Possible stake sale revs up Sinotruk

SINOTRUK (Hong Kong) Ltd, China's largest heavy-truck maker, jumped the most in four days after saying it may sell a stake to a strategic partner.

The company gained 8.2 percent to HK$4.22 (54 US cents) yesterday in trading, while Hong Kong's Hang Seng Index rose 2.9 percent. Sinotruk has plunged 65 percent so far this year, compared with the benchmark's 54 percent decline.

The unidentified potential investor may buy new and existing shares in Sinotruk and also allow the company to use its technology, the Hong Kong-based truck maker said in a stock exchange statement on Thursday. Sinotruk is seeking investment and planning to boost sales overseas as domestic truck demand wanes alongside China's cooling economy, Bloomberg News said.

"The company may benefit from an overseas partner if they do the deal in the right way," said Mandy Qu, an analyst at UBS AG in Shanghai. "It's not easy and other ventures haven't always worked."

Paccar Inc, Navistar International Corp, or Scania AB could be among the possible investors, as these truck makers don't have local joint ventures in China yet, she added. Qu rates Sinotruk "buy."

Calls to Sinotruk were referred to a public relations company. Winston Yau, who represents Sinotruk at Christensen in Hong Kong, declined to identify the prospective investor.

China's vehicles sales, which include passenger cars, buses and trucks, rose 3.4 percent last month, according to the China Association of Automobile Manufacturers. That compares with a 22 percent increase for the whole of last year.

The country's economic growth slipped to 9 percent in the third quarter, the slowest pace in five years.

Sinotruk plans to sell 33 percent of its vehicles overseas by 2010 as slowing demand and competition from domestic rivals, including Dongfeng Automobile Co, make China sales less profitable.

The truck maker sells vehicles as kits to independent assemblers in Indonesia, Vietnam and Morocco.