Investors should avoid companies that own land near a proposed Walt Disney Co. theme park in Shanghai as stock valuations more than reflect potential one-off gains from property revaluation, Industrial Securities Co. said.

Walt Disney said yesterday it won government approval to build a theme park in Shanghai’s Pudong district. The mainland’s first Disneyland will be in the district’s Chuansha area, Hong Kong’s Wen Wei Po newspaper reported yesterday, and Shanghai Securities News said Nov. 3 the park will force 59 companies in Chuansha to be relocated.

“The potential benefits from any one-off gains for these so-called Disney concept stocks are baked into the price,” Zhang Yidong, a Shanghai-based analyst at Industrial Securities Co., said in a phone interview today. “There’s also some uncertainty over whether such gains will actually materialize.”

The rally in shares of Zhonglu Co. and other landowners investors bought ahead of the Disney announcement have driven their valuations to at least 5.8 times book value, almost twice the 3.4 times for the benchmark Shanghai Composite Index. Disney and the Shanghai government haven’t announced the actual location for the park.

The headquarters of Zhonglu, a bicycle manufacturer in the Pudong district, is adjacent to the land investors speculate is the site for the Disney park, according to Zhang. The stock has risen 135 percent this year, twice the gain in the Shanghai Composite. Zhonglu now trades at 18 times book value.

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