Khakis’ R UsTeam 5

Kenry Qi| Mable Chow | Zack Xu

23/5/3

Agenda

Industry Overview1

Company Overview2

Valuation Analysis3

Alternative4

Recommendation5

Q/A6

23/5/3

Industry Analysis: Apparel and Footwear

Industry overview:

• Highly Competitive• Rely on Import• Bounce Back• Globalization

Sub-industry: Men’s Apparel Analysis

• Potential Opportunity

• Developmental Stage

• Growing potential in SP (i.e.: Men’s Wearhouse

Acquisition)

Chart Source: Conductor

Trends AnalysisOpportunities: •Online Store and Outlet Trends•Move to Overseas

Risks:•Competitive Edge•Growth Edge

Chart source: eMarketer

Khakis’ R Us Valuation Analysis – Overview of Selected Valuation Methodologies• Analysis of Selected Publicly Traded Company

Estimates current public market value of firm based on trading multiples of selected comparable companies

• Analysis of Selected Company Acquisitions Transactions Estimates value of firm in a change of control transaction based on multiples and premiums implied by

prior acquisitions of selected transactions

• Discounted Cash Flow Analysis Estimates enterprise value based on its projected future free cash flows discounted at a rate reflecting

risks inherent in its business and capital structure

Assumption• KRU price used in the most recent time manner: $12/ share• Reliable forward multiple (Projected sales, EBITDA, EBIT, etc.)• Capital structure will maintain the current in the future• No option and share repurchase program• Data and metrics were 2013 if without indication• Other assumptions

Analysis of Publicly Traded Company

Consideration:•D/E Ratio•LTM EBITDA Margin•EPS•Capital Size

Analysis of Publicly Traded Company

Analysis of Selected AcquisitionsConsideration:•Operations•Financial•Size of Transaction Value•Market condition

Analysis of Selected Acquisitions

Discounted Cash Flow Operating Assumptions

• Company sales growth will match the forecast

• Company stay constant growth after the fifth year

• Value as a stand alone company

Analysis of Discounted Cash Flow

Analysis of Discounted Cash Flow Selected Companies’ Unlevered Beta are based on the following factors:

•Capital structure•Capital Size•Rate of return on debt and equity

Levered Unlevered BetaBl=Bu*(1+(1-Tc)*(D/E))

Analysis of Discounted Cash Flow Assumptions:

•Cost of Debt is higher than the average of comparable companies

•Risk Free Rate will be taken the median rate

•Market Risk Premium match with other Comparable Companies

Analysis of Discounted Cash Flow

Analysis of Discounted Cash Flow

Khakis’ R Us Valuation Analysis - Summary

Price Per Share: $23