UPDATE 1-China High Speed Trans says 2009 order book full

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By Joanne Chiu

HONG KONG, Nov 4 (Reuters) - China High Speed Transmission Equipment Group Co Ltd (0658.HK), a maker of gears for wind power transmission, said its 2009 order book was full, but its shares took another hit on potential losses on an equity swap.

"We will see a good rise in both sales and profit this year," Chairman Hu Yueming said on a telephone conference on Tuesday.

China High Speed, which vies with Belgium-based Hansen Transmissions International (HSNT.L) and the business Siemens (SIEGn.DE) inherited when it bought Flender, aims to become one of the world's top three wind-gear equipment makers in a few years, company executives told Reuters in April.

But its stock plunged 16.8 percent to HK$4.95 on Tuesday and has fallen 46 percent in the past two weeks on worries over possible losses on derivatives.

China High Speed said it had a share swap arrangement with Morgan Stanley (MS.N) that could post up to 1.1 billion yuan ($161 million) in unrealised losses following the recent sharp fall in its stock price.

"If the company's shares fall to zero, its losses would be 1.1 billion yuan, and that's impossible," Hu said.

The actual loss would be narrower if its stock strengthened, and the company had bought back 13 percent of a convertible bond with profits that could help offset part of the swap loss, Hu said.

He did not disclose the amount of the profit.

In April, China High Speed issued 1.996 billion yuan zero coupon convertible bonds due 2011, whose global coordinator and bookrunner was Morgan Stanley.

China High Speed Transmission was in talks with Morgan Stanley over amending the terms of equity swap. The equity swap would not have any impact on the firm's cash flow or normal operations, Hu said.