To proof the Polish meat industry is attractive for portfolio investment. 1. Current macroeconomic situation in Poland 2. Institutional overview 3. Market overview (SWOT analysis of sector, BCG matrix) 4. Corporate analysis of Indykpol and "ZM Henryk Kania" 5. The comparative ratio analysis of Slovakian, German, Hungarian, Czech and Ukrainian, meat companies with Polish representatives on the market. 6. Regression model ( Determining significant production factors that have impact on the production. We assume the higher production, the more attractive the market is. )

1. Meat Industry in Poland

2. To proof the Polish meat industry is attractive for
portfolio investment
Where?
 Poland
In what?
 Meat Industry
To whom?
 Portfolio investors, who are interested in long term investment.

3. Why Poland?
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
580000
600000
620000
640000
660000
680000
700000
720000
740000
GDP of Poland, 2009-2013
Poland Growth rate
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
Relationship between interest rates and
inflation, 2009-2014
Inflation Long-term interest rate Short-term interest rate
• World’s 14th most attractive country
for investments 2013-2015;
• 24th GDP in the world;
• Cheap labor cost (7.1 €/hour);
• Low taxation (19%);
• Stable S&P A-; Moody’s A2.

4. -0.04
-0.03
-0.02
-0.01
0
0.01
0.02
0.03
0.04
0.05
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
Volatility of exchange rate, 2008-2014
Change of EUR-PLN Volatility of EUR-PLN
-0.06
-0.04
-0.02
0
0.02
0.04
0.06
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
Volatility of exchange rate, 2008-2014
Change of RU-PLN Volatility of RU-PLN
Why Poland?
• 4th biggest meat producer within EU;
• Main trading partners – countries of EU.
Germany
15%
UK
9%
Czech
Republic
6%France
4%
Russia
3%
Italy
8%
Netherlands
7%
China
4%
Others
44%
Structure of meat export to main trading
partners, 2013

5. Domestic Polish meat
market in 2013
 27,9 % of the food sector sales
 2 344 thousand tons
 47 248 zl billion
 71,7 kg per capita
Capabilities Threats
The market has been stable for the past 5 years A strong downward trend of pork and beef meat
The increasing tendency of production of poultry Animal diseases and infections
Price of Polish meat is about 30% lower than in EU Growth of average market prices of beef and pork meat
Per capita consumption of meat can reach 80 kg by
2015
Strong dependence of animal feeding costs, weather,
climatic conditions and possible environmental
pollutions
Expected growth of demand of more quality meat
products
Embargo from countries-members of Commonwealth of
States
The growing import of meat products to China and
other Asian countries
The strong strong concentration of the market

6. The BCG matrix
Low Market Share High
LowThegrowthofsalesHigh
1% 2% 8% 19,5% 20% 21% 24% 50%
2%6%7%10%11%34%118%
The growth of
sales
Market
Share
Indykpol 2% 19,5 %
Henryk Kania 34% 8%

7. KANvsIND

8. KANvsIND
Financial Ratios 2008-2013
IND
year
P/E bv/share p/b ratio
2008 46,09 0,54
2009 17,49 50,25 0,93
2010 54,99 50,57 1,29
2011 20,00 52,81 0,86
2012 51,21 0,73
2013 3,14 52,58 0,69
KAN
year
P/E bv/share p/b ratio
2008 7,82 0,93 0,92
2009 16,14 1,40 2,94
2010 8,64 1,47 2,30
2011 2,99 7,07 0,22
2012 34,47 1,09 1,65
2013 32,66 1,22 3,21

9. KAN&IND vs WIG20
Er(WIG20) = CAGR = (P1/P0)^(1/y) -1 = 10,07%
Source: ft.com

10. INDvsWIG20
E(r)
14%
SML
ß
rf=3,7%
1.78
Er(market) = CAPM= 15,03%
Er(IND) = CAGR = 14, 09%
OVERpriced!
IND
*Corr coef highly positive = 0,6
E(r)
12.5%
SML
ß
rf=3,7%
0.9
Er(market) = CAPM= 9,43%
Er(IND) = CAGR = 12,53%
UNDERpriced!
+ 3,1%
*Corr coef low positive = 0,22
KAN

