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SCMP Reporter

Fujikon Industrial Holdings, a Hong Kong-listed headphones manufacturer whose customers include  Microsoft and Nokia, will start to mass produce high-end 5.8GHz wireless headphones next year, aiming to boost the profit margin of its core  headphones business.

Profit from audio products, which account for 28.8 per cent of  revenue, grew just 1 per cent in the year ended March to HK$44.8 million, while overall sales gained 11 per cent to HK$313.3 million.

Fujikon  said it will produce more high-end headphones to further boost its  gross profit margin  from the recent 23 per cent.

The 5.8GHz bandwidth offers clearer reception than existing 2.4GHz  headphones while also allowing increased reception area of about 20 metres from a transmitter compared with  10 metres for  Bluetooth technology.

'These 5.8GHz wireless headphones will be more and more popular in the future because consumers are demanding  higher quality audio products,' chairman Johnny Yeung said at the Hong Kong Electronics Fair.

Amphony, a leading maker of audio products in United States, started selling the world's first 5.8GHz wireless headphones in 2004 while the same technology had already been in use for some  years in  cordless telephones.

Amphony retails 5.8GHz wireless headphones for US$259 each, four times the price of 2.4GHz handsets.

'The wholesale price of 5.8GHz wireless telephones is US$5 to US$8 more than that of 2.4GHz ones, which are being sold for US$20-US$30 each to distributors,' said Fuijkon executive director Dylan Ng.

Fujikon,  based in Dongguan, Guangdong province, produced 6.4 million units monthly in the August and September peak season last year, pushing  turnover up 16.9 per cent to HK$1.08 billion for the year to March.

Net profit rose 29.4 per cent to HK$86 million.

Mr Yeung said the company has spent about 50 per cent of a budgeted  HK$55 million this year to expand production  to meet 10 per cent sales growth for the  Christmas season on orders from new customers in the US and Europe.

'Last month we shipped products worth HK$100 million to a new US customer, who will probably become our fifth-largest and account for 10 per cent of our total sales this year,' Mr Yeung said.

Fujikon's customers  include AKG, a high-end headphone company,  it said. So far, Fujikon  has not made  studio-level headphones because of the narrow market, it said.

The company's multimedia-related products, boosted by orders for headsets with online-chatting functions for  Microsoft's Xbox gaming console, grew 150 per cent  to HK$101.5 million for the year,  accounting for 9.3 per cent of  sales, compared with 5 per cent a year earlier. The segment's profit jumped 209 per cent.

'Revenue from Xbox will account for at least 15 per cent of our sales this year,'   Mr Ng said. 'We will keep on looking for target customers, such as Sony's PlayStation.'

Ivan Cheung, an analyst at Kim Eng Securities, said: 'Fujikon won't find it easy signing contracts with Sony due to competition from other headphone makers.'

Sales by Fujikon's communication unit, whose customers  include mobile-phone maker Nokia, rose 57 per cent  to HK$282 million in the year, accounting for 23 per cent of  sales. Profit rose 55 per cent  to HK$23.2 million.

The company is outsourcing work for its electro-acoustic parts, which accounted for 10 per cent of  revenue, after sales and profit for the year declined.

'Our labour should concentrate on the headphones  line, rather than producing parts and accessories for customers,'   Mr Ng said.

Fujikon shares rose 1.1 per cent to close at HK$1.83 yesterday,



Fujikon wireless headphones to increase margins