Poyry Releases Sino-Forest’s China Forest Asset 2010 Valuation Reports
TORONTO, May 27, 2011 /PRNewswire/ – Sino-Forest Corporation (“Sino-Forest”)
(TSX:TRE), a leading commercial forest plantation operator in China,
released today summary reports about the yearly China forest asset
valuation conducted by Pöyry (Beijing) Consulting Company Limited
(“Pöyry”), an international forestry consulting firm.
In 2010, Pöyry’s Management Consulting Business Group changed its
disclosure policy relating to valuation services following Pöyry’s
determination that the associated liability risk could not be
effectively excluded or limited. Therefore, Pöyry’s full valuation
reports conducted on behalf of all its clients, including Sino-Forest,
are no longer available in its clients’ public domain. Pöyry is willing
to provide summaries of the December 2010 valuation reports (the
“Summary Reports”) to Sino-Forest’s stakeholders, conditional on
recipients accepting certain terms and conditions prior to accessing
such Summary Reports.
Pöyry has provided separate valuations of Sino-Forest’s China forest
crops as at December 31, 2010 as follows:
1. Valuation of Planted Forest Crops; 2. Valuation of Purchased Forest Crops; 3. Valuation of Mandra Forestry Holdings Limited ("Mandra") Forest Estate Crops
The content of Pöyry’s 2010 valuation reports is consistent with Pöyry’s
2009 report, including the following valuation information:
1. Forest Valuation Methodology 2. Log Market and Price Outlook 3. Risks 4. Investment Appraisal for Forest Investment in China
Summary of the Reports:
Sino-Forest had approximately 788,700 hectares (“ha”) of forest
plantations under management in China as at December 31, 2010, which
includes approximately 147,200 ha of Mandra forest assets acquired in
February 2010. However, the total net stock area valued by Pöyry was
754,816 ha, after excluding 33,884 ha that were recently harvested,
located on land leased pending planting season, or land allocated for
bio-fuel, carbon credit development and other purposes.
____________________________________________________________________ | | As at December|Change (%)| | |_______________| | | | 2010| 2009| | |_________________________________________|_______|_______|__________| |Sino-Forest tree area under management in| | | | | China(hectare)|788,700|512,700| 54| |_________________________________________|_______|_______|__________| |Net tree area valued by Pöyry(hectare) |754,816|491,000| 54| |_________________________________________|_______|_______|__________| |Total standing timber of merchantable | | | | |volume(million m3) | 93.2| 62.0| 50| |_________________________________________|_______|_______|__________| |Average yield(m3per hectare) | 124| 126| (2)| |_________________________________________|_______|_______|__________|
Pöyry 2010 reports provide the following comments on the valuation
1. The valuation methodology was consistent with that used in previous years and was based on a single rotation using a pre-tax discount rate of 11.5% which is unchanged from previous years. 2. This is a single rotation analysis. The modelled wood flow sees approximately 85% of the log volume harvestable from the current rotation, harvested over the next 10 years. The analysis includes only the revenues and costs associated with the existing tree inventory or current crop (i.e. costs and revenues associated with replanting and harvesting of second and subsequent rotations are not considered). 3. The valuation assumed that positive log supply/demand dynamics will continue the trend of real log price increases through the midterm.
Pöyry estimated that Sino-Forest’s total merchantable standing timber
volume as at year end 2010 was 93.2 million cubic metres (m(3)), compared to 62.0 million m(3 )in 2009, representing a 50% increase in wood fibre. The volume increase
was attributable primarily to the substantially increased tree area
acquired during the year. The average yield per hectare of the
Sino-Forest estate decreased 2% to 124 m(3) per hectare in 2010; Pöyry reports that this change is primarily due
the fact that yields for both Chinese fir and Masson pine of the Mandra
estate are lower on average when compared with equivalent age stands
that are typical for the remainder of Sino-Forest’s Purchased
In contrast, Sino-Forest’s planted eucalypt yield is higher than in
previous years. Data collected during 2010 shows the average total
recoverable volume of six-year old eucalypt stands has increased by
approximately 11% to 141 m(3 )per hectare. This is equivalent to an average total standing volume of
175 m(3 )per hectare and compares with the highest volume recorded at a
Sino-Forest planted plantation of 250 m(3) per hectare. These yield improvements have been calculated following
analysis of the large amount of inventory data collected as part of the
Strategic Inventory Program, which Sino-Forest and Pöyry have been
working on together during 2010. The Strategic Inventory Program data
augments sampling undertaken as part of the field assessment plots that
Pöyry has established and measured in 2008, 2009 and 2010.
