticker page, also available for all moomoo users.

*Investments involve risk. Full disclaimers at https://www.moomoo.com/my/support/topic9_37. This commentary has not been reviewed by the SC.