(Yicai) June 24 -- Shares of Midea Real Estate Holding skyrocketed after the real estate firm controlled by the family of Chinese home appliance giant Midea Group’s founder He Xiangjian said it plans to spin off its property development business.

Midea Real Estate [HKG: 3990] closed 69.9 percent up at HKD6.37 (82 US cents) in Hong Kong today.

Midea Real Estate will establish a new company to take over its real estate development business to cut its liabilities and credit risks, the Foshan-based firm announced yesterday, adding that it will keep asset-light businesses with higher profit margins, such as property management, commercial real estate operations, and engineering construction services.

Midea Real Estate’s shareholders can choose to obtain a stake in the new company based on their shareholding ratio or receive HKD5.90 per share, which is about 57 percent higher than Midea Real Estate’s closing price on the day before the announcement, the firm noted. He’s daughter-in-law Lu Deyan, the controlling shareholder of Midea Real Estate, will own 81 percent of the new company.

As of the end of last year, Midea Real Estate had developed more than 310 residential housing projects, mainly in first- and second-tier cities, and owned land reserves of about 26.5 million square meters and 385 property management projects with a total construction area of around 90.3 million sqm.

Midea Real Estate’s net profit plunged 47 percent to CNY913.6 million (USD125.8 million) last year from the year before, while revenue remained unchanged in the period at CNY73.6 billion (USD10.1 billion) due to the downturn in the Chinese real estate market, according to the company’s latest annual earnings report.

Editor: Futura Costaglione