1 2016 CFA INSTITUTE RESEARCH CHALLENGEResearch Reports: WHAT TO FOCUS ON? Local round – Teams Orientation October 2015

2 Teams orientation ProgramResearch Report writing essentials Lessons from Amsterdam 2015 Student Recommendations

3 Key Questions What is a research report?What is the most important part of the research report? How detailed should be the descriptive part? What is financial analysis for? In which part of the research report is the greatest value added of the analyst? Lessons from London 2013

4 What is a Research ReportResearch report is a communication between an analyst and a „reader“ Analyst should deliver a reliable message (story) in an attractive form Your message (opinion) then serves in most cases as a basis for investment decisions Who are the „readers“? – portfolio managers, traders, auditors, regulators, retail clients…

5 Structure of a Typical Research ReportSummary Country & Industry Overview and Outlook Business Description and Outlook Financial Analysis with Comments Valuation & Recommendation

6 Summary (the front page)Shows the reader reasons to read the full report Summarizes the major investment ideas and risks States the investment recommendation

7 Country, Industry and Business Overview and OutlookThis part describes the general environment the company operates in Focus on characteristics that are relevant for valuation Describe the current situation and always focus on the outlook

8 Financial analysis FA helps the analyst to understand the company from a financial point of view The analyst then presents the results to the reader Each parameter (ratio) has to be put into a context and commented Give outlook for profitability, activity, indebtedness, liquidity etc. based on your knowledge of the industry

9 Valuation I Your task is to estimate the fair value of an asset (company) You already know the asset very well, it was analyzed in preceding chapters of your report Build a simple model, you can always make it more enhanced later Briefly describe the valuation methods used Every time you make an important assumption, make a note of it

10 Valuation II Each valuation method gives a different estimate of the fair value (like throwing darts on a target) Averaging the outcomes is not always the best approach Show your analytical skills and decide which method is the most relevant State your investment recommendation

11 Analysis and Synthesis IFrom methodological point of view, each research report can be divided into two main sections: Summary Country & Industry overview and outlook Business description and outlook Financial analysis Valuation Appendix ANALYSIS SYNTHESIS

12 Analysis and Synthesis IIValuation synthesizes the analyst‘s general outlook of the industry and the company The synthesis represents the greatest value added of the analyst Quality of the valuation chapter helps to distinguish true analysts from the rest

13 the Appendix Matters! Judges look not only at the presentation itself, but also at the Appendix – it is an integral part of the final presentation. This is the opportunity to show your hard work. Present all your calculations and analysis in the Appendix (e.g. Excel snapshots) In many cases, the Appendix was much bigger than the presentation (e.g. 10 slides of presentation + 20 slides of Appendix) Hyperlinks will make your life easier: The first page of the Appendix should include „Contents“ with hyperlinks to individual slides. Individual slides should contain hyperlink to jump back to the first page of the Appendix Think about the questions that may be raised (e.g. WACC assumptions)

14 To Sum up Describe only relevant factsIdentify important trends (value drivers) State clearly your opinion and outlook Make sure that the analytical part is consistent with the final synthesis (valuation). Choose the best valuation method(s) State your investment recommendation Include the Appendix (present all your calculations and thoughts)

15 Appendix: Educational ResourcesFor more information please refer to : https://www.cfainstitute.org/community/challenge/Pages/index.aspx You can find there audio and video webcasts, articles and books that can help you with: Preparing for the project Researching the subject Developing your report Presenting your work Do not forget to read the CFA Research Challenge Official Rules 2016.

16 Karel Tregler, Ph.D., CFA Contacts Karel Tregler, CFAHead of Financial Markets Division PPF banka a.s. Evropska 2690/17, Prague 6

17 Lessons from Amsterdam 2015Rehearse the presentation thoroughly and carefully plan every minute. The whole presentation should read like a convincing story Get feedback during rehearsals, also using videotaping. Body language, dress, and movement on the stage are important Take care to be respectful towards the judges and their questions Tanweer Ali, CFA Academic Adisor

18 Lessons from Amsterdam 2015Know the Rules! Structure research report and Final presentation according to best practice Pay attention to every single detail Spend enough time rehearsing the final presentation. It is important for the research challenge teams to practice (in addition to content) also speed, intentional pauses, points that should attract attention and need to be emphasized by voice and gestures Be a well-prepared confident actor which leaves the best impression Michal Mareš, CFA Industry Mentor

19 Lessons from Amsterdam 2015Be prepared for hard questions from judges in the Q&A Session However, questions from judges can be anticipated if you intentionally create logical gap in your Final presentation Back up slides in the Appendix serve valuable purpose as they help you to answer hard questions Team that can be easily remembered wins the competition Jan Hájek, CFA Presentation Judge

20 Jakub Jurga , RC Coordinatorrecommendations Jakub Jurga , RC Coordinator Tips & tricks for report writing Guidelines in the Official Rules (Appdx A) Annual reports, other analysis, (various banks etc.) publically available documents  everything need to be disclosed Cover & back page available after registration at CFA Institute website (or I can send it via ) Old reports available at CFA Society Czech Republic website Equity analysis book available after the registration Current status: 11 universities (2 from SVK) 11 teams 50+ students  sufficient number of mentors

21 Jakub Jurga , RC CoordinatorKey takeaways Jakub Jurga , RC Coordinator Read the rules and register Teams assigned to Industry Mentors during the next week Company presentation at 4 November 1:00pm in EY, Na Florenci 2116/15, Praha, (Florentinum) Tomáš Hrbáček, Jakub Jurga CFA Institute Research Challenge Coordinators ,

22 CFA Institute Research ChallengeSupporting Companies Organizing the RC would not be possible without our corporate partners.

23 We are looking forward to see you in FINALCzech CFA Society c/o EY, Marek Jindra Na Florenci 2116/15 Praha 1 Czech Republic Mobile: