* Shares slide as concerns about review weigh
* Shares down 11 pct in afternoon trading on TSX (Adds analysts’ comments on results, delay in review)
By Euan Rocha
TORONTO, Aug 16 (Reuters) - Shares of embattled Chinese forestry company Sino-Forest TRE.TO slipped further on Tuesday, on concern about the delay of an internal review into allegations of fraud.
Shares of Sino-Forest, one of the most actively traded stocks on the Toronto Stock Exchange, were down 11 percent at C$5.42 at 1425 ET, following an 8.4 percent fall on Monday.
Toronto-listed Sino-Forest has shed roughly C$3.5 billion in market value since June, when short-seller Carson Block accused it of fraudulently exaggerating its forestry assets.
The shares, which plunged as low as C$1.29 in mid-June, recovered some ground since then as large fund managers such as Singapore-based Mandolin Fund and Boston-based Wellington Management Co bought in. [ID:nN1E7740BO]
The company denies any wrongdoing and has asked a committee of independent board members to investigate the matter. That report was originally due next month, but the company said on Monday it now only expects to finish the review by year-end.
“This is a situation in which, it was bad enough that they said it’s going to take us three months to figure out if we own what we say we own. And now it’s going to take another three extra months?” said David Baskin, portfolio manager at Baskin Financial Services in Toronto. “Hardly, comforting is it?”
“I just don’t understand how you can trade this stock. You are just going on no information whatsoever,” he said. “It’s like going to Las Vegas and putting your money on red, or black.”
Sino-Forest reported a larger net profit on Monday, but that reflected a non-cash gain of about $469.5 million as the company changed accounting rules.
Excluding the gain, the company reported a loss of $9.8 million, which fell short of analysts’ admittedly fuzzy expectations.
“The announcement these results will not be released until closer to year-end as well as the second-quarter conference call being canceled is disappointing, in our view, and more relevant than the second-quarter miss,” said Raymond James analyst Daryl Swetlishoff in a note to clients.
Swetlishoff, who has put his rating on Sino-Forest ‘under review,’ continues to believe that a clean outcome from this investigation is needed to restore investor confidence.
Other analysts said Sino-Forest has to improve its disclosure, especially given the delay in the internal review.
“We do not believe a single piece of disclosure will help restore the market’s confidence in the company. Yet, a rather robust disclosure, should aid the gradual process to share price recovery,” said Credit Suisse analyst Andrew Kuske in a note to clients.
Kuske said the company should consider a share buyback to restore investor confidence.
Sino-Forest is one of several North American-listed companies that are active in China that have been the target of short-seller attacks and regulator reviews. The Ontario Securities Commission is conducting a targeted review of companies that have significant business operations in emerging markets. [ID:nN1E7641Q1] [ID:nN1E7641WQ] ($1= $0.98 Canadian) (Reporting by Euan Rocha; editing by Janet Guttsman)