UPDATE 2-Sino-Forest Q3 profit tops estimates

* Q3 EPS $0.48 vs est EPS $0.41

* Q3 rev up 25 pct to $367 mln

* Expects log prices to recover 2008 levels by year end

* Sees opportunity in China's state-owned farms

* Says set up jatropha gene bank in Yunnan (Recasts; Adds conference call details, share movement)

BANGALORE, Nov 12 (Reuters) - Sino-Forest Corp (TRE.TO) reported quarterly profit that topped analysts' estimates on higher sales volumes of plantation fiber, and said it sees opportunity in China's plans to commercially manage its vast state-owned tree farms.

Sino-Forest, which owns and manages plantations in China, said it had established a jatropha gene bank in Yunnan province and plans to use the drought-resistant trees for producing biodiesel.

"The Chinese government is moving to a small commercialization of the management of state-owned tree farms and reforming collective-owned plantation rights... There will be more opportunity for biofuels in China's future," Chief Executive Allen Chan said on a conference call.

Chan said there were about 70 million to 80 million hectors of state-owned forests and even if half of that is designated for commercial management, it will be a "large pool" to select from.