George Fisher submits:
Sino-Forest (TRE.TO – C$19.30, SNOFF.PK – $18.77) is China’s largest timber company and is uniquely positioned to benefit from continued improvement in China’s economic standard of living. SNOFF grows, harvests, and processes timber domestically and is a major importer of logs. SNOFF offers investors exposure to a Chinese resource that is in short supply and to an industry that is favored by the government. Sino-Forest shares trade on the Toronto exchange using TRE.TO and on the US Pink Sheets using SNOFF.PK.
First it is cement, then it is steel, and then it is wood. This is the progression of raw materials demand as a country moves through economic development – cement for roads and infrastructure, steel for commercial buildings and factory production, and wood for housing and consumer products. It is estimated China has reached the point in economic development when domestic wood demand will grow by a consistent 10% annually. For example, the government has set a short-term target of 4 million new affordable housing units over the next three years to accommodate the anticipated long-term migration of 300 million people from rural to urban areas. Beijing looks favorably on the timber industry to supply the materials for this effort and in Oct 2009 formed the Forest Industry Revitalization Plan 2010-2012. The Plan calls for reduced government taxes on timber land and offer financial incentives for best practices forest management. In addition, the government is looking to privatize its state-run tree farms.
Complete Story »
This entry was posted
on Monday, March 29th, 2010 at 2:38 pm and is filed under China Stock.
You can follow any responses to this entry through the RSS 2.0 feed.
You can skip to the end and leave a response. Pinging is currently not allowed.