The price of the top 10 advancing stocks on the Jamaica Stock Exchange (JSE) increased by between 18 and 59.9 per cent during the month of November with investors in Jamaica Pegasus earning about $600,000 for every $1 million held in the stock.

The market drivers are just released financials, low price to high earning ratios and anticipated macroeconomic improvement according to stock analysts quoted by the Business Observer.

The top 10 stocks have outperformed the JSE Index which increased 3.2 per cent in November from 80,723 to 83,322 points. The JSE Index is recovering from its worst decline in 14 years and on Monday the Index was some 28,000 points below its 2008 high of 112,100 points in May.

Research analyst at Stocks & Securities Juvenne Yee explained that of the 34 listed companies that released September quarter results, 29 firms or 85 per cent posted a profit.

“Even more impressive, 20 out of those 29 firms were able to increase earnings compared with the year-ago period,” she said whilst highlighing as sexy stocks Seprod which doubled its profits, National Commercial Bank of Jamaica (NCB), Scotia Group Jamaica (SGJ), Salada and Berger Paints.

“A number of stocks would have been significantly undervalued and so that along with good results really was an opportunity for investors to get in,” said equity manager at Mayberry Investments, Neilson Rose who added that stocks are also relatively attractive due to falling interest rates.

Rose added that the expectant signing of the International Monetary Fund (IMF) agreement with Government would facilitate macroeconomic stability via the injection of US dollars in the economy.

“The dollar will be under significant pressure but if we were to get a standby facility with the IMF for US$1.2 billion we will have enough dollars in the Net International Reserve to defend our dollar,” said the principal of a non-aligned stock brokerage firm which spoke on condition of anonymity to avoid possible market distortion. “If we get an IMF agreement by the end of this year I am almost sure we will see better results on the JSE.”

Jamaica wants IMF support to offset its declining fiscal revenues hurt by the global recession. In November, the three leading rating agencies, Standard&Poor’s, Moody’s and Fitch had downgraded Jamaica.

Pegasus Jamaica’s net profit for the September quarter increased 24 per cent to $15.3 million over the prior year’s quarter. The reason was that hotel received a tax break due to the hotel’s extension. “The benefits include a waiver of general consumption tax and customs duty for 10 years on a list of approved items and corporate tax relief for 10 years arising from the hotel’s operations,” the company stated in its financials.

Salada Foods Jamaica’s after-tax profit increased 43.5 per cent to $108 million for the year ended September 30, 2009 as it benefited from keeping its core expenses below inflation. Its turnover increased 9.8 per cent to $432.4 million, whilst selling and promotions expenses decreased by 3.9 per cent for the year “due to the arrangement in distributorship” and administrative expenses increased by 6.4 per cent to $57.9 million.

“Inflation over the period increased by 7.2 per cent,” Salada stated in its financials released November 20 to the Jamaica Stock Exchange. In October, Salada was the top advancing stock up 33.1 per cent from $7.51 to $10 between September 30 and October 31, followed by Trinidad Cement, Sagicor Life and Scotia DBG Investments, which increased by 26.3 per cent, 23 per cent and 8.56 per cent, respectively.

NCB reported a net profit of $10.2 billion for the year ending September 2009, a 18 per cent increase over the year prior. According to NCB, its results reflect growth in the corporate and retail loans portfolios, which were responsible for a 25 per cent increase in interest income from loans, and growth in the investment portfolio which accounted for 18 per cent growth in interest income for securities.

SGJ last week reported $11.1 billion net income for the fiscal year ended October 31, an increase of $1.7 billion or 19 per cent above the comparable period last year.

The growth was despite a decline in net income of the banking division, which the firm said took the brunt of the recession.

Total revenues, comprising net interest revenue and other income, increased by 23 per cent from the prior year to $35.2 billion. Net interest income was $29.3 billion, up 32 per cent over last year. The firm said that this was due to strong growth in earning assets combined with improved interest margins resulting from increased market rates.

Total assets increased by $35 billion to $316 billion, or by 35 per cent, year over year.

The group’s loan portfolio increased by $2.5 billion to $92 billion over the year, with growth coming mainly in the commercial loan portfolio. At the end of the period, the firm’s loan portfolio comprised of 45 per cent retail loans, 44 per cent commercial loans and 11 per cent government loans. However, the tough economic climate was evident in the fact that non-performing loans increased by $616 million over last year and stood at $3.5 billion at the end of the period under review. Retail loan customers have especially been affected by the downturn in the economy and this affected the banking segment’s performance.

The JSE lost $211 billion in market capitalisation over the 52 weeks to August 31, or the value equal to twice the US$1.2 billion the Government is seeking to borrow from the IMF.

Market capitalisation stood at $590 billion on Monday, versus $805 billion a year prior based, on JSE statistics analysed by the Business Observer.

JSE general manager, Marlene Street-Forrest in May blamed the ongoing decline in market performance on the global meltdown, high interest rates and its crippling spill-over effect on company earnings in 2008. She added, however, that now is the time to buy stocks. She said that the economic environment will affect the speed of recovery and noted markets are confidence-based and to “the extent that investors feel there is more risk in the equities market, then they will tend to shy away from it”.

Investors realised the highest gains between November 1 to November 30 from:

*Jamaica Pegasus up 59.9 per cent from $12.51 to $20;

*Ciboney which up50 per cent from $0.04 to $0.06;

*Salada Foods up 49.7 per cent from $10 to $14.97;

*Pan Caribbean Financial Services up 49.4 per cent from $14.30 to $21.37;

*Kingston Properties Limited up 48.9 per cent from $4.50 to $6.70;

*Jamaica Producers Group up 39.4 per cent from $13.50 to $18.82;

*Scotia DBG Investments up 35.7 per cent from $17.50 to $23.76;

*Capital & Credit Financial Group up 23.6 per cent from $2.50 to $3.09;

*Seprod up 22.5 per cent from $15.50 to $19; and

*Pan Jamaican Investment Trust up 18.5 per cent from $32.49 to $38.50.