REPORT ON VALUATION PROJECT OF CROWN CRAFTS BY JIUN-AN CHEN & ZIYI WANG FEB. 19th 2019 UNIVERSITY OF ILLINOIS

agenda Framework of report ILLINOIS INTRODUCTION METHODOLOGY VALUATION ANALYSIS Introduction-Macro(Industry), Company(Timeline) Methodology-Porter/Pest, DCF Analysis-Key assumption, I/S, B/S, Modeling Extension-Technical analysis Timeline 8/4/2017 Acquire Carosusel 12/15/2017 Acquire Sassy 2019 fiscal year Impacted by bankruptcy of Babies"R"Us and Toys"R"Us, Toys R Us and Babies R Us will be liquidating at least through June, 2018 Summary-Buy or sell? EXTENSION DISCUSSION SUMMARY UNIVERSITY OF ILLINOIS

INTRODUCTION Basic Information of Company Description of Business Timeline(bankrupt)-product category(business model)-subsidiary(acquisition) UNIVERSITY OF ILLINOIS

METHODOLODY Analysis Methods of Report Key Assumptions Macro Analysis Porter Five Forces Theory P. E. S. T. Theory Financial Analysis Valuation Model DCF Model Technical Analysis UNIVERSITY OF ILLINOIS

VALUATION ANALYSIS Key Assumptions Net Sales grow at 3% at fiscal year 2019 and 2020 because of 2 acquisitions and then grow at 1% in the following three years Perpetual growth rate is 2% Based on Crown Craft previous 5 years financial statements, it only raised debt for acquisition funding. As a result, we assume that only equity plays the role in CAPM The effective tax rate should continue to hold at 24.2% according to management. According to latest earning call, Toy“R”Us should stop being such a big drag entering fiscal year 2020 UNIVERSITY OF ILLINOIS

Bargaining power of buyers Bargaining power of SUPPLIERS VALUATION ANALYSIS Macro Analysis Porter Five Forces Theory P. E. S. T Analysis POLITICAL Regulation Tariff Law RIVALRY Bargaining power of buyers Bargaining power of SUPPLIERS THREAT OF NEW ENTRANTS THREAT OF SUBSTITUTES SOCIAL Population Culture Habit TECH Improvement Efficiency Cost industry producer Consumption ECONOMICS UNIVERSITY OF ILLINOIS

VALUATION ANALYSIS Financial Analysis UNIVERSITY OF ILLINOIS

VALUATION ANALYSIS Financial Analysis

VALUATION ANALYSIS Financial Analysis

VALUATION ANALYSIS Financial Analysis

VALUATION ANALYSIS Valuation Model Monte Carlo Model DCF Model UNIVERSITY OF ILLINOIS

VALUATION ANALYSIS Technical Analysis UNIVERSITY OF ILLINOIS

EXTENSION DISCUSSION Economic Cycle Extreme Situation Financial crisis: Curse or Concern? Measure test Hedge risk UNIVERSITY OF ILLINOIS

ACQUISITION: POSITIVE ATTITUDE SUMMARY The Final Conclusion BASIC ANALYSIS TECHNICAL ANALYSIS ACQUISITION: POSITIVE ATTITUDE RECOMMENDATION: HOLD UNIVERSITY OF ILLINOIS

THANK YOU FOR LISTENING! BY JIUN-AN CHEN & ZIYI WANG FEB. 19th 2019 UNIVERSITY OF ILLINOIS