The move follows the restructuring in June 2008 when the Shanghai-listed unit acquired a string of assets, including properties and logistics services, for 4.47 billion yuan ($654.36 million) from three other group affiliates in a share swap. These assets constituted a major share of Waigaoqiao Group's core businesses and accounted for 82 percent of the company's total income.

The latest asset transfer is seen to be in line with the local government's urge to reform the State-owned enterprises through assets injection and equity acquisition, the source, who asked not to be named, said.

Although the property sector has been a major income contributor, Waigaoqiao Group is shifting its overall strategy by focusing on its core business of managing the trade zone to providing more public facilities and other related businesses, the source said.

The restructuring anticipation has lifted the share price of Waigaoqiao Free Trade Zone by over 14 percent in the past three months to close at 16.12 yuan yesterday.

"The quality asset injection will give Waigaoqiao, which has been an under-performer, a boost, and indicates the government confidence in the future of the Shanghai property market," said Ma Ji, head of research at Shanghai Centaline, which operates the city's largest brokerage chain.

"Waigaoqiao's major business is not clear when compared with peers like Vanke and Lujiazui, but its valuation is surprisingly high because of concept speculations," said Chen Xiaobo, a property analyst with The First Capital Securities.

However, a top executive from one of Waigaoqiao's subsidiaries told China Daily earlier that the firm is not involved in the Disneyland investment, and the major growth concept for the company is still based on the development potential of the free trade zone.

Waigaoqiao posted net profit of 242 million yuan in 2008, up 26 percent from a year earlier, with 0.24 yuan earnings per share (EPS), which plummeted to 0.003 yuan in the first half of 2009 on a net profit of 3.49 million yuan.

"The company's profitability is below the industry level and we don't see the asset injection from the parent extending its valuation room going forward," Chen said.

Shanghai Securities projected Waigaoqiao's EPS to 0.19 yuan and 0.37 yuan with P/E ratio of 74 times and 38 times in 2009 and 2010 respectively.