1. David Lee | Ningzhou Fang Reviewed October 25, 2016 Updated: November 17, 2016

2. Agenda Section I Business Summary Company Overview Business Segments
Porter’s Five Force
SWOT Analysis
Section II Key External Drivers
Macroeconomic Outlook
Industrial Review
Section III Technical Analysis
Section IV Financial Analysis
Section V Valuation
Discount Cash Flow Model
Comparable Valuation
Section VI Forecasting
Section VII Recommendation

3. Company Overview
WBA is the first global pharmacy-led health and wellbeing enterprise
Basic Information
Company Size
Founded in 2014, Headquarter in Delaware, Successor of Walgreen Co.
The largest retail pharmacy, health and daily living destination across the U.S. and Europe
Portfolio includes: Walgreens, Duane Reade, Boots and Alliance Healthcare
Purpose is to help people across the world lead healthier lives
Over 13,200 stores in 11 countries
Equity method investments have presence in more than 25 countries and employ more than 400,000 people
Over 390 distribution centers delivering to more than 230,000 pharmacies, doctors and health centers each year in more than 20 countries
Business Strategies
Key Statistics (10/24/16)
Fosters in-house new product research and development and manufacturing capabilities
Seeks to drive innovative ways to address global health and wellness challenges
Well positioned to expand customer offerings in existing markets and become a health and wellbeing partner of choice in emerging markets
Shares Outstanding: 1.08 billion
Current Price: $83.11
Trailing P/E Ratio: 21.8
Market Cap: $90 billion
Trailing Annual Dividend Yield: 1.78%
Real Client Managed Portfolio

4. Retail Pharmacy International Pharmaceutical Wholesale
Business Segments
Pharmacy-led health and beauty retail business in 50 states
Market leader in US; operated 8,173 retail stores in 2016
76% of US population live within 5 miles of Walgreens retailer
Focus on customer loyalty; 67% pharmacy, 33% retail sales
Retail Pharmacy USA
Pharmacy-led health and beauty retail business in 8 countries
Operated 4,673 retail stores in 2016
Growing online presence with online retail support platforms
Market leader in Europe
Retail Pharmacy International
Services more than 110,000 pharmacies, doctors, health centers and hospitals; 288 distribution centers in 11 countries
Products & Services include IP and Licenses, in-house R&D, sourcing raw materials, competitive availability, and exports
Pharmaceutical Wholesale

5. Buyer’s Bargaining Power Supplier’s Bargaining Power
Porter’s Five Force
Industry
Rivalry
Entry Barriers
Buyer’s Bargaining Power
Threat of Substitute
Supplier’s Bargaining Power
Entry Barriers (Moderate)
-High industry attractiveness and room for small businesses
-Low capital requirement
-Industry concentration raises barriers
Industry Rivalry (High)
-Multiple competitors
-Undifferentiated products
Supplier’s Bargaining Power (Moderate)
-Strong long term relationships with suppliers
-Access to raw material channels
-Industry giant
Buyer’s Bargaining Power (Moderate)
-Multiple alternatives and existence of public health insurance
Threat of Substitutes (High)
-Multiple alternatives like drug retail chain, supermarket, independent drug store, online drug ordering and mail-order drugs

6. SWOT Analysis Strengths Weaknesses Threats Opportunities
Regulation – national, state, and local
Pricing pressure
Competitive landscape
Uncertainty regarding further economic conditions
Acquisition of drugstore chains bring growth potentials
International expansion
Online retail platforms
High degree of operating leases
Equity method investments
Seasonal variations in business
Market cannibalization
Store locations
Brand recognition
Customer loyalty program
Diversified retail operations
In-house R&D
Expansive relations with domestic and foreign suppliers
Strengths
Weaknesses
Threats
Opportunities
Real Client Managed Portfolio

7. Macroeconomic Outlook
The relatively sluggish increase is attributed expected economy recovery
Number of People Aged 65+
Federal Funding for Medicare
Number of Physician Visits
Number of People with Health Insurance
Real Client Managed Portfolio
Source: IBIS World URL:

8. Industry Review
Industry revenue will be less volatile, increasing 5.4% annually over the next five years
Current Performance
Major Players
Industry Structure
Key Statistics
Life Cycle Stage: Mature
Revenue Volatility: Medium
Capital Intensity: Low
Regulation Level: Medium
Revenue: 283.6B (2016)
Profit: 13.9B (2016)
Annual Growth: 2.7%( )
Expected Growth: 5.6% ( )
Business: 21,738
Real Client Managed Portfolio
Source: IBIS World URL:

9. Technical Analysis

10. Assumption for Income Statement
In millions of usd, except per share amount

11. Financial Analysis
Consistent Operating Margin with Increasing Liquidity Ratios
Real Client Managed Portfolio
Source: Financial inputs from Capital IQ

12. Capital Structure
Improving Interest Coverage and Cash Conversion Cycle
Real Client Managed Portfolio
Source: Financial inputs from Capital IQ

13. DuPont Analysis – ROE Improving Tax Burden and Operating Margin
Real Client Managed Portfolio
Source: Financial inputs from Capital IQ

14. Discount Rate Calculation

15. Discount Cash Flow Valuation
WBA implied share price is $86.24

16. Comparable Companies
Comparable companies are in similar business model with WBA
Comparable Companies
CVS Health Corporation
Patterson Companies, Inc.
The Jean
Coutu Group
PharMerica Corporation
Ticker
CVS
PDCO
PJC
PMC
Business
Description
Retail and health company in US; operated subsidiaries CVS Pharmacy in 2014
Medical supplier primarily in the business of veterinary and dental products, operating in US, Canada and Europe. 
Canadian drugstore chain; the third largest pharmacy distributor in North American
Second largest in institutional pharmacy service market
Market Cap
$98,827
$4,559
$2,710
$707 EV
$121,262
$5,612
$2,599
$1,111
LTM Revenue
$166,729
$5,576
$2,077
$2,029
LTM EBITDA
$12,356
$443
$232
$136
LTM EBIT
$10,006
$355
$213
$84
Source: Capital IQ

17. Comparable Valuation
WBA implied share price is ranged from $81.09 to $82.71
In millions of usd, except per share amount

18. Forecasting – EPS and Price/Share
EPS: , $79.06-$101.29/share
P/E Multiples Analysis
2012
2013
2014
2015
2016
2017E
2018E
2019E
2020E
2021E
Dividends per Share
0.90
1.09
1.25
1.32
1.44
1.68
1.90
2.15
2.42
2.74
EPS
$2.31
$2.69
$2.03
$3.87
$3.85
$4.76
$5.12
$5.48
$5.77
$6.10
Share Price
$36.44
$53.80
$59.27
$83.10
$80.62
$79.06
$85.10
$91.03
$95.90
$101.29
P/E
15.79
19.99
29.16
21.46
20.92
16.61
Total Return
3.7%
47.0%
10.2%
39.5%
-2.8%
-1.6%
7.8%
7.1%
5.5%
5.8%
Annualized Return
23.5%
18.9%
23.7%
17.9%
14.4%
13.4%
12.6%
11.8%
11.2%
Real Client Managed Portfolio
Source: 2017 Forward P/E Input from Morningstar

19. Current Share Price is Fairly Valued
Recommendation
Current Share Price
Discount Cash Flow
Implied Share Price
Comparable Valuation Implied Share Price
$83.19
$86.24
$81.09-$82.71
Current Share Price is Fairly Valued
Asset intensity poses financial risk for business
Inorganic growth opportunities through M&A transactions
Additional growth opportunities
overseas
Firm to continue growth
through 2017
Hold

20. Q&A
Thank You !