(Yicai) Nov. 18 -- Shares of Joy City Property advanced after the Chinese commercial real estate firm announced it will delist from the Hong Kong Stock Exchange.

Joy City [HKG: 0207] was trading up 3.3 percent at 62 Hong Kong cents (8 US cents) as of 11.10 a.m. in Hong Kong today. The stock has soared 158 percent since the second half of this year.

After 12 years of public trading, Joy City will delist on Nov. 27, the Hong Kong-based firm announced yesterday, citing a court meeting held by shareholders on the same day.

Joy City is a subsidiary of Chinese state-owned food processing giant COFCO Group. It owned or managed 32 Joy City shopping malls, Joy Hub hotels, and other commercial projects in China as of the end of last year.

Real estate developer Grandjoy Holdings Group, another subsidiary of COFCO, is Joy City’s largest shareholder with a 64.2 percent stake. It announced at the end of July that Joy City would spend about HKD2.9 billion (USD373 million) in a share buyback scheme.

Once the privatization is completed, GrandJoy’s stake in Joy City Property will jump to 96.1 percent. The remaining 3.9 percent will be held by Demao, which now owns 2.6 percent.

“After the deal is closed, Grandjoy will raise its equity in Joy City, which will boost the net profit attributable to the parent company,” Grandjoy noted.

The low stock liquidity, restricted financing functions, and complicated corporate governance are the main reasons why Joy City decided to go private, China Real Estate Information Corporation said, adding that the privatization can also provide an opportunity for investors to withdraw.

Due to the in-depth adjustment in the Chinese real estate sector and the complex and volatile market environment, sales of real estate developers have been declining in recent years, so privatization is an inevitable phenomenon during the adjustment period, CRIC noted.

The trend of real estate companies delisting may continue in the next two to three years, as the industry undergoes a more thorough reshuffling and reorganization, CRIC added.

Editor: Futura Costaglione