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Eric Ng

Bags and fashion accessories designer and distributor FX Creations International is aiming to raise net proceeds of about HK$13 million via a Growth Enterprise Market listing this month, market sources say.

The bulk of the proceeds had been ear-marked to finance the company's plan to expand into manufacturing, they said.

Chief executive Petto Ng Pak-to would not comment on details, but said the company planned to either construct its own factory or acquire one in Guangdong province in the next few years.

The move would help bolster the company's profit margin, give it greater control over product quality and confidentiality of its proprietary designs, he said.

FX has about five major bag suppliers to which it provides designs to be made into products under the FX Creations brand.

Its bags are sold at an average of HK$350 to HK$400 each, with a mark-up from the manufacturers' selling price of between three and 10 times.

Mr Ng said: 'We typically come out with 10 to 15 new lines of products in each of the two fashion seasons of the year, and spend 2 to 3 per cent of our annual turnover on promotions.'

Opening its first flagship store in 1999, FX operates three shops and four department store counters in Hong Kong, and 10 store counters in Taiwan.

On the mainland, it has an exclusive distributor in Shanghai running some 80 sales points, mostly in department stores.

Mr Ng said the company had selected an agent in South Korea this year and was studying expansion to the United States.

FX booked a net profit of HK$217,000 in the eight months to November 31 last year, on turnover of HK$29.97 million, the sources said.

Net profit grew to HK$1.86 million in the year to March 31 last year from HK$685,000 in the preceding year, as turnover edged down from HK$39.86 million to HK$38.5 million.

Mr Ng admitted that counterfeit products were a major problem on the mainland.

'But I'm not too worried about this. They may be able to copy our designs, but they haven't been able to copy our image, shop decoration, after sales services and brand status.'

To ensure orderly market development, FX has only one distributor in the mainland.

'We have to protect our brand image and to prevent improper parallel distribution and inventory dumping across different regions,' he said, adding the company prohibited its mainland agent from wholesaling.



FX Creations seeking $13m on GEM for expansion into manufacturing