• V.S. Industry (VSI) has appointed PwC Consulting Associates (M) Sdn Bhd (PwC Consulting) to conduct an independent review of its labour practices on migrant workers hired through the Recalibration Programme.

• To recap, the Recalibration Programme is the government’s initiative that allows employers from certain sectors such as manufacturing to legally employ undocumented foreign workers or holders of expired permits.

• The review will be based on the International Labour Organization’s indicators of forced labour. PwC Consulting will work alongside labour rights consultants and external legal advisors to address any gaps identified under the Recalibration Programme.

• We are positive on the group’s ongoing commitment to work closely with relevant parties for better ESG standards, particularly on improving employees’ welfare. Recall in VSI’s 1QFY22 briefing held in Nov 2021, the group has allocated RM30mil for new hostel construction in FY22F to enhance its employees’ living conditions.

• Furthermore, we believe this will improve VSI’s prospects in recruiting additional workers to expand the group’s capacity to meet more orders from customers. With 9,000 workers currently, VSI is targeting to bring in 3,000 additional workers.

• We maintain BUY on VSI with a fair value of RM1.61/share, pegged to an unchanged FY23F PE of 20x, in line with its historical 2-year average. We make no adjustment to our 3-star ESG rating.

Source: AmInvest Research - 14 Feb 2022