UPDATE 2-China's Sinotruk eyes exports after MAN deal, shares up

* Sinotruk shares soar 28 pct after MAN stake buy

* Aims to produce trucks using MAN technology in 2-3 yrs

* Eyes exports to emerging markets including India, Russia

* Partnership unites China market with European technology (Add more comments, update stock price)

HONG KONG, July 16 - China's Sinotruk <3808.HK> and Europe's MAN SE will use their new 560 million euro ($788 million) tie-up to co-develop trucks for emerging markets in China and elsewhere, MAN's chief executive said on Thursday.

News of the tie-up, which will see MAN acquire 25 percent of China's largest heavy truckmaker for HK$8.76 a share, sent Sinotruk shares soaring as much as 27.8 percent when trading resumed after a three-week suspension. The stock ended the morning at HK$8.79, against its last trade of HK$7.51 before the suspension it requested pending the announcement of this deal.

Sinotruk aims to produce the new trucks using technology from MAN, Europe's third largest truckmaker, within the next two to three years, MAN CEO Hakan Samuelsson told a media briefing the day after the deal was announced. [ID:nLF410654]

"Within the Sinotruk group there will be a new brand for this premium segment in China and for export markets," Samuelsson said. He added that the trucks would be targeted for export to emerging markets including Brazil, Russia, Africa and India.

MAN will acquire its stake in the Chinese truckmaker by buying existing shares from the controlling shareholder, and by subscribing to a convertible bond issue worth about $769 million.

"This partnership is important to us. ... Our strategy includes growth, especially in the fast growing emerging markets and China is the largest and fastest growing market in the world for trucks," Samuelsson said, adding he was confident of getting regulatory approval for the deal.

WIN-WIN

Analysts said the tie-up could create significant value for Sinotruk by helping it tap the latest advanced heavy truck technologies from overseas at limited cost.

It also helps consolidate Sinotruk's leadership position in China while opening up more opportunities for export via MAN's network.

"We view this tie-up as a long-term positive for Sinotruk, which would make it one of the very few Chinese truck makers with access to the global truck platform and ability to differentiate itself from other local peers," said Kate Zhu, analyst at Morgan Stanley, in a research note.

The deal will give Sinotruk, which commands 20 percent of China's heavy truck market, access to the German company's truck, engine, chassis and axle technology, as well as its manufacturing and sales network.

Steve Man, an analyst at HSBC, said the deal was positive but would have no immediate benefit to Sinotruk and it "appears MAN paid a premium to gain access to a growth market".

Even as MAN looks to China to offset flagging sales in recession-hit Europe, Chinese commercial vehicle makers have been grappling with slow demand and intense competition at home.

In June, Sinotruk said it expected a substantial drop in its half-year profit on reduced demand for heavy duty trucks amid the financial crisis and increased market competition. [ID:nHKG72576]

"In the second half year the situation will change and throughout the whole year we may see slight increase in sales and profitability," Sinotruk chairman Ma Chunji said on Thursday. "We are confident for the second half year."

Prior to the announcement, Sinotruk shares had risen 44 percent this year, compared with a 27 percent rise for the broader market <.HSI>. ($1=.7104 Euro)