Oriental Kopi Holdings Berhad is set to list on the ACE Market of Bursa Malaysia on January 23, 2025, with an initial public offering (IPO) price of RM0.44 per share. The company aims to raise approximately RM184 million through this IPO, resulting in a market capitalization of about RM880 million upon listing.
IPO Details
Purpose of IPO: The funds raised are allocated as follows:
RM75.78 million (41.2%) for working capital to support daily operations and business growth.
RM53.69 million (29.2%) to establish a new head office, central kitchen, and warehouse in Selangor.
RM36.4 million (19.8%) for the expansion of cafes within Malaysia.
The remaining funds are designated for marketing activities in foreign countries, expansion of the packaged food segment, and to cover listing expenses.
The IPO was oversubscribed by 59.96 times, indicating strong investor interest.
Dividend Policy: Oriental Kopi has established a dividend policy to distribute 30% of its net profit as dividends. Analysts project dividend yields of 2.5%, 2.8%, and 3.1% for the fiscal years 2025 to 2027, respectively.
IPO Placement Amount and Outstanding Shares
IPO Placement: The IPO comprises 418.1 million new ordinary shares, representing 20.9% of the enlarged issued shares of two billion upon listing.
Outstanding Shares: Post-IPO, the total number of outstanding shares will be two billion.
Given the substantial oversubscription rate and the company’s growth plans, the IPO is anticipated to perform well on its first day of trading.
Principal Adviser, Sponsor, Sole Underwriter, and Placement Agent: Alliance Islamic Bank Berhad is serving in these capacities for the IPO.
The involvement of a reputable institution like Alliance Islamic Bank Berhad suggests a well-structured IPO, potentially leading to favorable first-day trading performance.
Established in December 2020, Oriental Kopi operates a chain of cafes under the “Oriental Kopi” brand, offering Nanyang-style coffee and signature items like egg tarts and polo buns. The company also distributes and retails its own branded packaged foods. As of January 2025, it has 20 cafes across Malaysia and one in Singapore.
The company reported a revenue increase to RM277.3 million in FY2024, doubling from the previous year. Net profit for FY2024 was RM43.1 million, reflecting strong financial performance.
Oriental Kopi has rapidly expanded its presence, establishing a strong brand in the Malaysian café sector. The planned increase to 36 outlets by 2026 indicates a strategic move to capture greater market share.
Management Team: The management team includes Managing Director Datuk Chan Jian Chern, Executive Director Callie Chan Yen Min, and Executive Director Sean Koay Song Leng.
Malaysia’s food and beverage industry is experiencing growth, with a revenue of RM228.66 billion in 2023 and a projected compound annual growth rate of 7.95% from 2023 to 2027.
The IPO is scheduled for January 23, 2025, aligning with positive industry trends and economic growth in the region.
Industry Benchmarks: At the IPO price of RM0.44 per share, Oriental Kopi is priced at a price-to-earnings (P/E) ratio of 20.4x FY2024 earnings per share. This is higher than the average P/E of 18.3x among market players. Assigning a target P/E of 16.5x to its CY2025 forecasted earnings per share, a fair value of RM0.62 per share has been derived.
Analysts have issued target prices exceeding RM0.60, reflecting positive market expectations. TA Securities set a target price at RM0.62, while Mercury Securities provided a higher target of RM0.68, implying a premium potential of 41% and 54.5%, respectively.
Considering the company’s solid financial performance, strategic expansion plans, positive analyst coverage, and significant oversubscription rate, subscribing to the IPO appears to be a promising opportunity. Analysts’ target prices range from RM0.62 to RM0.68, suggesting that the stock may trade strongly above the IPO price of RM0.44 on the first day. However, investors should conduct their own due diligence and consider market conditions before making investment decisions.
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