KUALA LUMPUR: Kuala Lumpur Kepong Bhd (KLK) has halted the arrival of some 140 Nepal workers amid investigations into allegations of unethical recruitment practices in Nepal.
In a note to investors Hong Leong Investment Bank Bhd research said KLK has temporarily halted the incoming arrival of workers from Nepal while the investigation into allegations of unethical practices are ongoing.
It said KLK has appointed an independent third party, a big four accounting firm, to examine the claims by Nepal's Sajha Sabal Media allegations and provide an unbiased assessment on the case.
"While we applaud KLK's swift response and actions in addressing the issue, these allegations (if it turns out to be true) will likely affect KLK's environment, social and governance profile, hence share price sentiment," it said in a note.
For now, the research firm said KLK has not been able to ascertain if any of the inward bound 140 Nepalese workers have paid recruitment and related fees. "KLK shared that it is prepared to take all necessary and appropriate actions based on the findings – these include, amongst others, possible termination, addressing any gaps and implement corrective measures," it said.
It said the company expects the issue to be resolved by end May-2024 (which is the deadline for the private sector to bring in all their foreign workers into Malaysia), and this means the audit finding report by the third party will be concluded soon.
According to HLIB research, KLK shared that there is no basis for the case to be escalated to the US Customs and Border Protection (USCBP).
"We understand that KLK exports glove and palm products to the US, and revenue contribution from North America accounted for ~2.1 per cent of the financial year 2023's (FY23) total revenue," it said.
HLIB research maintained its earnings forecasts, target price of RM24.41, and Buy rating, pending the release of the second quarter (Q2) FY24 results on May 20, 2024.
The company's share price was trading unchanged at RM23.10 a share as at 9.16am.