11. Impact of external factors on the volatility of
Kania and Indykpol
Volatility of Indykpol = 0.015768 + 0.071756*RESID(-1)^2 + 0.915586*GARCH(-1) + +
0.672698*EUR + 54.59582*RUB - 0.000104*FTSEFOOD + 0.004149*CACFOOD -
0.000296*WIG20 - 0.000630*MICEXCPG
Volatility of ZM Henryk Kania = 0.000683 + 0.151850*RESID(-1)^2 + 0.757839*GARCH(-1) +
1.37E-05*CACFOOD - 1.17E-05*WIG20 -0.015299*EUR
Indykpol Henryk Kania
MICEX CPG -0.000630 EUR -0.015299
EUR 0.672698 CAC FOOD 1.37E-05
RUB 54.59582 WIG 20 -1.17E-05
WIG 20 --0.000296
FTSE FOOD 0.000104
CAC FOOD 0.004149

12. 0
50
100
150
200
250
300
350
Agroton
(Ukraine)
Bonafarm
(Hungary)
AGROFERT
HOLDING
AS (CZ)
Penta
(Slovakia)
Tönnies (
Germany)
Vion Food
(Germany)
Henryk
Kania
(Poland)
IndykPol
(Poland)
Total Assets, million USD
0
20
40
60
80
100
120
140
160
180
Agroton
(Ukraine)
Bonafarm
(Hungary)
AGROFERT
HOLDING
AS (CZ)
Penta
(Slovakia)
Tönnies (
Germany)
Vion Food
(Germany)
Henryk
Kania
(Poland)
IndykPol
(Poland)
Market Capitalization, million USD
0
1
2
3
4
5
6
7
Agroton
(Ukraine)
Bonafarm
(Hungary)
AGROFERT
HOLDING
AS (CZ)
Penta
(Slovakia)
Tönnies
(Germany)
Vion Food
(Germany)
Henryk
Kania
(Poland)
IndykPol
(Poland)
Net Income, million USD
0
50
100
150
200
250
300
350
Agroton
(Ukraine)
Bonafarm
(Hungary)
AGROFERT
HOLDING
AS (CZ)
Penta
(Slovakia)
Tönnies
(Germany)
Vion Food
(Germany)
Henryk
Kania
(Poland)
IndykPol
(Poland)
Revenue, million USD

13. 0.000
0.500
1.000
1.500
2.000
2.500
3.000
3.500
4.000
4.500
2007 2008 2009 2010 2011 2012 2013
Current ratio
Henryk Kania (Poland) IndykPol (Poland)
0.000
0.200
0.400
0.600
0.800
1.000
1.200
1.400
1.600
1.800
2.000
Current Ratio 2013
-0.5000
-0.4000
-0.3000
-0.2000
-0.1000
0.0000
0.1000
0.2000
0.3000
2007 2008 2009 2010 2011 2012 2013
Operating Profit Margin
Henryk Kania (Poland) IndykPol (Poland)
0.0000
0.0500
0.1000
0.1500
0.2000
0.2500
0.3000
0.3500
Operating Profit Margin 2013
-0.1000
-0.0500
0.0000
0.0500
0.1000
0.1500
0.2000
0.2500
0.3000
2007 2008 2009 2010 2011 2012 2013
Net Profit Margin
Henryk Kania (Poland) IndykPol (Poland)
0.0000
0.0500
0.1000
0.1500
0.2000
0.2500
0.3000
0.3500
Net Profit Margin 2013

