China's Sinochem has confirmed it is in "early stage discussions" over a potential takeover of Nufarm, but doubts over the bid's success undermined shares in the Australian farm chemicals group nonetheless.

Sinochem, China's biggest chemicals trader, said the talks were "incomplete" and that there was "absolutely no certainty that matters will progress".

The statement added: "This is one of a range of potential growth opportunities that Sinochem is currently exploring."

Nufarm shares, which rocketed 13% on Friday when the Australian group revealed the approach, slipped 4.1% to Aus$10.66 on Monday, valuing the company at Aus$2.32bn.

'Half-baked bid'

Many investors have raised doubts about the bid, with China already having failed in an approach to Nufarm, Australia's biggest supplier of crop sprays.

China National Chemical Corp, backed by US private equity firms Blackstone and Fox Paine Management, sought to buy Nufarm two years ago, but withdrew from talks in December 2007 without publicly giving a reason.

Credit Suisse, in a note on Monday entitled "Half-baked bid, full-blown downgrade", said: "No financial details, no timing, no offer.

"While strategically the merits of a takeover add up - global distribution footprint, emerging geographic presence in key global agriculture markets -, we would consider the timing curious given the constant earnings downgrades and poor quality cash earnings."

Nufarm also on Friday trailed its second profits warning within six weeks, saying that its net operating profit for the year  ending this month may be a further 10-15% below that signalled in a June 16 alert, but that the company was "not yet in a position to determine whether this will be the case".

Nufarm has been hurt in particular by the fall in prices for glyphosphate weedkillers, a drop which has also hurt industry giants such as Monsanto.

Rival suitors?

However, some analysts shown have a more positive take, with Merrill Lynch noting that Doug Rathbone, the Nufarm chief executive who owns 11.1%, had recently sold shares at Aus$11.25.

JPMorgan Chase said that Sinochem's approach might start a bidding war, with Arysta Life Sciences, of Japan, Israel's Makhteshim Agan Industries and India-based United Phosphorus among potential rival suitors.