A lot was said during the past weeks about overrating the Bulgarian Stock Exchange, the indexes' P/E ratios were cited as examples.

However, all investors familiar with BG40 and its method of calculation should know that neither the index's level, nor its P/E is indicative of the market in a any way. Thus, SOFIX and BGTR30 seem more suitable to reflect.

By end of November, companies had released their Jan – Sept consolidated reports, which enables us to calculate SOFIX's actual level.

The sum of the financial results posted by the 16 companies included in the index's calculation came to nearly 348 mln leva (177.929 mln euros), and when juxtaposed with their market value (the method BSE uses to calculate indexes) reaches 25.7 (with corrected figures for 3 companies which recently increased capital).

Elana Agricultural Land Opportunity REIT has the lowest coefficient, because of the large 2006 profit, entirely formed through reevaluations. Chimimport has the second lowest ratio, since it posted the highest profit – 118 mln leva.

Albena, Kaolin, Orgachim and Bulgarian-American Credit Bank fluctuate around 20. Neochim, after disappointing nine-months results, has the highest P/E.

SOFIX's lower level is mainly due to the convincing Jan – Sept financial reports posted by companies, as well as to the correction, which in the past 2 months took an average of 15% off the index, some issues lost more than 20 – 25 %.

CompanyProfit (12 months) / BGNP/EAlbena 2083421,94Elana Agricultural Land REIT843015,02Euroins609326,18Industrial Holding Bulgaria1253736,51*Kaolin1928622,06M+S Hydraulic Elements&Systems398542,5Monbat1419839,94Neochim 211588,96Orgachim1380322,9Petrol1460939,19Sopharma3308634,03Sparky Eltos700236,47*Bulgarian-American Credit Bank4822620,11CB Central Cooperative Bank2200835,09*Toplivo360141,76Chimimport11807018,99Total347883SOFIX25,7

*The coefficient for IH Bulgaria, Sparky Eltos and CCB has been corrected, since the companies are currently in the process of increasing capital, which has an impact on the stock price (the new issues have not yet been registered for trade on BSE).

This article is not a recommendation for buying or selling stock.