FGV Holdings Bhd has received a thumbs up from MIDF Research following its preparedness to appoint ELEVATE as an independent auditor to look into 11 of International Labour Organisation’s (ILO) forced labour indicators associated with the company.
The research house is of the view that ELEVATE’s expertise will help to accelerate the auditing process which will eventually pave way to the revocation of FGV’s Withhold Release Order (WRO) by the US Customs and Border Protection (CBP).
In a stock exchange filing yesterday (Nov 16), FGV said it has appointed ELEVATE as its independent auditing firm to assess 11 of ILO’s forced labour indicators. The assessment is part of the group’s efforts towards petitioning for the revocation of the WRO.
To re-cap, the US banned imports of palm oil from FGV on Sept 30 last year following an investigation into allegations that it uses forced labour. This came as a surprise to FGV as the group has been communicating on the initiatives undertaken by FGV to enhance the group’s labour practice since 2019.
To note, CBP did not disclose further on the investigations such as the nature of their findings and locations with regard to the 11 indicators of forced labour.
“Aside to that, we do note that FGV already had discussions with its US-based legal counsel and ELEVATE on the audit design and plan,” noted analyst Shahira Rahim in a company update. “The audit process is slated to commence this month.”
For the record, Hong Kong-based ELEVATE is an independent sustainability and supply chain service provider.
The company also designs, builds as well as manages data driven sustainability-linked programmes with (i) assessment, (ii) advisory, (iii) programme management and (iv) analytics.
“Looking at ELEVATE’s experience and data-driven insights, we believe that it can conduct the 11 ILO forced labour indicators assessment efficiently and diligently.
Maintaining its “buy” rating on FGV with a target price of RM2.36, MIDF Research further expects favourable crude palm oil (CPO) prices coupled with modest fresh fruit bunch (FFB) production to generate a better financial performance for the group.
“On top of that, the anticipated higher ASP (average selling price) of refined sugar and increase in sales volume should be able to help MSM Malaysia Holdings Bhd (a 51%-owned FGV unit) achieve higher profit margin in the coming quarters,” reckoned MIDF Research.
At 11.10am, FGV was up 1 sen or 0.68% to RRM1.48 with 7,100 shares traded, thus valuing the company at RM5.4 bil. – Nov 17, 2021
