12.21
Outperform, Above Average Risk, Price Target: $25.00 (prev. $22.00)
Yesterday Sino completed its offering of US$460MM convertible notes and 21.85MM shares. Both offerings were well oversubscribed and the 15% over-allotments were exercised. The notes pay 4.25% and mature in 2016 with a conversion price ofUS$21.16/share (~C$22.25 at US$/C$ US$0.95). The equity offering generated gross proceeds of C$367MM. In total, RBC CM estimates net proceeds of about US$775MM. As of the end of third quarter, Sino had about 475 k hectares under management, primarily in favourable growing regions. Including existing and the proposed Master Agreement in Guizhou, the company will have rights to an additional 975 million ha. Sino’s timber assets should be in hot demand for years to come, as China’s fiber demand far outstrips domestic supply. Sino-Forest continues to execute on its acquisition and operating plan. At the same time, the company is taking advantage of its position as China’s premier forest plantation operator. RBC CM is raising its target to C$25.00 (from C$22).
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