スライド 1

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1 FAST RETAILING WASEDA University Ryo Takahata Yasushi Kobayashi Eriko Kawamoto Ayaka Moriwake

3 The Investment Recommendation Basic clothing The system of SPA High-quality and Low-price Growth in overseas market Target stock prices :21556 Yen Current stock prices :13720 Yen

4 Company Overview Fast Retailing is the Japanese apparel retailing company which has UNIQLO brand and which offers high-quality basic clothing at reasonable prices.

5 Corporate Statement Changing clothes. Changing conventional wisdom. Change the world.

6 Net Sales Net Sales: 814 billion Yen = 12.5 billion S Dollars (1 S$=65Yen) Number of Shops: Japan :878 World :136 Global Brands 17% UNIQLO International 9% Net Sales Component Ratio UNIQLO Japan 74%

7 SPA Model(Specialty store retailer of Private label Apparel ) design production final sale

8 Strong Points of the Business 1Basic Clothing 2High Quality Clothing 3 Strong Points 3Low Price Clothing

9 1Basic Clothing Anybody can wear Not affected by trend Can target every generation

10 Position in Apparel Market High Quality Basic Specialty Shops Fashion GMS Low Quality

11 2High-Quality Clothing Can focus on the same products for a long time Can improve the products as a result of trial and erro

12 3 Low Price Clothing Excluding the middleman Most of the products of them are made in China Placing large amount of orders on factories

13 The Current and Future Situation of FR UNIQLO Japan UNIQLO International

14 UNIQLO Japan Nation s largest apparel retailer Ranking Company Type of Business Appar el Retail Sales ( billion) Y/Y (%) 1 UNIQLO Specialty Store Shimamura Specialty Store Sogo and Seibu Department Store Takashimaya Department Store Daimaru Matsuzakaya Department Store Isetan Department Store Notes: Taken from the "FY2010 Buying Power Rankings" published in the Nikkei MJ (June 29, 2011)

15 Trend of Japanese Apparel Retailing Market (billions of yen) 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Scale of Apparel Retailing Market Business recession Aging society with a falling birthrate UNIQLO Japan s Growth

16 UNIQLO International Stores Store Number Trends UNIQLO international Stores in China Focus on China

17 Advantage in China 1 Population of Middle-Income Group ( thousand) 1,200,000 1,000, ,000 Estimate 856, , , , , , ,

18 Advantage 中国での優位性 in China 2 2 High Basic Fashion Point!! Low The number of branch shop in China

19 Future Net Sales Net sales =Numbers of store Net sales per store Net sales per square meter Floor area per store

20 Future Net Sales Net sales = Number of store Net sales per square meter Floor area per store

21 Future Net Sales of UNIQLO International Number of stores Increase in 50 stores every year China Net sales per square meter Reach the same level as Japanese stores by Floor area per store Large scale stores:1566m²

22 Stores Trends of Net Sales and Number of Stores 2500 Millions of yen (1S$=65 Yen) ,000,000 Others ,500,000 1,000, ,000 Other Asia China UNIQLO Japan 0 0

23 Valuation : DCF Method Calculate free cash flow from future net sales Prediction term: 10 years WACC : 5.06% Permanent growing rate : 2% Target stock prices :21556 Yen Current stock price: 13720Yen

24 Conclusion Basic clothing The system of SPA The Investment High-quality and Low-price Recommendation BUY Growth in overseas market The target stock prices :21556 Yen

25 Thank you for listening

26 Risk Factor Key Person Risk Risk of reliance on certain regions for production Risk of operations outside Japan

27 Future Net Sales of UNIQLO Japan Net sales =Number of store Net sales per store Net sales per square meter of retail floor space Shopfloor area per store Number of store The pace of opening large scale stores will decrease. Net sales per square meter of retail floor space Square stays the same (about 0.9 million) Shopfloor area per store Normal stores 766m² Large scale stores 1566m²

28 Worldwide Apparel Specialty Stores Company Name Sales(Billio Change Count ry (Flagship Brand) ns of dollar) (%)(local base) INDITEX(ZARA) Spain H&M Sweden GAP USA FAST RETAILING (UNIQ LO ) J apan Limited Brands USA NEXT UK Polo Ralph Lauren USA Esprit Hong Kong Abercrombie & Fitch USA Liz Claiborne USA Notes: Compiled from the annual reports of the companies listed above.

