In a large bowl using a hand-held mixer or stand mixer fitted with a whisk or paddle attachment, beat the butter and cream cheese together on medium speed until creamy and smooth, about 2 minutes.
Add confectioners’ sugar, coconut milk, vanilla extract, coconut extract, and salt with the mixer running on low.
Increase to high speed and beat for 3 minutes.
Add more confectioners’ sugar if frosting is too thin, more coconut milk if frosting is too thick, or an extra pinch of salt if frosting is too sweet.
Apply the coconut by scooping some in your hand and pressing gently into the icing.