Shares in Japan Display – the world’s biggest maker of screens for smartphones and tablets and a key Apple supplier – lost almost a quarter of its value on its debut, following a $US3.
2 billion ($A3.52 billion) initial public offering.
The firm slumped to Y706 a share at one point on Wednesday from its listing price of Y900. It ended the morning session at Y758, down 15.78 per cent, with one analyst describing the losses as a “disaster”.
The liquid crystal display maker last week priced the offering at the low end of expectations, suggesting that investors were wary about the sale, but insisting that demand was strong.
Japan Display holds a leading 16 per cent in the growing $US35 billion global market for smartphone and tablet screens, according to US-based research firm NPD Group.
And its IPO was one of the biggest in Tokyo since drinks giant Suntory’s food-and-beverage unit raised $US3.9 billion in 2013.
However, analysts have warned it faces tough competition from lower-cost countries, including China, South Korea and Taiwan. To address this, the firm – set up in 2012 through the merger of Hitachi, Toshiba and Sony’s money-losing LCD units – is looking to boost production of small and medium-sized screens.
But Seiichi Suzuki, market analyst at Tokai Tokyo Securities, told AFP: “This is a company that was made up of units offloaded by their parent firms. (It doesn’t) have a bright future.”
He said the firm should not have “forced its listing”, citing a tough market environment with the Nikkei index down around 10 per cent this year.
Japan Display had earlier said it would sell 140 million new shares between Y900 and Y1,100, while its major private shareholders would offload 213.9 million shares.
“A disaster, no doubt,” Lorne Steinberg, head of Montreal-based Lorne Steinberg Wealth Management, told Dow Jones Newswires.
“The deal must have been either badly mispriced or the investor base was misjudged. In North America, dealers routinely support IPOs so that this type of opening performance could only happen if the entire market was also going suddenly bad at the same time.”
Chris McGuire, chief executive of Chicago-based hedge fund Phalanx Capital Management, dumped all the shares his firm had bought at the open.
“The steep price fall is extremely disappointing and shows that the deal was overpriced at issue,” he said.
Apple accounts for nearly a third of Japan Display’s revenue, but the firm also deals with other top gadget makers such as Samsung and Microsoft.
The company was formed with the intention of helping Japanese firms better compete in high resolution display technology, which has become the standard for smartphones, tablets and other electronic devices.
The government-backed Innovation Network Corp of Japan (INCJ) held about a 70 per cent share of the firm with the three electronics giants each claiming a roughly 10 per cent stake.