29 Future net sales Furure Net Sales Net sales UNIQLO Japan UNIQLO International Others Net sales UNIQLO Japan UNIQLO International Others Stores Total store The number of total store Total UNIQLO UNIQLO Japan Standard store Large-scale store UNIQLO international China Other Asia Others Other project Furure total store The number of total store Total UNIQLO UNIQLO Japan Standard store Large-scale store UNIQLO international China Other Asia Others Other project

30 60 (%) Gross Margin FAST RETAILING Averageof ZARA,H&M,GAP Industry average in Japan (%) Operating Margin FAST RETAILING Averageof ZARA,H&M,GAP Industry average in Japan

31 35 30 (%) ROE FAST RETAILING Averageof ZARA,H&M,GAP Industry average in Japan (%) 25 ROA FAST RETAILING Averageof ZARA,H&M,GAP Industry average in Japan

32 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% ROIC FAST RETAILING H&M GAP ZARA

33 Balance Sheet (milions of yen) Condenced Consolidated Balance Sheet Assets Cush and time deposit Funds surplus Acounts receivable trade Inventries Defferd tax assets others Total current assets Total tangible assets Goodwill others Total intangible fixed assets Total investments and other assets (Investment in securities) (Long-term loans reciable) Total fixed assets Total assets Liabilities Accounts payable trade Short-term loans payable New borrowing Current portion of lomg-term debt Income tax repayable

34 Total fixed assets Balance Sheet Total assets Liabilities Accounts payable trade Short-term loans payable New borrowing Current portion of lomg-term debt Income tax repayable others Total current liabilities Long-term loans payable Reserve for retirement benefits others Total fixed liabikities Total liabilities Net assets Common stock Capital surplus Legal reserve of retained earnings Treasury stocks Owner's equity Accumulated other comprehensive profit Minority stockholder's equity Total net assets Total liabilities and net assets

35 Balance Income Statement Sheet (milions of yen) Consolidated profit and loss statement Net sales Cost of sales Gross profit Depliciation Others Selling, general and administrative expenses Operaring incom Interest incom others Non-operating income Interest payed others Non-operating expenses Ordinary income Extraordinary profit Extraordinary loss Net income before income tax Total income, inhabitant and business tax Net income before minority stockholder's prof Minority stockholder's profit Net income

36 Cash Flow Statement (milions of yen) Cash flow statement Operating cash flow Net income Depliciation Acounts receivable trade Inventries Defferd tax assets Dffered tax liabilities Others(current assets) Accounts payable trade Income tax repayable Investment cash flow Total current assets Goodwill Others(intangible fixed assets) Total investments and other assets Depliciation Free cash flow Financial cash flow Short-term loans payable Current portion of lomg-term debt Others(current liabolities) Bonds Convertible bonds Long-term loans payable Reserve for retirement benefits Reserve for retirement benefits for officers Others(fixed liabolities) Common stock Capital surplus Legal reserve of retained earnings Treasury stocks Others(owner's equity) Accumulated other comprehensive profit Minority stockholder's equity Divident paid Decrease and increase in cash and time deposit Cash and time deposit at beginning of year Cash and time deposit at end of year

37 Future Balance Sheet Condenced Consolidated Balance Sheet(milions of yen) Assets Cush and time deposit Funds surplus Acounts receivable trade Inventries Defferd tax assets others Total current assets Total tangible assets Goodwill others Total intangible fixed assets Total investments and other assets (Investment in securities) (Long-term loans reciable) Total fixed assets Total assets Liabilities Accounts payable trade Short-term loans payable New borrowing Current portion of lomg-term debt Income tax repayable others Total current liabilities Long-term loans payable Reserve for retirement benefits others Total fixed liabikities Total liabilities

38 Income Future Statement Income Statement Condenced Consolidated Balance Sheet(milions of yen) Net assets Common stock Capital surplus Legal reserve of retained earnings Treasury stocks Owner's equity Accumulated other comprehensive profit Minority stockholder's equity Total net assets Total liabilities and net assets

39 Income Future Statement Income Statement Consolidated profit and loss statement(milions of yen) Net sales Cost of sales Gross profit Depliciation Others Selling, general and administrative expenses Operaring incom Interest incom others Non-operating income Interest payed others Non-operating expenses Ordinary income Extraordinary profit Extraordinary loss Net income before income tax Total income, inhabitant and business tax Net income before minority stockholder's profit Minority stockholder's profit Net income

