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Embattled Sino-Forest to give look at finances with report of Q1 results
By Craig Wong, The Canadian Press – 10 hours ago
OTTAWA — Besieged Chinese timberland operator Sino-Forest, under attack from a short seller who has accused the company of fraud, is expected to offer a more detailed look at its finances Tuesday when it releases its first-quarter results.
Scotia Capital analyst Benoit Laprade wrote in a recent note to clients that the company needs to identify its biggest customers for investors, something it has been reluctant to do for what it has said are competitive reasons.
"We believe that to fully restore investor confidence, in addition to further evidence of timber ownership, the company should revise its position not to identify authorized intermediaries/customers who it buys from and sells to in China," Laprade wrote.
Laprade also said the company needs to provide a better understanding of the role of the authorized intermediaries and customers in its business model.
Shares in Sino-Forest have lost roughly three-quarters of their value since scathing allegations that the company exaggerated sales and assets were made against the company nearly two weeks ago by short seller Muddy Waters Research, a research and investment firm.
In an effort to ease investor concerns, Sino-Forest has released copies of sales agreements and other documents showing its ownership of timberlands. However the documents released so far only account for a small fraction of the company's timberland holdings in China.
The company has said it had US$1.09 billion in cash on its books at March 31 and that it would provide further detail on its sources and uses of cash for its most recent quarter when financial statements are released.
In 2010, the company reported a profit of $395.4 million or $1.60 per diluted share on $1.92 billion in revenues. That compared with a profit of $286.4 million or $1.38 per diluted share on $1.24 billion in revenue in 2009.
The average analyst estimate is for Sino-Forest to report a quarterly profit of 22 cents per share on $386 million in revenue, according to Thomson Reuters.
Sino-Forest has appointed an independent committee to investigate the claims, but has said it's confident it will be vindicated. The committee has hired accounting firm PwC to help in its investigation.
The Ontario Securities Commission has also launched an investigation into "matters related" to Sino-Forest.
Moody's Investors Service put Sino-Forest under review for a possible downgrade last week after it raised concerns the company's business may be affected even if the accusations are proven false.
Several law firms have also announced plans to start class action lawsuits against the company.
Sino-Forest shares closed up 51 cents at $4.98 on the Toronto Stock Exchange on Monday.
Quelle: The Canadian Press
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