New Stumpage for Sino-Forest

Even though he still  has “serious reservations” about the stock, Deutsche Bank analyst Christopher Chun is raising his target price on Sino-Forest Corp. (SNOFF.PK) to C$12 from C$17 and upping his rating to “hold” from “sell.” The reason? Recent stumpage acquisition agreements in Guanxi and Fujian provinces give the company a higher assest valuatoin, and the stock  has declined to a level that makes it more “fairly valued.”

Mr. Chun said the new deal in Guanxi adds about  C$1 a share to the company’s valuation, while the Fujian deal adds about C$2. However, the analyst is still worried about log price trends in China, given that log prices are alreaday far highe in China than they are in the U.S. As well, there’s also the potential for costs to increase as volumes ramp higher in Hunan and Yunna, and for losses to  accur as the copmany invests more in wood products and manufacturing.

Mr. Chun’s target price of C$17 is based on a net asset value analysis. The shares, which were trading at C$15 each on Monday, closed yesterday at C$18.68, up 5.5% on the previous day.

Comments

[lanaar2:]

Check out Cathay Forest (CFZ.V), potentially another Sino-Forest in the making.

2008 Aug 16 10:02 AM