(Yicai Global) June 21 -- Shares of 5i5j Holding Group rose after the first Chinese real estate agency to list in the mainland said it intends to shutter franchises in some second-tier cities, including Hefei and Yantai, to focus on direct sales in key cities as a result of the property market slump.

After jumping as much as 4.2 percent earlier today, the company’s stock price [SHE: 000560] closed 1.4 percent higher at CNY2.92 (44 US cents).

5i5j also plans to close franchises in Changsha, the Beijing-based company said in a statement posted on WeChat yesterday. It has about 170 stores in Hefei, more than 150 in Changsha, and nearly 30 in Yantai, according to a report by The Paper.

Formed in 2000, 5i5j handles pre-owned home sales and lettings. It went public via a backdoor listing on the Shenzhen Stock Exchange in 2017. The firm operated more than 4,610 stores in 33 cities as of the end of last year, per its annual earnings report.

The realtor's profitability has been declining over the past two years because of the coronavirus pandemic and stricter regulation of China’s real estate market. Net profit slumped almost 47 percent to CNY166 million (USD24.8 million) in 2021 and in the first quarter of this year, the firm had a net loss of CNY241 million, versus a CNY172 million net profit a year earlier.

The housing market has been recovering more slowly than expected, 5i5j said in its quarterly report. The pandemic hit key cities for the firm such as Shanghai, so online business has been limited, greatly impacting sales, it said.

5i5j will adjust and improve business in smaller cities and garner its resources in key cities, while protecting the firm’s network and helping employees in core areas hit by the pandemic, it also said in the report.

Editors: Dou Shicong, Emmi Laine, Xiao Yi