November 12, 2009 / 11:34 AM / 8 years ago

UPDATE 2-Sino-Forest Q3 profit tops estimates

* Q3 EPS $0.48 vs est EPS $0.41

* Q3 rev up 25 pct to $367 mln

* Expects log prices to recover 2008 levels by year end

* Sees opportunity in China’s state-owned farms

* Says set up jatropha gene bank in Yunnan (Recasts; Adds conference call details, share movement)

BANGALORE, Nov 12 (Reuters) - Sino-Forest Corp TRE.TO reported quarterly profit that topped analysts’ estimates on higher sales volumes of plantation fiber, and said it sees opportunity in China’s plans to commercially manage its vast state-owned tree farms.

Sino-Forest, which owns and manages plantations in China, said it had established a jatropha gene bank in Yunnan province and plans to use the drought-resistant trees for producing biodiesel.

“The Chinese government is moving to a small commercialization of the management of state-owned tree farms and reforming collective-owned plantation rights... There will be more opportunity for biofuels in China’s future,” Chief Executive Allen Chan said on a conference call.

Chan said there were about 70 million to 80 million hectors of state-owned forests and even if half of that is designated for commercial management, it will be a “large pool” to select from.

These plantations, being bigger than the privately owned ones, would also be more economical to operate, he said.

Sino-Forest, which is present in nine provinces in China, said during the quarter log prices reported a steady recovery and it expects log prices to return to 2008 levels by the end of the year, given the increase in demand.

The company also said that China’s stimulus package to bolster its economy through various initiatives, such as construction of low-cost houses and rail projects, has helped the company due to increased demand for logs.

Q3 PROFIT TOPS MARKET

For the quarter ended Sept. 30, the company’s earnings from continuing operations were $106.5 million, or 48 cents a share, up from $95.2 million, or 50 cents a share, a year ago.

Revenue rose 25 percent to $367 million.

Analysts were expecting earnings of 41 cents a share, excluding items, or revenue of $386.2 million, according to Thomson Reuters I/B/E/S.

Shares of the company, which have gained about 97 percent in last one year, were up 28 Canadian cents at C$17.83 in late morning trade Thursday on the Toronto Stock Exchange. (Reporting by Ashutosh Joshi and Isheeta Sanghi in Bangalore; Editing by Anil D‘Silva, Unnikrishnan Nair)

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