According to the attached press release, Stora Enso will begin valuing its Swedish forest assets using the market value method: https://www.storaenso.com/fi-fi/newsroom/regulatory-and-investor-releases/2020/10/stora-enso-muuttaa-metsaomaisuutensa-arvostusmenetelmaa. Valuation based on market transaction data makes it possible to abandon the theoretical determination of WACC (weighted average cost of capital) and to base valuation changes and price levels directly on the development of the forest property market. However, it is simultaneously stated that a corresponding valuation method cannot be reliably used in Finland because market data is not available in sufficient detail. We dare to challenge this claim.
The comprehensive market data of Suomen Sijoitusmetsät, and the Market Price Forecast model that effectively utilises it, are good examples of the fact that useful and reliable comparable transaction data is available from the forest property market to support the market value method. The data set of representative forest property transactions collected since 2014 already includes 6,920 transactions, and the data is currently growing at a rate of more than 20 forest property transactions per week. In addition to the volume and coverage of the comparable transaction data, it is essential for the market value method that the classifying characteristics of the property, such as the distribution of development classes and site types, can be determined from the data in addition to growing stock information. Collecting and recording market data is by no means an effortless task; we have two people monitoring forest holdings coming up for sale and completed property transactions on a weekly basis. Information on the forest property market is therefore not free, but when utilised effectively, it is extremely valuable.
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