skeptical voices on Sino-Forest, even before Mr. Bhttps://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20110611/RBSINOANALYSTPERKINSATL
There have been some skeptical voices on Sino-Forest, even before Mr.Block. Months before he shocked the market, an analyst across thePacific raised some of the same questions.
In early March, Anissa Lee, a credit analyst with venerable Japaneseinvestment bank Nomura Securities, put out a report that putSino-Forest's valuation in the spotlight. Ms. Lee wondered whySino-Forest was able to sell its timber for so much money and she wasconcerned that the company's top five customers, which accounted for 60to 70 per cent of its revenues for the past three years, have never beendisclosed.
She pointed out that co-founders Allen Chan and Kai Kit Poon, have afairly low stake in the company at 2.68 per cent and 0.07 per centrespectively, "which is not very common among Asian high-growthcompanies." She also raised questions about the company's cash flows.
"I actually used to like this company a lot," Ms. Lee said in aninterview from Hong Kong. When she started covering Sino-Forest's bonds,"it was one of the very first companies in the high-yield space whichone can play the China growth story."
For that reason, she decided not to attack the company and insteadasked to sit down with management. They agreed. But she still found shecould not get comfortable with their story.
"It's very difficult to verify information," Ms. Lee said. Sheultimately put out a negative report, but it didn't have nearly the sameeffect as Mr. Block's, which she attributed to his use of morebombastic language. Dundee's Mr. Kelertas alleged that Mr. Blockpre-marketed the report to some hedge funds, so they were primed for anynegative market reaction.