Chinese farm equipment-maker Cayman Golden Century Wheel, the fourth Chinese company to be listed on the secondary Korean bourse, closed weaker than expected on its first trading on Thursday.

The company’s stock closed at 3,815 won ($3.40), 4.74 percent lower than the market price set at 4,005 won, while Kosdaq inched up 0.15 percent to 661.26 points.

It was higher than the initial public offering price of 3,500 won, but lower than expected, experts said.

The price of 3,500 won is 6.1 times the price-earnings ratio, which indicates the ratio of a company’s share price to its per-share earnings. The company’s PER is about 60 percent lower than competitors, meaning the company is valued lower than its rivals. Investors had been hyped about the company’s IPO, as the company is expected to benefit from the still ongoing development in China’s agricultural industry and low valuation.

Analysts said the performance on the first day of trading indicates there still exist “China risks.”

Earlier this year, trading for shares of China Ocean Resources, listed on Kosdaq, was suspended after the company was found to have made a false public disclosure. In 2011, China Gaoxian Fibre Fabric Holdings was delisted amid a case of accounting fraud, which was the onset of a five-year hiatus of IPOs of Chinese companies, lasting until January this year. Scandals involving Chinese companies have resulted in distrust in Korea-listed Chinese companies, analysts said.

Before the IPO, Golden Century had unveiled plans to reduce such distrust, including a pledge to open an office in Korea and a longer period for the safe deposit of securities certificates.

The company said it is planning to use funds raised through the IPO, worth 26 billion won, for expansion of its facility and building a new plant.

Two more Chinese companies are expected to go public on Kosdaq in November, making the total number of Chinese companies listed on the smaller Korean bourse an unprecedented six.

By Park Ga-young (gypark@heraldcorp.com)