Subaye, Inc (SBAY)

[CaesarStone]

MYST Sell Off despite Justin Kuepper

The OTC article MyStarU.com’s Future Looks Bright
By Justin Kuepper • on June 12, 2009

MyStarU.com, Inc. (MYST) is connecting its customers with each other and its shareholders with profits. The diversified Chinese software provider saw its net income jump 115% last quarter, and the stock still trades at a bargain compared to most.

MyStarU.com, Inc. (MYST.OB: 0.103 -16.94%), a diversified Chinese software provider, may be one of the best deals in the market, according to some experts. The company posted a 115% increase in net income last quarter and continues to trade at just 3.96x earnings, even after a rapid 54% run-up in its share price over the past week. So, is now the time to get in this stock?

Last quarter, MyStarU.com recorded net income of $3.26 million, or $0.02 per share, on revenues of $23.74 million. The company’s balance sheet also remains healthy with $523,548 in cash, a high current ratio of 3.77 and no long-term debt. Finally, the company generated a positive cash flow from operations of $216,175 compared to a loss a year ago.

The largest growth area for MyStarU.com is in online membership services, including its corporate online video business Subaye.com. Members of this service are charged a monthly fee of approximately $100 with 39,822 members last quarter sharing 80,025 corporate video showcases. Moreover, the company expects this growth to continue through next year.

Despite the positive results, there are a few concerns with MyStarU.com. The company drove its higher revenues through an extensive advertising campaign costing $4.7 million compared to just $1.3 million a year earlier. However, the company did manage to substantially boost its net income, which means that these costs could be justified in terms of return on investment.

In the end, MyStarU.com is a growing company in a hot sector that is extremely undervalued relative to its peers. The company has posted a 115% increase in net income, but still trades for less than 4x earnings with a healthy balance sheet. Prudent investors may want to consider taking position after the stock takes a breather from its recent run-up.