INITIAL public offerings (IPOs) are supposed to perform fairly well, especially in the first few days or the first month.

When they do not do so, it begs the question if valuations were right when the company was listed, and if investors needed more convincing of the company’s ability to grow revenue and earnings in future.

For instance, the share price of Facebook hardly moved when it was listed in 2012 at US$38 per share. Now, it is about 4.5 times more when investors were convinced of its growth story.

Leong Hup International Bhd came into the market with much fanfare, as it was touted as one of the few large listings on Bursa Malaysia with a regional flavour. However, its share price faltered, which tells us a few things beyond merely blaming the weak stock market sentiment.

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