The presentation shows how American investors may directly invest into the foreign stock. Presentation includes also analyses of two Polish companies.

1. DIRECT
INVESTMENT
OPPORTUNITIES
OF THE IMP
POLISH STOCK MARKET
W. LATOCHA

2. SOME THEORY FIRST

3. CROSS LISTING OF SHARES
when a firm lists its equity shares on one or more
foreign stock exchange in addition to its domestic
exchange
 Primary listing – on a stock exchange in the country
of incorporation
 Secondary listing – on a stock exchange of the
other country
Common for companies that started out in a small
market but but grew into a larger market

4. WHY WOULD A COMPANY DO THAT?
 To
reduce the cost of capital through an
improvement of the firm’s information
environment
 Toincrease domestic shares liquidity by the
„bonding” process
 Tosignal their quality to outside contractors
by showing them ability to adopt foreign
regulations

5. DOES IT WORK?
Doidge, Karolyi, Stulz (2004):
„companies with a cross-listing in
the US have a higher valuation that
non-listed corporations”
It applies especially for firms with
high growth opportunities.

6. CROSS-LISTING
INFRASTRUCTURE
=
AMERICAN DEPOSITARY
RECEIPT

7. American depositary receipt is a
negotiable security that represents the
underlying securities…
SOUNDS FAMILIAR?
… of a non-U.S. company that trades in
the U.S. financial markets

8. ADRS FEATURES
 Denominated in US dollars
 Pay dividends in US dollars
 May be traded like domiciled
companies stock
 Ratio

9. RATIO
Example:
 Swiss ADR Tissot, with a ratio of 10:1, was priced
$24.86
 In Zurich, its home exchange, Tissot was traded at
379 Swiss Francs.
 The Dollar/Franc Exchange rate is 1.526
Now we can calculate:
 Multiply the price in Dollar with the ratio (10):
24.86 * 10 = $248.6. It means that ten ADRs equal
one share of Tissot and cost $248.6
 Multiply this Dollar-amount with the exchange rate:
$248.6 x 1.526 = SFR 379.59
 The ADR has been valued fair

10. TYPES OF ADRS
1. Unsponsored
 Issued in accordance with market demand
 Foreign company has no formal with a
depositary bank
 Often issued by more than one depositary
bank
 About 50% of all ADR programs

11. 2. Sponsored Level I
 Company has one designated depositary
who also acts as its transfer agent
 The most convenient way for foreign
company to have its equity traded in the US
 Shares can be only traded on the OTC
market
 Foreign company must publish in English on
its website its annual report

12. 3. Sponsored Level II
 Shares can be listed on the US stock exchange
 Company must file a registration statement in SEC
 Company is required to follow US GAAP standards
or IFRS
4. Sponsored Level III
 It’s issuing shares to raise capital
 Requirements as above plus more frequent
reporting

13. 5. Privately placed
 Under SEC rule 144A
6. Offshore
 Traded in the US stock markets
 Cannot be held by any „US Person”

14. HOW TO
(TECHNICALLY)
TRADE THEM?

15. 2 WAYS
1. On a stock exchange
 Sponsored Level II
 Sponsored Level III
 Privately placed (Portal Market)
 Offshore
2. (croosbook) SWAP
 Unsponsored
 Sponsored Level I

16. UNSPONSORED
PLN
DEPOSITARY CUSTODIAN 50 pcs
BANK BANK
50 (USD) $ 50 (PLN)
50 pcs

17. SPONSORED LEVEL I
50 pcs
STOCK
DEPOSITARY
BANK $
ADRs POOL
50 pcs
50 pcs

18. LET'S GET DOWN TO THE
BUSINESS!

20. THE OVERVIEW OF LISTED
INSTRUMENTS
# of # of
sector Sponsorship
instruments instruments
Finance 13 Sponsored 16
Mutual Funds 7 Unsponsored 22
Energy Minerals 5 Restricted
7
Industrial Services 5 Programs
Non-energy materials 4
Telecommunication 3 # of
Depositary Bank
Technology Services 3 instruments
Consumer services 2 BNY Mellon 36
Healthcare 1 Deutsche Bank 3
Process Industries 1 144A 6

