UPDATE 1-China's Dongfang Electric tumbles after quake damage

(Adds analyst's comment)

HONG KONG, May 16 (Reuters) - Shares in Dongfang Electric Corp Ltd (1072.HK), China's top power generator maker, dived as much as 20 percent on Friday to their lowest level in more than a year after it said the earthquake in Sichuan had seriously damaged production at its steam turbine business.

Dongfang (600875.SS) said in a statement late on Thursday that the steam turbine business accounted for 20 percent of its operating revenue in 2007 and there were casualties at the steam turbine operation in Hanwang town in Mianzhu.

The quake had little impact on its other operations, while production and operations at its headquarters had been fully restored, it said.

Analysts say it may take more than a year for the steam turbine business to fully recover and the potential earnings impact could be up to a fifth.

"Given the steam turbines have higher profit margins than other segments, we belive profit contribution from steam turbine will be higher than 20 percent on a full-year basis, about 30-40 percent, according to our estimates," JP Morgan analyst Boris Kan said in a report.

"If steam turbine can not resume operations over the remaining course of 2008, the potential earnings impact on listed Dongfang Electric could be 15-20 percent."

Shares of Dongfang had dropped 16.5 percent to HK$25.05 by 0300 GMT, lagging a 1.2 percent gain in the index of Chinese companies listed in Hong Kong .HSCE.

Already some 20,000 people are confirmed dead and 25,000 remain buried as a result of Monday's quake in southwest Sichuan province, China's deadliest earthquake in decades.

HSBC analyst Steve Man said Dongfang may temporarily source turbines from foreign suppliers and he believed the most likely candidates included Japan's Mitsubishi Heavy (7011.T), Fuji Electric (6504.T) and Korea's Doosan Heavy (034020.KS).

French engineering firm Alstom (ALSO.PA) may also benefit as it was a technology partner of Dongfang, Man said.

(Reporting by Judy Hua; Editing by Anne Marie Roantree)