Property developer Shenzhen Investment's shares surged yesterday after the company said it plans to acquire a site in Shenzhen from its shareholder Shum Yip Group. Analysts said the deal was just the first step for the company in replenishing its land bank as the market recovers. The acquisition is expected to enhance the developer's leading position in the city's residential market. Trading in the stock, which was halted last Friday, resumed yesterday. The price rose by 22 per cent to HK$4.09 at one point before the shares closed at HK$3.91, up 16.37 per cent. The developer, which is backed by the Shenzhen government, plans to buy a site at the junction of Caitian Road and Sungang Road in Shenzhen's Futian district for 4.15 billion yuan (HK$5.17 billion), according to a filing with the Hong Kong Stock Exchange. Shenzhen Investment will issue 1.41 billion new shares to pay for the deal, which will increase Shum Yip's stake in the company from 44.4 per cent to 59.7 per cent. Christie Ju, an equities research analyst at Jefferies, said the site was a great asset at a bargain price. "We expect more value-accretive land bank injections to come. This should help boost Shenzhen Investment's land bank quality and growth prospects," Ju said, assigning the firm a "buy" rating in a research note. The company said it would develop residential units on the site with a total gross floor area of 170,720 square metres, and a 618,190 sq metre mixed-use complex including an office building and a hotel. Lu Hua, the acting chairman of Shenzhen Investment, said: "The acquisition represents an excellent opportunity for the group to increase its land bank in Shenzhen. [It] is vital for the group's long-term development, as the directors believe that the demand for high-quality properties in Shenzhen will continue to increase." After the deal is completed, Shenzhen Investment's land bank is expected to exceed 800,000 square metres, the company said in the filing.