Sino-Forest Chairman & CEO Allen Chan said, “With our plantation area
under management in China increasing 54%, and Pöyry recognizing our
improved yield for our planted eucalypt forest, we are ready to commit
to large-scale replanting. Our plan is to plant up to 200,000 hectares
by 2013, given our scientifically advanced seedlings, our 16-year track
record, and our R&D know-how and plantation silviculture expertise.
Despite Pöyry’s change of disclosure policy, we believe the Summary
Reports provide our stakeholders and analysts with impartial and useful
data to value Sino-Forest’s forest assets as well as information to
understand the forestry industry in China.”
Instructions to access and download Summary Reports:
1. Clickhttp://www.poyry.com/management_consulting/valuation_services/Sino-Forest_valuation_2011,or 2. Go to Sino-Forest's website under the category "Filings" (http://www.sinoforest.com/filings.asp) which will direct you to the Summary Reports. After completing the requested information and accepting the terms and conditions of the disclosure, a one-time link to the Summary Reports will be provided.
About Pöyry (Beijing) Consulting Company Limited
Pöyry (Beijing) Consulting Company Limited is an independent management
consulting entity within the Pöyry Group and is recognised as one of
the world’s leading advisors to the global forestry industry cluster.
The cornerstones of its operations are its strong business
understanding and industry expertise. The Forest Industry business
group’s global network of around 2,100 employees covers 17 countries in
all major forest products regions in the world.
About Sino-Forest Corporation
Sino-Forest Corporation is a leading commercial forest plantation
operator in China. Its principal businesses include the ownership and
management of tree plantations, the sale of standing timber and wood
logs, and the complementary manufacturing of downstream engineered-wood
products. Sino-Forest also holds a majority interest in Greenheart
Group Limited, a Hong Kong-listed investment holding company (HKSE:
00094) with operations based in Suriname, South America and New
Zealand, which is involved in responsible and sustainable log
harvesting, lumber processing and sales and marketing of logs and
lumber products to China and other countries around the world.
Sino-Forest’s common shares have been listed on the Toronto Stock
Exchange under the symbol TRE since 1995. Learn more at www.sinoforest.com.
Please note: This press release contains projections and forward-looking
statements regarding future events. Such forward-looking statements are
not guarantees of future performance of Sino-Forest and are subject to
risks and uncertainties that could cause actual results and company
plans and objectives to differ materially from those expressed in the
forward-looking statements. Such risks and uncertainties include, but
not limited to, changes in China and international economies; changes
in currency exchange rates; changes in worldwide demand for
Sino-Forest’s products; changes in worldwide production and production
capacity in the forest products industry; competitive pricing pressures
for Sino-Forest’s products and changes in wood and timber costs.
Sino-Forest has not independently verified the data or conclusions
contained in the Summary Reports and cannot assure you that such
information is complete or reliable. The fact that Sino-Forest has
provided a link to the Summary Reports is not an endorsement of the
contents of the Summary Reports.
The Sino-Forest Corporation – Valuation of China Forest Crop Assets 2010
reports have been prepared by Pöyry solely for use by Sino-Forest
Corporation. All other use is strictly prohibited and no other person
or entity is permitted to use these reports, unless otherwise agreed in
writing by Pöyry. NOTHING IN THE REPORTS IS OR SHALL BE RELIED UPON AS
A PROMISE OR REPRESENTATION OF FUTURE EVENTS OR RESULTS. PÃƒ—YRY HAS
PREPARED THE REPORTS BASED ON INFORMATION AVAILABLE TO IT AT THE TIME
OF THEIR PREPARATION. NEITHER SINO-FOREST NOR PÃƒ—YRY HAVE THE DUTY TO
UPDATE THE REPORTS. PLEASE REFER TO THE TERMS AND CONDITIONS
RELATIONG TO THE REPORS AT WWW.POYRY.COM.
SOURCE Sino-Forest Corporation