21. SELECTED COMPANIES’
PROFILES

22. DATA MINER
For updates email me anytime:
wojciech.latocha@gmail.com

23. „POLISH OIL AND
GAS CO”
Core activity covers:
 exploration and production of natural gas
and crude oil at home and abroad
 geological & geophysical services
 import, storage, trade and distribution of
gas and liquid fuels
 maintenance and expansion of its
distribution system

24. Polskie Górnictwo Naftowe i Gazownictwo is the
largest Polish oil and gas exploration and production
company.
INTERNATIONAL PEER GROUP

25. PGNIG’S INFRASTRUCTURE /
RESOURCES
 107 thousand kilometers of gas pipelines
covers primarily industrialized and
urbanized areas of the country
 natural gas and petroleum are produced
in 67 mines
 the size of oil and gas resources are
estimated at 768.8 million boe, while
annual production is 30.1 billion boe
9000 employess

26. STOCK DATA HIGHLIGHT
 Last Trade 3.90 (October 12)
 Day's Range 3.89 - 3.97
 Turnover 36,120,281
 Previous 3.92
 Change -0.02 (-0.51%)
 1 Year Change 8.64%
 Market Cap 23,010.00ml
 Volume 9,202,680
 52-week High 4.64 ()
 52-week Low 3.45 ()
 Last dividend 0.06 (Oct 06)
All values given in Polish Zloty.

27. Indicator P/BV P/E P/S
Value 0,96 8,34 1,04

28. SELECTED FINANCIALS

29. STRENGHTS
The biggest gas company in
Poland
Loyal customers (6.5 mln)
Governmental support (Treasury
owns 72% of its shares)
Law environment allowing for
shale gas mining

30. WEAKNESSES
Revenues depend on external
factors on which company has no
impact

31. OPPORTUNITIES
Discovery of the gas field in
Poland that is an equal size as the
largest European gas fields at the
North Sea
In practice it means a gas
independence from Russia

32. THREATS
 3Legs Resources, UK company,
received an access to shale gas by six
exploration licences in the area of th
Baltic Sea and three near Cracow
 Strongcompetition in the field of oil
processing: 2 huge corporations
winning the most of recent auctions

33. THE LAST TEN
RECOMMENDATIONS
 Buy 8
 Sell 1
 Hold 1

34. Asseco Group was in the top ten in the ranking of "top 100
European Software Vendors" (published by Truffle Capital in
2010)
Core activities:
 company develops and implements a centralized,
comprehensive information systems for the banking sector
 company's offer is now directed also to the energy
industry, telecommunications, healthcare, local
government, agriculture and the uniformed services and
international organizations and institutions such as NATO
or the EU

35. Total number of employees: 13 500
INTERNATIONAL PEER GROUP

36. STOCK DATA HIGHLIGHT
 Last Trade 46.40
 Day's Range 44.12 - 46.40
 Turnover 4,077,488
 Previous 45.19
 Change 1.21 (2.68%)
 1 Year Change -12.37%
 Market Cap 3,599.04ml
 Volume 90,364
 52-week High 56.45 ()
 52-week Low 35.45 ()
 Last dividend 1.8 (Jun 01)
All values given in Polish Zloty.

37. Indicator P/BV P/E P/S
Value 0.56 5.48 0.87

38. SELECTED FINANCIALS

39. STRENGHTS
 International diversification
 Asseco Central Europe (Czech Republic, Slovakia,
Hungary)
 Asseco South Eastern Europe (the Balkans, Turkey)
 Asseco DACH (Germany, Austria and Switzerland)
 Asseco South Western Europe (France, Italy, Spain
and Portugal)
 Asseco Northern Europe (Scandinavia and the Baltic
states)
 International recognition

40. WEAKNESSES
Revenues heavily depend
on the current economic
situation

41. BUT… OPPORTUNITIES
 8th of October – Asseco received a contract
from Bank Gospodarstwa Krajowego to custom
software developement
 6th of October – Asseco received contract from
Uniwersytet Kardynała Stefana Wyszynskiego w
Warszawie to computer equipment and supplies
 5th of October – Asseco/BRE Bank consortium
files best bid for regional public services card
system for the Slaskie region

42. THREATS
The other Polish ADR’s
sponsor…
Sygnity – takes over the most of
contracts with healthcare
companies

43. THE LAST TEN
RECOMMENDATIONS
 Buy 8
 Sell 0
 Hold 2

44. THANK
YOU