(Yicai Global) May 30 -- Shares of Haiqi Transportation Group jumped after the Chinese passenger transport firm said it intends to acquire a duty-free mall operator, run by its shareholder in southern China's Hainan province, to shift its focus onto tourism.

Haiqi's stock price [SHA:603069] surged by the daily limit of 10 percent to CNY13.22 (USD2), with a market capitalization of CNY4.2 billion (USD631.4 million). Before today, stock trading had been halted since May 16 due to the major asset restructuring plan.

The road transport company will buy a 100 percent stake in Hainan Tourism Duty Free from Hainan Tourism Investment Development, the Haikou-headquartered buyer said in a statement on May 27. It will pay partly in cash and garner funds via private placement.

Haiqi aims to upgrade to provide tourism-related services via the acquisition to improve its profitability, the firm that has been coping with losses amid the Covid-19 pandemic explained. The deal is a related party transaction as Hainan Tourism Investment indirectly holds 38 percent of Haiqi's shares, according to public information.

The seller, Hainan Tourism Investment, gained a license to operate a duty-free business in 2020. Late that year, its unit HTDF opened its 95,000-square meter Hainan Tourism Duty Free Shopping Complex in Sanya. The mall features more than 700 renowned brands, including watches, bags, and cosmetics.

China has big plans for the southern holiday destination. The whole island of Hainan is on its way to becoming a free trade port by 2035, based on the government's legislation passed in June 2021.

HTDF has had a great beginning of the year. In the first quarter, the mall operator turned profitable, reporting CNY59.7 million (USD9 million) in net profit, according to the statement. Its revenue exceeded the total of last year which was CNY2.5 billion.

But Haiqi can hardly say the same. It logged losses in the first quarter and during the past two years. Haiqi's net loss declined by almost 47 percent to CNY16.3 million in the first three months of this year from a year ago. Meanwhile, its revenue climbed nearly 16 percent to CNY192 million (USD28.9 million).

Editor: Emmi Laine, Xiao Yi