L&P Global Bhd CEO Ooi Lay Pheng (right): We cannot depend on organic growth, so we are looking at M&A for cross-sector growth. (Photo by Sam Fong/The Edge)

KUALA LUMPUR (June 19): L&P Global Bhd (KL:L&PBHD) said on Wednesday it is eyeing acquisitions to support organic growth as the industrial packaging firm seeks to nearly double its revenue within the next three to five years.

To achieve its growth target, the company is also looking at potential acquisitions, chief executive officer Ooi Lay Pheng told The Edge. L&P is currently in talks to acquire a domestic company, she noted.

“We are looking into eco-friendly packaging materials that can be applied not just for the packaging industry but also for other sectors such as construction and furniture,” she said. “We cannot depend on organic growth, so we are looking at M&A for cross-sector growth.”

L&P, which mainly serves the renewable energy, semiconductor, and electrical and electronics (E&E) industries, was recently transferred to the Main Market in less than two years after its debut on the ACE Market.

In the latest quarter ended March 31, 2024 (1QFY2024), net profit rose 6.3% to RM4.32 million from RM4.07 million in 1QFY2023, thanks to improved margins as a result of lower timber prices, coupled with stronger greenback and higher sales of boxes and crates.

Revenue, however, declined by 4% year-on-year to RM36.42 million from RM37.93 million amid lower demand for palettes from customers in the renewable energy industry amid overcapacity in China's solar industry.

The company is targeting to hit RM250 million in revenue within three to five years on the back of an anticipated technology upcycle, Ooi said at an earnings briefing on Wednesday.

“L&P is well-positioned with adequate raw materials and skilled labour to capitalise on the projected recovery of the semiconductor industry by the end of this year,” she said.

In 1QFY2024, the company derived 75% of its revenue from the solar energy sector while 16% of the revenue was contributed by the E&E sector.

Utilisation rate of its assembly line catering to the renewable energy industry hit 97% for the quarter. Meanwhile, the utilisation rate of its general assembly line — which caters to the semiconductor and E&E industries — was only 23% during the same period.

Ooi flagged that geopolitical risks, particularly those surrounding the trade war between the US and China, remain the biggest challenge for the company.

“A good thing is that the China Plus One strategy has brought in a new pool of customers for us,” she said. “Packaging is bread and butter,” she continued, “so eventually, they will have to look for us.”

Some customers, however, were affected by the tariffs, resulting in a reduction in orders to L&P, “while some had to move out to find another suitable place,” she added.