For nearly a decade Kingsley Cooper's Pulse Investment Limited, remained suspended from the Jamaica Stock Exchange while it attempted to put its finances in order after failing to meet the market's requirements for filing audited accounts. It was re-admitted to the exchange less than two years ago.

Cooper has become as aggressive in business as his fashion models are adept at breaking into the world of high fashion. His new push to create a winning business has, perhaps surprisingly for some, vaulted the model agency to the top ranking company in its sector, tourism/services/entertainment.

Significantly, Pulse did not merely just make it to the top of this league table in the Financial Gleaner/Pan Caribbean Financial Services survey of listed companies, the 183 points it scored from a maximum 200, was seven more than both either Montego Freeport Limited or Supreme Ventures Limited - one the wider differentials between the top performer and runner-up companies in any sector.

Pulse is novel, at least in its history, among the firms listed on the Kingston market. Started in the 1980s, it is at its core a model agency and events management company, but has been moving into new areas of interactive media and entertainment.

By the early 1990s Pulse had become almost synonymous with fashion modelling in Jamaica and the rest of the English-speaking Caribbean. Cooper was sending models to Europe and North America in partnership deals with global agencies. The company was also looking to expand into other areas of entertainment and leisure.

Around this time Cooper took his company public. But by the mid 1990s Pulse was in trouble, on the precipice of bankruptcy. When it failed to meet various deadlines to file its accounts, Pulse was told that it had to leave the exchange. Over the years, Pulse announced various reorganisation strategies and capital injections - one of which was from the then National Investment Bank of Jamaica (NIBJ), a government institution that was collapsed in the Development Bank of Jamaica (DBJ).

The NIBJ acquired six per cent of Pulse and at the same time pumped an additional $20.5 million into the company in exchange for preference shares, which were supposed to mature at the end of 2010. But earlier this year Cooper, who holds 77 per cent of Pulse, redeemed the prefs - paying out $28.5 million suggest that he feared the DBJ would want to convert them to ordinary shares and make a grab for a bigger stake in the company.

"The redemption is in line with an ongoing strategy top reduce debt and prevent the dilution of the company," Cooper said in February: "Importantly, this move could prove to be particularly strategic for pulse as (the) redemption prevents conversion of the stock to ordinary shares."

Months later, made a capital call on shareholders, raising $120 million in a rights issue, to be used, according to Cooper, to finance a deeper thrust into overseas markets as well as the building out of other projects, including a storage facility at its Kingston headquarters, a museum of the late reggae artist Peter Tosh and interactive websites.

So, what would have given Cooper the confidence to move so aggressively? Essentially, the same things that propelled it at the top of heap in its sector in delivering investor value: a resurgent and strong balance sheet.

That balance sheet is now valued at $1.5 billion, but it is heavily weighted in advertising contracts - $924 million - which represent future revenue for the agency.

For the financial year to June 2008, the company's profit jumped 45 per cent to $430 million, or $1.58 per share. Its operating profit at $435 million was up 63 per cent despite a 77 per cent or $400 million jump in operating expense to $921 million. Revenues climbed by more than half a billion to $1.36 billion.

What is significant about Pulse's performance is that 97.3 per cent of its income is reported to have come from 'advertising entitlements'. This apparently is what firms pay to have their brands displayed at Pulse's events and critically, the value of the advertising time and space it receives from media as "sponsors" of its events. Indeed, in its 2007 accounts, Pulse carried in balance sheet as an asset $476.5 million in unused advertising entitlements, which is booked as income as it is used. A year later, those entitlements had doubled to $924 million.

However, while Pulse's "advertising" revenue rocketed, other income streams, including model agency fees and earnings from property lease dipped marginally from $37.8 million to $36.7 million.

It was on the back of this performance that Pulse outperformed its peers in four of the 10 variables used to determine rankings on this sector's league table.

It was the most liquid, with current assets being almost 17 times greater than current liabilities. Its total liabilities were a mere six per cent of capital, the lowest for its sector, where the average was 35 per cent. This implies a strong financial position, but only if the value of advertising assets carried on its balance sheet can be easily realised.

The company boasts a return on equity of 36 per cent, which, like the year-to-date price change (131 per cent) at the review period, was the highest for the sector.

Sector Analysis - Hospitality and Entertainment Services

While overall economic activity was estimated to be flat for the first half of the year, the Miscellaneous Services sector expanded by 4.4 per cent. Within this sector, the 'hotels, restaurants and clubs' sub-sector performed even better, registering growth of 5.0 per cent for the same period.

Tourism, the country's main earner of foreign exchange experienced an 8.0 per cent growth in stop over arrivals and modest increase of approximately 2.0 per cent in visitor expenditure.

This resulted in total revenue of US$984 million. There was, however, a 6 per cent decline in cruise passenger arrivals.

A number of cruise lines changed their itinerary due to spiralling fuel costs resulting in a reduction of ships docking at Jamaica's major ports.

Looking ahead, the country's spiraling crime rate and prolonged weakness in the United States economy remain major threats to growth in the tourism industry.

There are however opportunities for the country to expand by appealing to European tourists.

The recent boom in the construction of Spanish Hotels will increase the appeal of the industry to tourists from these areas.

Dramatic increase

In 2007, the industry saw a dramatic increase of 140 per cent in the amount of Spanish visitors to the island.

There was also an overall increase 12.8 per cent in the amount of Europeans vacationing here.

Jamaica's remarkable and memorable performances at the Beijing Olympics also opened new trading opportunities.

In this regard, the Government has launched a number of initiatives to capitalise on the heroics of our athletes, among them is an invitational 100m beach sprint event, slated for November 2009, which will see some 30 international athletes and celebrities competing on a three-lane beach track.

For the September quarter, the Planning Institute of Jamaica (PIOJ) is projecting overall growth of 1.7 per cent to 2 per cent for the sector, of which 'hotels, restaurants and clubs' is expected to account for 1.6 to 1.9 percentage points.

However, service providers are being impeded by three significant challenges in their quest for growth. Firstly, reduced consumer spending on non-essential items given a cut in disposable income as inflation canters at over 26 per cent year over year.

Secondly, the unmeasured negative effect of the freeze on consumer funds tied up in alternate investment schemes, which many believe is significant.

Thirdly, the decline in economic activity following the passage of Tropical Storm Gustav with one major player, Supreme Ventures Limited, indicating a potential loss in revenues of $150 million.

Pan Caribbean's outlook on Pulse

The initiatives being undertaken by Pulse will continue to drive advertising revenue, helping to push EPS to a projected $2.20 over the next 12 months. Given the illiquid nature of the stock, a forward P/E of four is anticipated. In this regard the stock is recommended as a HOLD at its current price of $6.