link for Poyry valuationThe comments about the "billion dollar gap" and suggestions that the whole standing forest business is a fraud in a recent post prompted me to crack open one of the asset valuations done by Poyry consulting. Under google.ca, if you google "poyry sino forest", the 4th link down is actually a full Poyry valuation report of TRE's standing timber assets for 2009. Link is:
https://www.google.ca/url?sa=t&source=web&cd=4&sqi=2&ved=0CCwQFjAD&url=http%3A%2F%2Fwww.sinoforest.com%2Fpdf%2Ffilings%2FPoyry-Sino-Forest_Valuation_Report_2009.pdf&rct=j&q=poyry%20sino%20forest&ei=oSAgTqLhMca_gQebvMDjBQ&usg=AFQjCNG4AuyrPxwo20swkdF3zwADJuU-sA&cad=rja
Poyry is an international consulting firm that does, among other things, asset valuations of resource and forestry companies around the world. Contrary to Carson Block's report, they have done independent valuations of TRE's standing timber assets going back to 2000 (end of year 2000, 2001, 2003, 2008, 2009 and 2010 valuations were done). CB claims that they only started doing the reports in 2003 after the BVI companies were created to "take the fraud to a more sophisticated level".
In any case, the 2009 report is a detailed report of about 180 pages that does a detailed valuation. One of the elements of preparing the report included site visits and meetings with forestry bureaus. CB does attempt to discredit the Poyry reports saying that they are based on information fed to Poyry by the company. However, it is important to note that in their methodology, it's Poyry who chooses each year which assets they want to inspect as spot checks to ensure that the info they are being supplied reflects reality. It also sounds like they focus on new areas from year to year and over 6 years have managed to get a pretty comprehensive sampling of TRE's holdings.
It does point out that because TRE trades in standing timber assets, that their holdings do change more frequently than traditional forestry companies. This makes it difficult to nail down a static valuation. However, even with this disclaimer, there does seem to be a good, scientific process to the valuation.
Again, this is not the be all and end all of things. The report and Poyry have a certain scope and the site visits don't include all the plantations (physically impossible). It's worth a read for sure though.
Mar