Sino-Forest: Volatility until clarity

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Richard Kelertas, an analyst at Dundee Securities who recently removed his target price and "buy" recommendation on Sino-Forest Corp. , believes that investors need to see much more clarity from the company before the share price can leave this volatile period behind.

The share price has been decimated since short-selling firm Muddy Waters published a scathing report on the firm, alleging that Sino-Forest has published misleading information about its operations. The company's quarterly results, released on Tuesday morning, haven't helped matters. The shares slid 32.5 per cent on Tuesday to $3.36 in Toronto, touching a new low. They traded as high as $25 earlier this year.

However, Mr. Kelertas' concerns related mostly to the way the company has handled the controversy, rather than its earnings release.

"The Q&A session was a bit short and it is our opinion that some questions were likely not answered to the satisfaction of equity analysts and investors," he said in a note.

Still: "We believe that the company has addressed as many of the Muddy Waters accusations as they can until the full force of the Independent Committee's (IC) findings are finalized. However, markets generally don't like uncertainty and until more information comes out and the IC unveils its full findings in 2-3 months time..., we expect that the market will remain cautious. We expect further volatility and a narrow trading range until then."