14. 0.0000
0.0200
0.0400
0.0600
0.0800
0.1000
0.1200
0.1400
Agroton
(Ukraine)
Bonafarm
(Hungary)
AGROFERT
HOLDING AS
(CZ)
Penta
(Slovakia)
Tönnies
(Germany)
Vion Food
(Germany)
Henryk
Kania
(Poland)
IndykPol
(Poland)
Return on Assets 2013
0.0000
0.5000
1.0000
1.5000
2.0000
2.5000
3.0000
3.5000
4.0000
2007 2008 2009 2010 2011 2012 2013
Debt to Equity
Henryk Kania (Poland) IndykPol (Poland)
0.0000
0.5000
1.0000
1.5000
2.0000
2.5000
3.0000
3.5000
Agroton
(Ukraine)
Bonafarm
(Hungary)
AGROFERT
HOLDING AS
(CZ)
Penta
(Slovakia)
Tönnies
(Germany)
Vion Food
(Germany)
Henryk Kania
(Poland)
IndykPol
(Poland)
Debt to Equity 2013
-0.2000
-0.1500
-0.1000
-0.0500
0.0000
0.0500
0.1000
0.1500
0.2000
0.2500
2007 2008 2009 2010 2011 2012 2013
Return on Assets
Henryk Kania (Poland) IndykPol (Poland)

15. 0
1
2
3
4
5
6
7
8
Indyk Pol
(Poland)
Henryk Kania
(Poland)
Agroton
(Ukraine)
Bonafarm
(Hungary)
AGROFERT
HOLDING AS
(CZ)
Penta
(Slovakia)
Tönnies
(Germany)
Vion Food
(Germany)
WACC
Indyk Pol
(Poland)
Henryk Kania
(Poland)
Agroton
(Ukraine)
Bonafarm
(Hungary)
AGROFERT HOLDING
AS (CZ)
Penta
(Slovakia)
Tönnies (Germany)
Vion Food
(Germany)
WACC 5,42 5,82 7,95 3,60 3,28 2,34 2,71 1,49
E, thousands USD 53652 45385,33333 62604 14815 35453 37781 123644,46 42167,574
D, thousands USD 99508 75271,33333 63625 30698 78800 112424 219887,68 140475,36
D+E, thousands
USD
153160 120656,6667 126229 45513 114253 150205 343532,14 182642,934
Return on equity 14 12,5 15,970 11,000 10,500 9,200 7,500 6,350
Return on debt 0,0478624 0,06179422 0,072 0,035 0,044 0,044 0,032 0,037
% debt 0,64969966 0,62384728 0,504044237 0,674488608 0,689697426 0,748470424 0,640078917 0,769125621
% equity 0,35030034 0,37615272 0,495955763 0,325511392 0,310302574 0,251529576 0,359921083 0,230874379
Tax,% 19 19 16 19 19 23 30,175 30,175

16. Why it is worth to invest: What are the risk factors:
• Polish meat industry has potential to growth,
especially in area of poultry
• It is due to the increasing trend of meat consumption
• In comparison to European firms, financial
performance of Indykpol and Henryk Kania is
competitive
• Better than companies from Hungary, Czech Republic,
Slovakia and Ukraine
• Slightly worse than German representatives
• Portfolio Investment in Polish meat industry could
be profitable, hence, some firms (such as Henryk
Kania) are underpriced
• It offers a higher return than market with the same level
of risk
• According to ratio analysis, Indykpol is more
attractive than Henryk Kania, which can be
explained by Kania’s recent split of shares
• However, split of shares is a sign of Henryk Kania’s long
term growth strategy
• Prices of shares are influenced by external factors
• Especially stocks of Indykpol
• It could be caused by the fact that this firm is more
exposed to the foreign markets
• Polish meat industry has to face the problem with
current embargo in Russia and CIS countries
• It could have negative impact on financial performance of
Polish firms
• Polish firms have to find new markets
• Law regulations and provisions increase the
operating costs of meat industry
• Management of Polish companies should increase
return on assets and decrease debt