Shares in Japan Display Inc — the world’s biggest maker of screens for smartphones and tablets and a key Apple Inc’s supplier — plunged on their Tokyo debut yesterday, following a US$3.2 billion initial public offering.
The stock, which at one stage lost more than a fifth of its value, ended at ￥763, a 15.2 percent drop from its ￥900 listing price, with one analyst describing the losses as a “disaster.”
The benchmark Nikkei stock index finished 0.36 percent higher.
The LCD maker last week priced its initial public offering (IPO) at the low end of expectations, suggesting that investors were wary about the sale, but insisted that demand was strong.
Japan Display holds a leading 16 percent in the growing US$35 billion global market for smartphone and tablet screens, according to US-based research firm NPD Group.
Its IPO was one of the biggest in Tokyo since drinks giant Suntory’s food-and-beverage unit raised US$3.9 billion last year.
However, analysts have warned it faces tough competition from lower-cost countries, including Taiwan, China and South Korea.
To address this, the firm — set up in 2012 through the merger of Hitachi Ltd, Toshiba Corp and Sony Corp’s loss-making LCD units — is looking to boost production of small and medium-sized screens.
“This is a company that was made up of units offloaded by their parent firms. [It does not] have a bright future,” Tokai Tokyo Securities market analyst Seiichi Suzuki said
He said the firm should not have “forced its listing,” citing a tough market environment with the Nikkei index down about 10 percent this year.
Japan Display had earlier said it would sell 140 million new shares at between ￥900 and ￥1,100, 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,” he said.
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.