LKL International eyes double-digit earnings growth for FY21

The group will expand its product portfolio to strengthen long-term prospects and enhance its value proposition, says MD

by HARIZAH KAMEL / pic by MUHD AMIN NAHARUL

LKL International Bhd eyes double-digit growth in earnings for the financial year ending April 30, 2021 (FY21), underpinned by contract deliveries of nitrile examination gloves to China.

The medical and healthcare equipment provider’s revenue improved 47.79% year-on-year to RM54.95 million in FY20 from RM37.18 million in the previous financial year mainly driven by stronger sales of medical/healthcare beds, medical peripherals and accessories, and medical devices.

LKL International is involved in two segments, manufacturing and trading. Although the group’s core product is medical beds which it manufactures, its medical peripherals and accessories trading segment surged to RM15.87 million in FY20 from RM6.21 million in FY19.

MD Lim Kon Lian (picture) said the group will expand its product portfolio to strengthen long-term prospects and enhance its value proposition as a supplier of choice to healthcare consumers, adding that it distributed personal protective equipment to public hospitals in Sarawak and other states in Peninsular Malaysia.

From a geographical standpoint, local sales contributed to a RM45.9 million or 83.53% of group revenue, representing a 50.05% increase compared to RM30.59 million in FY19.

Exports to various Asian countries, namely Bangladesh and Maldives, and African countries accounted for the remaining RM9.05 million (16.47%) of group revenue, the group said in a post-EGM presser yesterday.

LKL International obtained shareholders’ approval to undertake a private placement and employee share option scheme (ESOS).

The private placement proposed on July 17 entails the issuance of up to 85.8 million placement shares amounting to not more than 20% of total ordinary shares issued at an indicative price of RM1.10 per share.

With up to RM94.3 million projected to be raised, the group plans to allocate RM26.5 million for capital expenditure (capex) and expansion plans with a majority of the capex (RM13 million) is for the purchase and set-up of two units of adjoining new factory buildings.

Lim said the new factories will be used for the manufacturing and assembly of medical/healthcare beds, peripherals and accessories, and as a production office and warehouse for finished goods.

Additionally, LKL International will invest RM9.5 million of the proceeds to construct a three-storey steel structure extension across existing factory buildings and instal a conveyor line to automate its epoxy powder coating process.

Another RM4 million of the capex will be spent on machinery purchases.

Lim noted that the construction of the factories will be completed by the end of 2021, and the company expects to utilise and start recognising contributions from the new factories beginning 2022.

On the group’s outlook, he said, Covid-19 prompted the heightened urgency for healthcare service providers to increase capacities and better equip capabilities.

“In line with this, we are currently witnessing greater demand for medical beds from hospitals and medical centres, with orders in hand of more than 750 beds to be delivered over the next 14 months.

“With strong demand within the healthcare sector expected to persist, our capex and expansion plans are timely in enhancing manufacturing capacities and capabilities to fulfil this uptrend,” he said.

Separately, the group also obtained shareholders’ approval for the proposed ESOS, encompassing the issuance of up to 15% of the enlarged total number of issued ordinary shares and private placement shares.

Lim added that the ESOS will be carried out and completed upon the expected completion of the private placement exercise in the first half of 2021.