Qianwen Wu, Wenqiang Xu, Yi Liu and Zuowei Xu December 10, 2013 Qianwen Wu, Wenqiang Xu, Yi Liu and Zuowei Xu

Agenda Introduction Macroeconomic Outlook Industry Overview Company Overview Financial Analysis Valuation Recommendation

Introduction Started as a health food store in1935 A leading global specialty retailer of health and wellness products: vitamins, minerals and sports nutrition products. 8100 locations in the United States and 54 international countries Listed on April 1st, 2011and has already returned far more cash to shareholders than it raised in IPO Industry: Nutritional Supplements Industry http://gnc.mediaroom.com/index.php?s=27058 Source: Company overview, GNC website

Macroeconomic Outlook Population over 50 and older Nutrition Supplement Disposable income CCI Consumer Confidence Index is a good indicator for the future consumption of nutrition supplement. The index soars above expectations came in at 82.5, beating the forecast of 76.0 in December.

Macroeconomic Outlook Source: U.S. Census Bureau, 2010 Census Summary File 1, page 6 http://www.census.gov/prod/cen2010/briefs/c2010br-03.pdf Source: 2010 Census Summary, U.S. Census Bureau

Macroeconomic Outlook Disposable income has been increasing from 9,800 to 11,600 for the past ten years. a Source: http://research.stlouisfed.org/fred2/graph/?id=DSPIC96 Source: 2013 research. Stlouisfed.org

Nutritional Supplements Industry Key Statistics: Market size: 35 billion Annual growth: 5.7% for 2008-2013 Source: Nutrition Business Journal, page 6 http://sftp.polsinelli.com/files/upload/SapsinNutritionBJ.pdf Source: Nutrition Business Journal

Nutritional Supplements Industry Target Consumers: According to the National Health and Nutrition Examination Survey, more than 50% of adults are taking a dietary supplement and 35% use a multivitamin product According to the IBIS World, older white women with higher education levels, lower BMIs, and higher physical activity levels are the most likely consumer to using a supplement. Source: Nutrition Business Journal, page 7 http://sftp.polsinelli.com/files/upload/SapsinNutritionBJ.pdf Source: Nutrition Business Journal

Nutritional Supplements Industry Stock New Products Brand Availability Key to Success:

Industry Forces Analysis Rivalry: High Buyers: Substitutes: Low Suppliers: New Entrants: Median

Industry Forces Analysis Bargaining Power of Suppliers: Low The raw materials has no product differentiation, which is a competitive market.. Bargaining Power of Buyers: HIGH The industry is fragmented and consumers have a lot choice to choose. Threat of New Entrants: MEDIUM The steady revenue growth attracts lots of investors. New regulation imposed by the Food and Drug Administration(FDA)

Industry Forces Analysis Threat of Substitutes: Low The consumers rely heavily on the nutrition products regularly to keep fit. Rivalry among Competitors: HIGH Price-based competition plays a significant role in vitamin and mineral supplements Competitive and fragmented industry. The four largest nutrition supplement company only cover 15% market share.

Company Overview 2.58bn Revenue in USD (TTM) 264.80m Net income in USD 2007 Incorporated 6.00k Employees Global specialty retailer of health and wellness products Three segments: Retail, Franchise and Manufacturing Franchise stores are located in the United States and 54 international countries Manufactures the majority of its branded products, but also merchandises various third-party products. It sells products through a worldwide network of more than 8,100 locations Mergers & Acquisitions Acquired company: A1 Sports Ltd Deal status: Completed Date: 02 Oct 2013 GNC: NYQ since announced: +4.71% Source: 2012 10k Page 7

Revenue by Segment/Product U.S. Retail Revenue by Product*  includes domestic retail and GNC.com, but excludes LuckyVitamin.co Source: 2012 10k Page 8

SWOT Analysis Strengths Weaknesses Opportunities Threats Leading Market Position Broad Product Offerings Multi-channel business model Reliance on Domestic Market Legal Proceedings High indebtedness Opportunities Threats Increasing online spending in the US Strategic Agreements Increasing obesity among Americans Increasing Competitive Pressures Uncertain R&D Outcomes Stringent regulations Increasing labor costs in the US

Company News GNC has linked a 15-year lease on 342,000 square feet in a 600,000-square-foot warehouse- and-distribution center in Anson business park. GNC Holdings, Inc. Announces $500 million Share Repurchase Authorization, Term Loan increase and repricing. Reaffirms its decision to develop a speculative building Reaffirms its commitment to consistently return capital to shareholders Reinforces its confidence in the fundamental strength and long- term prospects of the business GNC expects to begin operations in the regional distribution center in the fourth quarter of 2014. The facility will be one of the company’s four distribution centers for national operations Source: Source: Indianapolis Business Journal

Management Outlook World-class management team with a proven track record.    Highly experienced and talented management team has a unique combination of leadership and experience across the retail industry. Team has successfully executed on key growth initiatives while effectively managing the business in a difficult economic environment. Source: 2012 10k Page 7

Financial Analysis Healthy ratios Steadily improving profitability High operating leverage NOTE: The years above refer to the fiscal years ending on Dec 31

Financial Analysis Healthy and improving ratios NOTE: The years above refer to the fiscal years ending on Dec 31

Comparable Companies Source: Yahoo Finance

Stock Performance Source: Yahoo Finance

Stock Performance Source: Yahoo Finance

Discount Rate Source: Yahoo Finance

DCF Analysis

Decision Drivers Strengths Concerns Leading market position (10 times larger store base than 2nd player) New product line potential (sports nutrition, pet, etc.) High operating leverage with certain top line growth International expansion potential Concerns Stringent regulation Price competition Quickly changing consumer behavior

Recommendation Valuation Summary Recommendation: Current price: $58.16 DCF result: $66.10 Comps result: $60.76 Recommendation: Buy 100 shares at market, with an estimated total cost of $5816

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