The passage of the black economic empowerment (BEE) codes of good practice into law this year has simplified the job of those interested in cherry-picking stocks according to empowerment credentials.

Of course such a practice is not necessarily done in the name of investor value creation but it is a necessary theoretical exercise to measure the progress of transforming the SA economy in line with its political transition since 1994. As the most transparent platform, the JSE presents a perfect stage for such an exercise.

In this year's Top Companies survey, we ask the question: who are the black chips of the JSE and how do they perform? This question was almost impossible to answer before the codes, which have been designed to regulate BEE implementation and measure its progress.

The codes are a standard tool to measure empowerment credentials using a broad-based BEE score card, which covers a range of transformational issues including ownership, management and control, employment equity, skills development, procurement, enterprise development and socioeconomic development.

The FM has applied this score card to all companies listed on the main board of the JSE and produced a top 200 list in a special report, Top Empowerment Companies (March 30). In it we took the top 10 and subjected them to the Top Companies' value creation test.

Led by pharmaceutical group Enaleni, with a total BEE score of about 80%, the TEC list is dominated by companies that were founded on the BEE ticket, as opposed to old entities seeking to transform. Listed at 100c/share in 2005, Enaleni's share price rose to a high of 545c in January but has cooled off to about 400c. Revenue rose by 300% in the year to December to R789,4m while profit after tax increased eight times to R104,5m.

In second position is services group Adcorp, followed by The Don Group, Oceana Group, HCI, Sekunjalo, Cadiz Holdings, Bytes Technology Group, Metropolitan Holdings and Bidvest Group.

Media and entertainment group HCI and investment holding company Sekunjalo are also notable because they were established post-1994.

Led by former unionists Johnny Copelyn and Marcel Golding, HCI was established to benefit the SA Clothing & Textile Workers' Union, which still controls more than 40% of the company. Quoted at 150c/share in 2002, HCI's stock rocketed to levels above R70 in May this year. Revenue went up 44% to R1,2bn in the six months ended last September. Profit before tax rose 77% to R463,7m and net asset value to R16,47 from 600c in 2002.

Sekunjalo - led by a former political activist Iqbal Survé - has established itself as a sustainable business. With investments in fishing, pharmaceuticals and IT, media and financial services, Sekunjalo has grown its asset base to R600m and profits have risen steadily. Its revenue rose to R187,4m in the six months ended February from R175m in the previous comparable period.

A study by BEE rating agency Empowerdex two years ago suggests that on a market-adjusted basis, the share price of companies that conclude BEE deals will outperform other counters - typically by an 11,4% jump in their share price 20 weeks before and 20 weeks after the deal.

Empowerdex says this is because black parties add value at an operational level and the positive return is market reaction to a new and efficient management team. Also, the newly empowered company is better positioned to secure business from government and other BEE-conscious trading partners.