UPDATE 1-Nufarm cuts profit f'cast; Sinochem talks ongoing

* Fertiliser group's 3rd profit downgrade for year just ended

* Warns net debt to be higher than earlier flagged

* No agreement yet with China's Sinochem

MELBOURNE, Aug 27 - Australian takeover target Nufarm Ltd slashed its full-year profit forecast by about 25 percent on Thursday, and said it was still holding talks with Sinochem Corp on the Chinese state firm's bid approach.

It was Nufarm's third profit downgrade for the year to July 2009 and the farm chemicals group also warned it would have a higher net debt balance than previously flagged.

That could affect the price Sinochem offers for the company, though analysts said the balance sheet issue was more likely to impact the bid price than the earnings downgrade for the year just ended.

"This year's profit doesn't influence the long term rationale that Sinochem may or may not have. The profit issues are short-term, whereas a potential buyer takes a longer-term view," said Macquarie Research analyst John Purtell.

The main attraction for Sinochem is Nufarm's global distribution network, analysts have said.

Broker estimates on what might be an acceptable bid price range between A$13 and A$14.50 a share, or between A$2.8 billion and A$3.2 billion.

The stock closed on Thursday at A$12.07, which analysts said already reflects some bid premium. The shares ran up 6 percent after the Australian Financial Review's Street Talk column said it appeared that Sinochem may be about to make a A$3 billion bid.

The cut in Nufarm's forecast reflected a slump in the price of its key herbicide, glyphosate, in the U.S. market in June and July, and weaker sales volumes than it had expected.

It now expects a net operating profit of between A$135 million and A$145 million ($112-120 million), down from a projection of around A$187 million.

The comments came in response to a query by the Australian stock exchange over a 9 percent share price rise over the past two days.

Nufarm said detailed discussions were continuing with Sinochem, but no agreement had been reached, and there was still no assurance that an agreement would be reached. Talks have been going on for at least a month.

Two years ago, Nufarm was approached by another Chinese suitor, China National Chemical Corp (ChemChina), which led a A$3 billion approach with two U.S. private equity firms but they failed to come up with a formal offer. ($1=A$1.21)