Shares in New World gained 4 percent to close at HK$12.95, its highest since February 3, 2000.

The stock has surged 65 percent in the past 12 months, compared with a 14 percent gain in the benchmark Hang Seng Index.

Credit Suisse analysts Karena Fung and Victor Kwok raised their earnings- per-share estimate for New World this year by 3 percent in a report Thursday.

They also raised their estimate for next year by 4 percent to "reflect the stronger rental income," mainly from the Sogo department store in the Tsim Sha Tsui shopping district.

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Lifestyle International Holdings, a Hong Kong retailer that operates Sogo, said last month it has taken a 15-year lease in the Amazon, an underground shopping mall in Tsim Sha Tsui owned by New World.

Retail rents in shopping malls increased more than 13 percent last year, according to property agency Jones Lang LaSalle.

Cazenove analyst Derek Kwong raised his price target for New World shares to HK$13.11 from HK$9.90, according to a report Thursday, citing the "potential to unlock values" in some of its assets.

"We believe New World Development has the potential to crystallize the underlying values in some of its businesses including investment properties and department stores," Hong Kong- based Kwong wrote.

New World may spin off its department store business, managing director Henry Cheng said Wednesday, without giving a timetable or other details.

It has a total of 21 stores in Hong Kong and the mainland, and the business generated sales of HK$2.3 billion in the fiscal first half.

Mainland retail sales rose 12.5 percent in the first two months of the year. The mainland in 2004 granted overseas retailers such as Wal-Mart Stores full access to its US$652 billion (HK$5.09 trillion) retail market to meet World Trade Organization obligations.

New World's first-half net income doubled to HK$2.09 billion thanks to revaluation gains.

The Hang Seng Index, meanwhile, rose 0.1 percent, to 15,729.04 while the Hang Seng China Enterprises Index, which tracks 40 mainland companies or H shares, fell 0.2 percent to 6,395.45. BLOOMBERG