China's Bona Films IPO sinks, SemiLEDs gains

Two Chinese IPOs in New York were afforded very different treatment by the markets, with Taiwan-based SemiLEDs (LEDS.NASDAQ) closing up 52% on its first day while Bona Film Group (BONA.NASDAQ) turned in the worst first-day performance of the year, Dow Jones reported. Bona Film opened with an IPO price of US$8.50 per share but closed at US$6.60, down 22%. Optimism about SemiLEDs was driven by investor expectations that a new joint venture on the mainland will allow the firm to benefit from policy incentives for energy-efficient lighting. Bona Film’s poor performance was attributed to concerns about management’s decision to grant generous terms to preferred stock options, the exercise of which contributed to the company posting three consecutive loss-making quarters this year. The redemption terms were revised in August, but investors are also concerned by the highly risky nature of Bona’s movie production business.