FGV Holdings Berhad (FGV)
FGV Holdings Berhad (FGV)

KUALA LUMPUR: Hong Leong Investment Bank (HLIB) research has revised its target price for FGV Holdings Bhd by almost 13 per cent to RM1.57 a share, on the strength of MSM Holdings Bhd's share price rally.

FGV holds a 51 per cent interest in MSM.

MSM's share price has almost doubled since the start of the year.

As at 9.30am, it was trading at RM3.27 a share.

FGV's share price was trading at RM1.37 a share.

HLIB research in its report said FGV is on track to submit a petition to modify the US Customs Border Protection (USCBP) Withold Release Order (WRO) issued to it, by end of June 2024.

Hong Leong Investment Bank (HLIB) research in its report said FGV expects to submit the petition following the completion of the assessment reports by independent auditor, LRQA, on its remediation plan.

FGV has completed its recruitment fee reimbursement to all active migrant workers in Sep 2023 and is in the midst of reimbursing former migrant workers (until Dec 2024).

HLIB research said FGV has completed the reimbursement programme to 20,153 active migrant workers with a total sum of RM72.2m as of September 2023, and the reimbursement have been 100 per cent verified by LRQA, an independent auditor appointed to conduct an assessment of FGV's operations against the 11 international labour organisation's (ILO)  indicators of forced labour.

"With the support of LRQA, FGV is reaching out to its former workers to inform them about the reimbursement programme through FGV's social media accounts and local newspapers in the workers' countries of origin (e.g. Bangladesh, India, and Indonesia)," it said.It added the company is targeting to submit a petition to the United States Custom and Border Protection (USCBP) by end-June

LRQA is at the tail-end of its follow up assessment on FGV's overall remediation plan which covered ILO indicators of forced and child labour in 24 sites.

The assessment is expected to complete in April.

"While timing of the modification/lifting of WRO by USCBP is beyond FGV's control, management shared that it will typically take six to 12 months to review the report and validate the estates," it said in a note.

In its efforts to modify the WRO issued by USCBP, FGV has allocated a total recruitment fee reimbursement of RM112 million to active migrant workers who have been recruited to work in FGV in Malaysia on or after Sep 30, 2018; and migrant workers who have left employment with FGV before Dec 31, 2022.

FGV also strengthened its recruitment procedures by instituting additional measures including engaging LRQA to conduct surveys among the newly recruited workers to ascertain if they have paid any recruitment fees.

It is also revising agreements with appointed recruitment agencies which stipulate the obligation of recruitment agencies to reimburse workers who claim to have made any form of fee during recruitment.

"FGV has also made several other initiatives to improve labour rights, which include improving workers' access to portable water and enhancing internet connectivity at workers' housing (particularly in remote areas), and upgrade/construction of new housing for migrant workers."

HLIB research has a "Hold" call on the stock.

FGV has reimbursed 491 former workers with total reimbursement amount of RM2.07 million, as of February 2024 and this will be carried out until end-2024.