Japanese IPOs: Digital-Book and Online Service Stocks Flourish, Biotechnology Firms Tumble

Strategic Insights -

The recent initial public offerings in Japan have shown a mixed performance, with digital-book and online service stocks leading the gainers, while biotechnology start-ups have struggled to recover their IPO prices. Among the 37 stocks that went public this year, 14 finished higher than their offering prices, while 23, or 62%, have fallen below the IPO price. This discrepancy reflects the diverse fortunes of various industries in the Japanese market, with digital-book and internet service firms experiencing significant growth, while biotechnology companies continue to face challenges.

Key Takeaways:

  • The digital-book and online service industries have emerged as leaders in the Japanese IPO market, with four of the top five gainers coming from these sectors.
  • KLab Inc. (TSE:3656) and eBook Initiative Japan Co. (TSE:3658) have seen their shares skyrocket by 180% and 170% respectively since their IPOs.
  • In contrast, biotechnology start-ups have struggled to recover, with RaQualia Pharma Inc. (TSE:4579) and SymBio Pharmaceuticals Ltd. (TSE:4582) standing 73.5% and 44.1% below their IPO prices.
  • Market observers attribute the poor performance of some biotechnology firms to factors such as the timing of their IPOs and the subsequent market sell-off following the March 11 disaster.
  • Individuals are increasingly cautious about investing in money-losing firms, as noted by Hideyuki Ishiguro at Okasan Securities Co.
  • The largest IPO of the year, Nexon Co. (TSE:3659), has yet to recover its offering price, which may have been set at a premium.

Statistics:

  • 62% of the 37 IPOs in Japan have fallen below their offering prices (23 down, 14 up, 0 unchanged).
  • 180% return on investment for KLab Inc. (TSE:3656) shares since their IPO.
  • 170% return on investment for eBook Initiative Japan Co. (TSE:3658) shares since their IPO.
  • 73.5% below IPO price for RaQualia Pharma Inc. (TSE:4579) shares.
  • 44.1% below IPO price for SymBio Pharmaceuticals Ltd. (TSE:4582) shares.
  • 77.7% decline in Ekitan & Co. (TSE:3646) shares since their IPO.

Sources:

  • "Shares of Japanese firms engaged in digital-book and online services have advanced following initial public offerings this year while biotechnology start-ups have tumbled." (Asia Pulse, Dec 27)
  • "Of the 37 stocks that went public this year, just 14 finished Monday higher than their offering prices, while 23 -- or 62 per cent -- have fallen below the IPO price." (Asia Pulse, Dec 27)
  • "Four of the top five gainers are in the e-book or internet service industries." (Asia Pulse, Dec 27)
  • "With weakening investment performances, individuals cannot afford to buy money-losing firms," notes Hideyuki Ishiguro at Okasan Securities Co. (Nikkei)
  • "The price may have been set at a premium, says an official at a domestic brokerage." (Nikkei)