There has been considerable debate regards the expected/forecast heartwood yield for QIN's Indian Sandalwood trees. Allow me to ramble:
1. As has been pointed out (I believe by hottuna?) there does appear to be a discrepancy between how QIN values its own trees in its financials and how they are valued in Project accounts. QIN's FY16 report indicates a forecast yield of 19.6kg/tree with a range of 6.7kg to 25.6kg, whereas Project statements reveal materially lower yields for example the 2013/14/16 projects anticipate a 15.7kg weighted average. This is quite significant....are mgt trying to inappropriately boost QIN's assets?
2. However, one must take note of the harvesting timeframes. QIN expects a average age of trees of 15.6 years, whereas recent (2013,14,15) accounts indicates trees will be harvested within 14 years....in other words mgt can leave QIN's owned trees in the ground for a bit longer whereas a Project must give investors have a maturity date (don't forget QIN's ownership is both direct and also shared harvest proceeds with MIS investors, so it must harvest some trees when Projects mature).
3. But how material is this? If one models a tree trunk as a cone, then the volume (i.e. mass equivalent) = pi x (radius^2) x height/3. Assuming a tree grows linearly then after 15 years the radius will increase by 6.7% and the height by 6.7%, which in turn implies a year of growth should increase the tree volume/mass by 27%.
4. So if we assume QIN leaves its trees in the ground a year longer than for Projects....15.7kg increased by 27% equals......19.9kg vs 19.6k in QIN's accounts.
5. Mystery solved, the methodology appears to be consistent.
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