LOOKING GOOD

NTSC

I was rather concerned about the earning report this morning and I was really considering scale back a bit yesterday, particularly after last quarter hiccup. The report is fine as it met expectation, and raise its 2005 revenue guidance, although only marginally.

qRevenues reached a record $97.7 million, up 27% year-over-year.

qOperating income increased to a record $7.7 million, up 42% year-over-year.

q Net income increased to a record $6.0 million, up 63% year-over-year.

q Backlog increased to $439 million, up 24% year-over year.

qGlobal workforce increased by 295 sequentially

The stock responded poorly, partly due to the poor mood of the overall market, and partly due to the 7% run yesterday. I continue to believe the stock is undervalued. At this level, it is traded at 14.6X of 2005 EPS of 0.65. Assuming it is able to maintain its 20% growth target, it is traded at 12X of its 2006 EPS, while growth its top and bottom lines at more than 20%. It should be trade at least at S&P500 average of 16X of 2006 EPS, i.e. $12.5 (30%). I believe it should be traded at 20X. My target is $15 by the end of 2006, more than 50% return. I shall stick with it for now. Management sounds pretty confidence during the conference call, which give me the comfort that Q4 is pretty much in the bag. The key will be 2006 outlook which will be released during Q4 conference call. Management indicated that we should see decent growth in both top and bottom line. The stock is under-valued mainly due to lack of coverage from major institutions.

A

My A got stopped-out this morning. This is rather stupid and undisciplined on my side, and it should not happen again.