KUALA LUMPUR: The appointment of Elevate Ltd as the independent auditing firm stands to benefit FGV Holdings Bhd as the firm's expertise will help expedite the auditing process and ultimately result in the revocation of the US Customs and Border Protection's (CBP) Withhold Release Order (WRO) .
MIDF Research said looking at Elevate's experience and data-driven insights, the research firm believes that it can conduct 11 International Labour Organisation (ILO) forced labour indicators assessments efficiently and diligently.
Yesterday, FGV Holdings announced the appointment of Elevate as the independent auditing firm to conduct an assessment of the plantation company's operations against the 11 indicators of forced labour as provided by the ILO.
The assessment is part of FGV Holdings's efforts towards petitioning for the revocation of the WRO by the US CBP.
On September 30, the US has banned imports of palm oil from FGV Holdings following an investigation into allegations that it uses forced labour by the US CBP agency.
Nonetheless, MIDF Research said this news came as a surprise to FGV Holdings as the company has been communicating on the initiatives undertaken to enhance labour practice since 2019.
"To note, CBP did not disclose further on the investigations such as the nature of their findings and locations regarding the 11 indicators of forced labour.
"Aside from that, we do note that FGV Holdings already had discussions with its US-based legal counsel and Elevate on the audit design and plan.
"The audit process is slated to commence this month"," it said.
MIDF Research has maintained its 'Buy' call on FGV Holdings with an unchanged target price of RM2.36.
"Going ahead, we anticipate favourable crude palm oil prices, coupled with modest fresh fruit bunch production, to generate better financial performance for the company.
"On top of that, the anticipated higher average selling price of refined sugar and increase in sales volume should be able to help MSM Malaysia Holdings Bhd achieve higher profit margin in the coming quarter," MIDF Research said.