Sino-Forest Corp. has postponed a much-anticipated analyst tour of its operations in China this month after some analysts halted coverage of the company.
In a letter to analysts and investors on Wednesday, Sino-Forest executives Allen Chan and Dave Horsley said they realized that many analysts are precluded from resuming coverage on the company, or speaking publicly about it, until its independent committee completes an investigation of the fraud allegations made by Muddy Waters LLC. As a result, the tour is postponed.
“Similarly, the board of directors and management believe it is appropriate to wait for the independent committee to report before commenting further,” the letter said.
Analysts such as Richard Kelertas of Dundee Capital Markets and Paul Quinn of RBC Capital Markets have suspended coverage of Sino-Forest entirely until the investigation is completed. Other analysts have pulled their ratings and target prices until there is more clarity from the company.
Sino-Forest has been reeling since June 2, when Muddy Waters, a short seller accused the company of fraud. The stock is down more than 70% since that day as investors wait to see the findings of the investigation by the independent committee and PricewaterhouseCoopers LLC. That investigation is likely to take at least two to three months.
The point of the analyst tour was to give the analysts a chance to see all of the company’s Chinese operations for themselves. Muddy Waters alleged that Sino-Forest is vastly overstating its timber holdings.
YOU CALL THAT GOOD NEWS.........