CHINA GRAND FOREST.HD-,10

910 CH GRAND FOREST 1 0.15 17.65 238,272 254,452

HK-listed China Grand Forestry Resources H1 to Sept net profit 1.27 bln hkd China Grand Forestry Resources Group Ltd first half to September results: Sales - 692 mln hkd Net profit - 1.27 bln hkd EPS - 24.76 hk cents Interim div - nil The company's first-half net profit was boosted by a fair value gain of 1. 04 bln hkd from its biological assets. The company did not provide comparative figures as it has changed its financial year end to March from June. The stock closed the morning session at 2.22 hkd, down 0.07 hkd or 3.06 pct.

BROKER CALL - China Grand Forestry target price raised to 5.70 hkd - HSBC HSBC has raised its target price on China Grand Forestry Resources Group Ltd (CGF) to 5.70 hkd from 5.0 while maintaining its ""overweight"" recommendation on the stock due the mainland firm's prospects of diversifying its earnings sources after its proposed acquisition of Shenyu New Energy Ltd. ""In our view, this (acquisition) is the first of many steps in diversifying CGF's earning mix from a mere tree logging company into a more balanced one ensuring growth momentum is more sustainable,"" HSBC said. ""This deal is also substantial in terms of earnings enhancement, forest reserves and is EPS (earnings per share) accretive,"" it added. HSBC noted that CGF currently derives about 83 pct of its total sales from tree logging and timber sales. ""While we firmly believe in this operation's strong growth nature and overall growth momentum, we expect the Shenyu deal would transform CGF's earnings mix into a more balanced one,"" it said. CGF said it will pay 4.0 bln hkd, instead of the originally agreed upon 6. 4 bln, to acquire 100 pct of Shenyu New Energy Ltd, after discovering that a portion of Shenyu's forest and timber assets are located in Myanmar. Less than a week after announcing the acquisition at the higher price, it said the fair value of the net assets of Shenyu New Energy was reduced after its own due diligence and that of an independent qualified valuer revealed the extent of Shenyu's dependency on Myanmar. HSBC estimates that the Shenyu group has a guaranteed net profit of some 800 mln hkd in 2008 and its earnings may grow by the same amount between 2009 and 2011. CGF closed up 0.04 hkd or 1.99 pct today at 2.05.

China Grand Forestry gets 2.4 bln hkd discount on risky Myanmar assets China Grand Forestry Resources Group Ltd said it will pay 4.0 bln hkd, instead of the originally agreed upon 6.4 bln, to acquire 100 pct of Shenyu New Energy Ltd, after discovering that most of Shenyu's forest and timber assets are located in Myanmar. Less than a week after announcing the acquisition at the higher price, it said the fair value of the net assets of Shenyu New Energy was reduced after its own due diligence and that of an independent qualified valuer revealed the extent of Shenyu's dependency on Myanmar. China Grand said there could be operational and execution risks attached to Shenyu's assets in the Southeast Asian country. Myanmar's military dictatorship is increasingly under siege from popular unrest and international condemnation, including threats of economic sanctions. Shenyu New Energy also owns Beijing Shenhao New Energy Technology Co Ltd, which in turn owns 100 pct of Yunnan Shenyu New Energy Co Ltd, a company working on renewable energy resources, especially bio-diesel fuel, derived from trees known as Jatropha curcas L. China Grand Forestry said Yunnan Shenyu is constructing a complete industrial chain, which includes planting Jatropha curcas Ls and establishing a processing factory with planned annual bio-diesel production capacity of 100,000 tons.