2016 cfa institute research challenge r esearch r eports : what to focus on? l ocal round – t eams...
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2016 CFA INSTITUTE RESEARCH CHALLENGE
RESEARCH REPORTS: WHAT TO FOCUS ON?
LOCAL ROUND – TEAMS ORIENTATION
OCTOBER 2015
TEAMS ORIENTATION PROGRAM
Research Report writing essentials
Student Recommendations
Lessons from Amsterdam 2015
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
WHAT IS A RESEARCH REPORT
Research 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…
STRUCTURE OF A TYPICAL RESEARCH REPORT
1. Summary
2. Country & Industry Overview and Outlook
3. Business Description and Outlook
4. Financial Analysis with Comments
5. Valuation & Recommendation
SUMMARY (THE FRONT PAGE)
Shows the reader reasons to read the full report
Summarizes the major investment ideas and risks
States the investment recommendation
COUNTRY, INDUSTRY AND BUSINESS OVERVIEW AND OUTLOOK
This 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
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
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
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
ANALYSIS AND SYNTHESIS I
From methodological point of view, each research report can be divided into two main sections:
1. Summary2. Country & Industry overview and outlook3. Business description and outlook4. Financial analysis
5. Valuation
6. Appendix
ANALYSIS
SYNTHESIS
ANALYSIS AND SYNTHESIS II
Valuation 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
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)
TO SUM UP
1. Describe only relevant facts2. Identify important trends (value drivers)3. State clearly your opinion and outlook4. Make sure that the analytical part is consistent with the final
synthesis (valuation).5. Choose the best valuation method(s)6. State your investment recommendation7. Include the Appendix (present all your calculations and thoughts)
APPENDIX: EDUCATIONAL RESOURCES
For 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.
CONTACTS
KAREL TREGLER, CFA
Karel Tregler, Ph.D., CFAHead of Financial Markets DivisionPPF banka a.s.Evropska 2690/17, Prague [email protected]
LESSONS FROM AMSTERDAM 2015
Tanweer Ali, CFAAcademic Adisor
Rehearse 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
LESSONS FROM AMSTERDAM 2015
Michal Mareš, CFAIndustry Mentor
Know 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
LESSONS FROM AMSTERDAM 2015
Jan Hájek, CFAPresentation Judge
Be 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
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 email)
Old reports available at CFA Society Czech Republic website
Equity analysis book available after the registration
RECOMMENDATIONS
JAKUB JURGA , RC COORDINATOR
Current status: 11 universities (2 from SVK) 11 teams 50+ students
sufficient number of mentors
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)
KEY TAKEAWAYS
JAKUB JURGA , RC COORDINATOR
Tomáš Hrbáček, Jakub JurgaCFA Institute Research Challenge Coordinators
[email protected], [email protected]
+420 775 413 578, +420 734 863 852
Organizing the RC would not be possible without our corporate partners.
CFA INSTITUTE RESEARCH CHALLENGE
SUPPORTING COMPANIES
Czech CFA Societyc/o EY, Marek JindraNa Florenci 2116/15110 00 Praha 1Czech Republic
Mobile: +420 603 489 663E-mail: [email protected]
WE ARE LOOKING FORWARD
TO SEE YOU IN
FINAL