Two companies' shares fell in their debuts on the New York Stock Exchange on Friday, capping a week of poor performance for initial public offerings as investors grow choosier at year-end.
Chinese radiotherapy and medical imaging company Concord Medical Services Holdings Ltd
Of the eight IPOs scheduled this week, one was withdrawn after the company was acquired, three were pulled due to bad market conditions and most of the rest traded lower on their first day.
Even the best performing IPO for the week -- Pebblebrook Hotel Trust
Analysts attributed the lackluster performance to a host of factors, noting that investors are less willing to take risks at the end of the year and that few of the IPOs looked particularly strong.
There are no compelling, must-do IPOs this week, said IPOfinancial.com President David Menlow. I think they just don't see anything there that makes a table-pounding argument to buy the stocks.
Investors' reluctance to take risk is more a matter of the time of the year than a broader fear of initial public offerings, Menlow said.
Concord Medical's shares fell as much as 12.6 percent from their initial offering price in morning trading on Friday.
The China-based company, which raised about $132 million in its IPO, sold its shares for $11. It had originally planned to sell shares for between $9.50 and $11.50 apiece.
On Thursday, another China-based medical company struggled in its Nasdaq debut. China Nuokang Bio Pharmaceutical Inc
Concord Medical operates a network of radiotherapy and diagnostic imaging centers in China. As of September 30, the company operated 83 centers in 36 cities there. The company, which sold 12 million American Depositary Shares, said it would use the proceeds to expand and develop research centers, and for general corporate purposes.
Underwriters were led by Morgan Stanley, JPMorgan and China International Capital Corp Hong Kong Securities Ltd.
Concord Medical posted net revenues of 205.7 million yuan ($30.1 million) for the nine months ended September 30, up 101.6 percent from a year before. It posted net income of 89 million yuan, up 122.3 percent from a year earlier.
A STRUGGLING INDUSTRY
Shares in vehicle auctioneer KAR Auction Services Inc
The shares were down as much as 7.4 percent in early trade. The Indiana-based company on Thursday sold 25 million shares for $12 each and raised about $300 million. It had originally planned to sell 23 million shares and had expected them to price for between $15 and $17 each.
KAR auctions used and salvaged vehicles. In 2008 the company sold more than 3 million cars and trucks.
CSM Worldwide analyst George Augustaitis said that fleet auctions of company and government vehicles will continue, but auctions of consumer-purchased vehicles, which are typically auctioned after 4- or 5-year leases, could dip in a few years if consumers continued to acquire fewer vehicles.
The auto industry worldwide has been hit hard as consumers scale back spending, and companies have accepted government funds to stabilize sales and prevent collapse.
The business can dry up really quickly, said Augustaitis.
KAR Auction Services posted revenues of $1.3 billion for the first nine months of 2009, down 4.6 percent from a year before. The company posted net income of $17.9 million, versus a $166.9 million loss a year earlier. It said in a regulatory filing that it plans to use proceeds from the IPO to repay debt and loans.
Underwriters were led by Goldman Sachs & Co, Credit Suisse, Bank of America, and JPMorgan. The underwriters have the option to purchase an additional 1.8 million shares.
In afternoon trading, Concord shares were down $1.35 or 12.3 percent to $9.65 and KAR shares were up 1 cent to $12.01.
(Reporting by Clare Baldwin, editing by Gerald E. McCormick)