• The Edge Financial Daily has reported that Mynews is being sued by two artists for copyright infringement, claiming that the company used their copyrighted artwork without consent on bags sold in October 2018.

• Mynews stopped the sale of the bags after it received a letter of demand on 19 Oct 2018 asking them to stop selling the bags.

• The company also denied that it was responsible for the alleged copyright infringement.

• According to the company, the bag was designed by a supplier. Mynews is being sued for RM1mil which is circa 3.1% of our net profit forecast of RM32.7mil in FY19F.

• In the worst-case scenario, the legal action could potentially shave 3.1% off of Mynews’ net profit.

• We maintain our BUY call on Mynews with an FV of RM1.66/share, pegged to a P/E of 27x.

• We continue to like Mynews for its: 1) franchise opportunities arising from the full autonomy of its myNews.com brand name; and 2) growth potential from its food processing centre (FPC), which will allow the introduction of ready-to-eat (RTE) and bakery products.

Source: AmInvest Research - 12 Apr 2019