40 Future Cash Flow Statement Cash flow statement(milions of yen) Operating cash flow Net income Depliciation Acounts receivable trade Inventries Defferd tax assets Dffered tax liabilities Others(current assets) Accounts payable trade Income tax repayable Investment cash flow Total current assets Goodwill Others(intangible fixed assets) Total investments and other assets Depliciation Free cash flow Financial cash flow Short-term loans payable Current portion of lomg-term debt Others(current liabolities) Bonds Convertible bonds Long-term loans payable Reserve for retirement benefits Reserve for retirement benefits for officers Others(fixed liabolities) Common stock Capital surplus Legal reserve of retained earnings Treasury stocks Others(owner's equity) Accumulated other comprehensive profit Minority stockholder's equity Divident paid Decrease and increase in cash and time deposit Cash and time deposit at beginning of year Cash and time deposit at end of year

41 Valuation ( milions of yen) UNIQLO Japan UNIQLO International Others Total sales Cost of sales Selling, general and administrative expenses EBITA Tax 46% 46% 46% 46% 46% 46% 46% 46% 46% 46% NOPLAT Depliciation Gross cash flow A change in working capital Capital investment Aggregate investment Operating free cash flow Discount rate Present value Total present value Risk free rate 1.17% Tarminal growth rate 2% Risk puremium 5.26% Discount rate 1.72 Levered beta Continuous value Cost of equity 5.36% Cost of debt 2.15% Enterprise value Tax rate 40% Debt 23,223 Non-enterprize assets Total net assets 287,987 Corporate value After-tax WACC 5.06% Debt Shares of minor shareholders 2548 Shareholder's equity Shares issueed Target stock price (Yen)

42 Scenario Analysis The number of store prediction base UNIQLO international China Other Asia Total net sales (milions of yen) good UNIQLO international China Other Asia Total net sales (milions of yen) bad UNIQLO international China Other Asia Total net sales (milions of yen) scenario probability stock price base good bad target stock price 21556

43 Future Net Sales Per Square Meter(Hundred of Yen) UNIQLO Japan UNIQLO International China Other Asia Others Area per store(m²) Area per store Standard store 766m² Large-scale store 1566m²

45 リスク要因人件費の高騰コストを圧迫する恐れキーパーソンリスク柳井氏に依存した経営後継者問題 ( 柳井氏は 65 歳で引退?)

46 SPA(Specialty store retailer of Private label Apparel ) design production final sale material procurance material manufacturer storage Online Store designer merchand ising Productiv e sector Production factory Stock control Internati onal store Japanese store customer merchandise plan marketing

47 国内アパレル市場動向 (billion yen) 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 衣服小売業販売額衣服小売業販売額市場規模約 10 兆景気後退の影響低価格カジュアルチェーン店が消費者に支持される商品単価が下落少子高齢化の進展経済規模の縮小国内ユニクロ事業の大きな成長は期待できない

48 ファーストリテイリング海外動向海外ユニクロ店舗総数中国店舗数特に中国に注力

49 中国での優位性 1 高品質 ( 千人 ) 中間所得者層人口予測 856, , ,415 低価格

50 中国での優位性 2 High Basic Fashion Low 今後の中国の出店数が成長のカギ!!

51 売上高予測国内売上高 = 店舗数 1 店舗当たり売上高 = 店舗数 1 m2当たり売上 1 店舗当たり売場面積国内店舗数年間 10 店舗ずつ大型店が増加すると予測しかし自社競合を避けるために大型店 1 店舗出店につき標準店 1 店舗をスクラップすると仮定 1 m2当たり売上 90 万円で一定と予測 1 店舗当たり売場面積大型店一店舗当たり 1566 m2標準店一店舗当たり 766 m2と予測

52 売上高予測海外売上高 = 店舗数 1 店舗当たり売上高 = 店舗数 1 m2当たり売上 1 店舗当たり売場面積店舗数 (2009 年以降 ) 平均出店増加数パターン毎年 19 店舗ずつ増加すると仮定日本平均出店増加数パターン毎年 41 店舗ずつ増加柳井さんの言う通り毎年 100 店舗ずつ増加一店舗当たり売上高

53 バリュエーション売上高予測から営業 CF を算出 WACC=5.05% 永久成長率 = 理論株価円マルチプルのレンジ ~ 現在株価円より %

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$Ł\”ƒ.eps$ P1 P4 P2 P7 P8 Consolidated balance sheet Consolidated statement of income Consolidated statement of shareholders' equity Consolidated statement of cash flows 1 $5,644,73 262,387 146,72.27 8.2 11,436,433