PETALING JAYA: Kuala Lumpur Kepong Bhd (KLK) is unlikely to be impacted by allegations of unethical recruitment practices towards its agent appointed to recruit Nepalese staff for its subsidiary KL-Kepong Rubber Products Sdn Bhd, mentioned AmInvestment Bank (AmInvest).
“We view the allegation negatively however don’t suppose that there’ll be a serious affect on KLK’s share worth.
“The allegation is a reminder that the plantation sector will all the time face allegations of labour abuse or unethical recruitment practices,” the financial institution mentioned in a analysis word as we speak.
It famous that the plantation group is investigating the allegations made towards the sub-agents of SOS Manpower Service, KLK’s appointed agent to recruit Nepalese staff. The allegations have been made by Sajha Sabal Media, a information portal in Nepal.
“We take the allegations critically and have instantly launched an investigation with all of the related events to find out and confirm the info of the matter,” KLK mentioned in a press release on Friday.
AmInvest additionally mentioned it didn’t suppose the matter will be escalated to the US Customs and Border Protection (US CBP).
It reminded that Sime Darby Plantation Bhd’s (SDP) palm merchandise in Malaysia have been banned by the US CBP from late-2020 to early-2023 because of allegations of labour abuse.
“In spite of the ban, SDP was not considerably affected as US is just not a serious marketplace for the group.
“We don’t suppose that the RSPO would be concerned because it seems the allegations contain staff within the glove business and never palm oil,” AmInvest mentioned.
RSPO is the Roundtable on Sustainable Palm Oil, a worldwide physique selling the expansion and use of sustainable palm oil merchandise.
AmInvest maintains ‘purchase’ name
Despite the controversy, the financial institution maintained its “purchase” name on KLK with an unchanged honest worth of RM25.20 per share. It mentioned that is primarily based on a FY2025F price-earnings (PE) ratio of 18 occasions, the five-year common of big-cap planters.
KLK mentioned it has a strict no recruitment charge coverage, carried out since 2018 and additional enhanced in 2022, to make sure no recruitment and associated charges are imposed on staff at any stage in the course of the recruitment course of.
“KLK absorbs all employer-related statutory recruitment and associated charges, together with however not restricted to the price of transportation, visas, work permits, medical checks, and coaching/orientation prices within the nations of origin,” KLK mentioned in its assertion.
However, the group additionally mentioned it had accomplished the “reimbursement of all recruitment and associated charges” to its overseas staff.
KLK, together with Batu Kawan Bhd, are managed by the household of the late Lee Loy Seng, a outstanding miner and plantation proprietor from Ipoh, Perak. Lee’s eldest son, Oi Hian, 72, is KLK’s government chairman whereas one other son Hau Hian, 70, is a director. Oi Hian’s son, Jia Zhang, 40, can also be a board member in addition to the group chief working officer.
During the Emergency years in post-war Malaya, many British plantation house owners offered off their rubber estates. The Lee household capitalised on this by shopping for a number of estates. Loy Seng subsequently bought the belongings of one of many largest plantation firms and renamed it Kuala Lumpur Kepong, remodeling it into one of many nation’s largest listed plantation teams.
Oi Hian and Hau Hian are in Forbes “Malaysia’s 50 Richest” record with a web value of US$1.2 billion (RM5.73 billion), as of April 15, 2024.
KLK’s shares ended 20 sen or 0.87% greater, giving the group a market capitalisation of RM25.5 billion.
