Qianwen Wu, Wenqiang Xu, Yi Liu and Zuowei Xu

December 10, 2013

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

Source: Company overview, GNC website

Macroeconomic Outlook

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.

Population over 50 and

older

Disposable income

Nutrition Supplement

CCI

Macroeconomic Outlook

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: 2013 research. Stlouisfed.org

Key Statistics: Market size: 35 billion Annual growth: 5.7% for 2008-2013

Nutritional Supplements Industry

Source: Nutrition Business Journal

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.

Nutritional Supplements Industry

Source: Nutrition Business Journal

Nutritional Supplements Industry

Key to Success:

Industry Forces Analysis

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

Source: 2012 10k Page 7

2.58bnRevenue in USD (TTM)

264.80mNet income in USD

2007Incorporated

6.00kEmployees

• 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%

Revenue by Segment/Product

Revenue by Segment  U.S. Retail Revenue by Product* 

Source: 2012 10k Page 8

includes domestic retail and GNC.com, but excludes LuckyVitamin.co

SWOT Analysis

Strengths Weaknesses- 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

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

NOTE: The years above refer to the fiscal years ending on Dec 31

• Healthy ratios

• Steadily improving profitability

• High operating leverage

Financial Analysis

NOTE: The years above refer to the fiscal years ending on Dec 31

• Healthy and improving ratios

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 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 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

Questions?