That is a very wonderful question. Your analysis is absolutely correct however, some of us have had the experience of reading these marks for a longer period of time. This is what we found out about this one.
It is KBAG not LBAG
it is the Bekleidungs Instandsetzung of the Guarde Corps---the repair depot
big letter L on the bottom is really a poorly applied F standing for felddienstbrauchbar--Field wearable (or serviceable) .
Here is our current example from the listing. We maintain this stamp listing at http://www.pickelhauben.net But we all contribute to it.