China's Non-Grain Ethanol Push Should Benefit Sino-Forest

News that China will approve more ethanol plants that use non-grain feedstock like sweet potatoes, sweet sorghum or cassava could be good news for Sino-Forest Corp. (SNOFF.PK) since it will undoubtedly encourage ethanol production from sources such as wood waste, according to Dundee Securities.

Sino-Forest is the largest commercial forestry plantation operator in China and had roughly 312,000 hectares of forestry plantations there as of the end of 2007. It is also a founding member, and the only representative from the forestry sector in the China Green Carbon Foundation, which focuses on developing carbon credits and renewable energy, analyst Richard Kelertas noted.

“Over the long-term, Sino-Forest should benefit from the expansion of the ethanol industry in China,” he said in a recent report, adding that China currently imports approximately half of its crude oil consumption and is trying to reduce its dependence on fossil fuels. “Cellulosic ethanol has the advantage of not using up the country’s valuable resources, while also producing more output per quantity used than grain feedstock.”

As Sino-Forest produces wood residue from its harvesting operations, the sale of this waste may produce extra revenue and profits. Mr. Kelertas is not yet factoring any of these potential funds into his forecasts, but does expect this to change by 2009-2010.

He rates the shares a “buy” (top pick) with a C$31.50 price target. It has been trading in the C$15 - C$18 range during the past month.

Comments

[tonykarmen:]

this is great,but this will also send the price of food to the moon. the world gov't must subsdize farmers that grow for food[share profits-even it out. we all know that ethanol is a failure. it just does not work to costly when you add it up my vehicles actually burn more fuel and i'm not alone. our planet has zillions barrels of oil untouched we are being lied to the american way repeat of 1977 gas lines we have made the communist nations wealthy and US in the :POOR HOUSE the new FUEL IS WATER watch the news this week

2008 Apr 14 08:24 AM

[rickh:]

Dear User 125195,
Please explain how using wood waste for fuel will send the price of food to the moon.

My car gets better mileage when I buy the fuel with 10% ethanol.

2008 Apr 14 09:49 PM

[devassocx:]

User 125195...with all due respect, there is no way you can get
better mileage with ethanol. It is physically impossible as there
is not as much energy content in ethanol.

I suggest you check your mileage again.

2008 Apr 23 09:26 PM