NYSE: WAG April 29 th, 2014 Leiyi (Sally) Huang Qun (Jett) Yu Siyang (Sylvia) Zhang

Agenda Introduction Business Overview Stock Performance Financial Ratio Analysis Valuation Recommendation

Current Position 500 shares bought on Oct 6, $25.00 Current Stock Price: $67.72 (April 25th 2014) Last Action: Sold 200 out of 500 shares in our portfolio Unrealized annual rate of return : 7.08%

Company Overview Pharmacies & Drug Store Market Capitalization: $63.61 billion

Industry Overview Major Players: CVS Caremark, Rite Aid Corp Macroeconomic Forces:  Per capita disposable income  Population aging  Health care reform  Unemployment rate Source from administration of aging, IBIS World Business

Porter’s Five Forces Medium Industry concentration raises barriers Capital requirement is low Threats of new entrants High On the basis of price, selection, convenience and the quality of customer services Intensity of industry rivalry Low General merchandise goods Threats of Substitutes Medium Supply agreement largely influence the profitability and competitiveness of drug stores Bargaining power of Suppliers High Reimbursement rate by third parties Bargaining power of Customers

Strategic Alliance w. Alliance Boots Currently 45% ownership in Alliance Boots  Entry and expansion to European Market  Full combination option available in 2015

Strategic Alliance w. Amerisource Bergen  10-year pharmaceutical supply agreement  AB act as the primary wholesale distribution source  All the branded prescription drug and significant portion of generic drug business transitioned to AB

SWOT Analysis Pricing pressure from the Pharmacy Benefit Management side Uncertainty about economic conditions outside U.S Acquisitions on drugstore chains bring growth potentials International Expansion potentials High degree of operating leases Shortage of backup supply sources and self- contribution capacity Advantageous store locations Brand Recognition Experienced staff Well established customer royalty program StrengthsWeaknesses ThreatsOpportunities

Stock Performance

Ratio Analysis

Comparable Companies

Comparable Company Analysis

WACC Calculation

Discounted Cash Flow Analysis

Sensitivity Table

Implied Price DCF $ % Comparable Analysis $ % Implied Price $ %

Recommendation Sell 200 shares at market 500 shares bought on Oct 6, $25.00 Current Stock Price: $67.72 (April 25th 2014) Gain: $8544 Sell