Luxshare Precision Industry shares fell more than five percent in their Hong Kong trading debut Wednesday, after the Apple supplier completed Asia largest initial public offering this year. The company priced shares at HK$63.28 each, raising HK$24.27 billion, roughly $3.1 billion USD.

Despite the first-day weakness, the offering marks a major milestone for the manufacturer of Apple AirPods and other consumer electronics. Apple accounts for roughly 70 percent of Luxshare revenue, but the company has diversified into automotive electronics and communications equipment. Shares dropped as much as 9.6 percent intraday before settling near flat.

Apple Supplier Expands Reach

Luxshare evolved from assembling AirPods to becoming a broader supplier of parts for consumer and automotive electronics. The company reported revenue of approximately $48.9 billion for the most recent year, up 23.6 percent from the prior year. Net profit grew 24.6 percent to $18.17 billion, suggesting strong margins.

The Hong Kong listing provides the manufacturer with capital to expand capacity and diversify revenue streams beyond Apple dependence. Strong revenue growth and improving profitability position the company to weather any slowdown in smartphone demand.

Market Dynamics

Interestingly, Luxshare shares listed on Shenzhen rose 3.2 percent Thursday, widening the so-called A-H premium gap to roughly 19 percent. This suggests mainland Chinese investors saw value that Hong Kong buyers initially questioned.

Luxshare closed Thursday down 1.6 percent at HK$62.30.