Sino-Forest Corporation, a commercial forest plantation operator in China, released today its yearly forest valuation report conducted by Pöyry (Beijing) Consulting Company Limited ("Pöyry"), an international forestry consulting firm. Pöyry has estimated the value of Sino-Forest’s forest assets on 491,000 hectares ("ha") of area, based on a single rotation
The 40% increase in appraisal value from US$1.64 billion in 2008 to US$2.3 billion in 2009 was largely attributable to the growth and value increment associated with the existing owned forests, and the increase in the area of owned forest through net acquisition. The average age (maturity) of the trees within the forest owned as at December 31, 2009 increased by about four years. While there have been increases in log prices, these have been countered by increases in harvest related costs, so the net impact of stumpage on value was negligible.
Assuming perpetual
management of the existing areas of forest with continuous replanting of plantation trees after harvesting, Pöyry’s estimate of the prospective valuation of Sino-Forest’s forest assets (also based on year end hectares under management, using the pretax discount rate of 11.5%) was estimated to be US$2.13 billion. This valuation takes into account revenues and costs of re-establishing and maintaining the forest plantations for a 60-year period.
