Sell call on Under Armour (NYSE:UAA) with a 1-year target price of USD11.7

1. LPHA CAPITAL
GIC x NYC Stock Pitch Challenge 2018
Team members:
Alwyn Thu Naung Zaw
Andrew Chok Rong Yao
Andy Chang Guang Hao
Marvin Chang Guang Wei
1
SELL
12-month price target:
USD11.73 (38.1% return)Under Armour, Under Pressure
Disclaimer:
This presentation deck has been prepared by Alpha Capital for the GIC x NYC Stock Pitch Challenge 2018, using publicly available information.
Alpha Capital has relied on and in many cases assumed without independent verification the accuracy and completeness of all such information.
This presentation deck is strictly for academic purposes and do not replace independent professional judgement.

2. LPHA CAPITAL
Executive Summary
Investment
proposal
✓ USD20mn short position in Under Armour (UAA-US) over a 1-year horizon
▪ Entry price of USD18.96 per share and target exit price of USD11.73 per share
Company and
industry overview
✓ Under Armour, Inc. (“Under Armour”) is one of the largest footwear, sports and casual apparel company in US
✓ Athleisure market is an exciting segment, providing high growth and higher margins than traditional performance apparel
Investment thesis
✓ Ineffective inventory management to continue weighing down on margins
▪ Discounted sales to get rid of inventory buildup likely to result in continued depressed gross profit margins
✓ Inability to capitalize on fast-growing, high-margin athleisure market
▪ Under Armour’s late entry into the athleisure market and poor marketing strategy continue to hinder its ability to gain a foothold in the
high-margin high-growth segment
✓ Inability to pivot to Direct To Consumer (DTC) channels for margin expansion
▪ Management provided an overly optimistic guidance on achieving a high DTC mix to justify gross margin recovery
✓ Restructuring plans likely to be ineffective in generating savings for the firm
▪ Restructuring initiatives by Under Armour have not been designed well enough to achieve SG&A savings and EBIT margin recovery
✓ Bullish APAC growth projected by consensus failing to materialize in the short to medium term
▪ Consensus is not correctly pricing in the cost of expansion into a market that Under Armour has weak presence in and is
overestimating its share in the region’s growth prospects
✓ Poor corporate governance yet to be fully priced in
▪ Under Armour’s weak governance, as seen in lacking board oversight and entrenched CEO powers, are likely precursors to future
financial/accounting and strategic issues
Valuation
✓ UAA-US is currently trading at 78% of 52-week high
✓ Target price of USD11.73 per share is a blended average of DCF (70% weight attributed to implied price of USD10.15 per share) and
FY2019 EV/EBITDA multiple (30% weight attributed to implied price of USD15.43 per share)
✓ DCF conducted using WACC of 6.67% and terminal growth rate of 2.5%
Key risks
✓ Upside risks include execution risks related to short-selling, improved inventory management and restructuring efforts resulting in margins
expansion and successful penetration into athleisure market
Source: Alpha Capital 2

3. LPHA CAPITAL
Founded in 1996, and headquartered in Baltimore, US, Under Armour is currently the third largest sportswear brand in the world.
Business description Key historical financials
Geographical presence
Business Overview
2.3
3.1
4.0
4.8 5.0
48.7% 49.0%
48.1% 46.4% 45.1%
13.5% 13.8% 12.9% 11.7%
6.6%
0.0%
40.0%
1.0
3.0
5.0
2013A 2014A 2015A 2016A 2017A
Margins(%)
Revenue(USDbn)
Revenue Gross margin EBITDA margin
Asia Pacific
EMEA
Latin America
North America
78%
9%
9%
4%
North America EMEA
Asia Pacific Latin America
2017A revenue
✓ Under Armour develops, markets, and sells performance apparel, footwear
and accessories for men, women and youth
✓ Its Connected Fitness segment offers digital fitness services through
MapMyFitness, MyFitnessPal and Endomondo applications
✓ Majority of sales are generated via wholesale channels, which include
sporting goods chains and retailers; it also sells products via its own
network of brand and factory house stores
✓ In 2017, sales via wholesale, direct to consumer, licensing and Connected
Fitness channels represented 61%, 35%, 2% and 2% of revenue
respectively
Product offerings
72% 68% 68%
17% 21% 21%
9% 9% 9%
1% 2% 2%
2015A 2016A 2017A
Connected Fitness
Accessories
Footwear
Apparel
Apparel
Footwear
Accessories
Connected
Fitness
Source: Capital IQ 3

4. LPHA CAPITAL
Under Armour has underperformed the broader index and has since fallen from a 3-year high of USD51.86 per share in Sep 2015 to trade at a 3-month VWAP of
USD21.33.
Historical Share Price Performance
0
20
40
60
-
20.00
40.00
60.00
80.00
Sep 2015 Mar 2016 Sep 2016 Mar 2017 Sep 2017 Mar 2018 Sep 2018
Volumetraded(mn)
Shareprice(USD)
Volume traded Under Armour NYSE Composite Index (rebased)
As at 14 Sep 2018
Share price USD18.96
Shares outstanding 444.9mn
Market capitalization USD8.16bn
Enterprise value USD8.74bn
3-month VWAP USD21.33
6-month VWAP USD19.89
1-year VWAP USD17.10
3-year VWAP USD28.19
52-week high USD24.31
52-week low USD11.61
S/N Date Event Price (USD) EV/EBITDA P/E
28 Jan 2016
Under Armour reported better than expected quarterly results driven by strong revenue growth in the
footwear segment and extensive overseas expansion.
42.04 36.67x 80.07x
25 Oct 2016
Under Armour warned investors that astronomical growth from prior years will not continue due to a
slowdown in core North American market and its male sporting apparel segment reaching maturity.
32.89 24.99x 74.02x
31 Oct 2017
Under Armour reported worse than expected quarterly sales amidst lower domestic demand for its
footwear and apparel segments.
12.52 12.54x 23.84x
26 Jul 2018
Under Armour reported quarterly revenue that exceeded expectations due to gradually improving
athletic space in US and strong sales in Europe and Asia.
22.04 31.86x n.m.
3
2
4
1
3
2
4
1
Source: Capital IQ, Bloomberg 4

5. LPHA CAPITAL
15%
12%
1%
4%
Others
68%
1.4%
1.6%
1.9%
2.2%
10.3%
15.7%
The global sportswear industry is dominated by Nike and Adidas; within the highest-growing Asia Pacific region, Under Armour only has a 1% share, with Anta and Li-Ning
being the domestic brands that compete against global players.
Under Armour’s main competitors Asia Pacific is the highest growth region
Geographical diversification amongst global brands
Industry Overview
Market share by brands in 2017
2017 global brand share breakdown LTM revenue
USD36,397mn
USD4,470mn
USD3,459mn
USD5,102mn
USD5,126mn
USD25,311mn
(100.0)
-
100.0
200.0
300.0
400.0
0.0% 2.0% 4.0% 6.0% 8.0% 10.0%
Sportswear spending per capita (USD)
5-year
forward CAGR
Size of bubble represents
2017 market size (USDbn)
North America
USD113.8bn
Asia Pacific
USD74.6bnCEEMA
USD33.6bn
Western Europe
USD57.4bn
Latin America
USD20.8n
North America Asia Pacific
20%
5%
4%
3%
Others
68%
54% 49% 42% 47% 47% 48%
48% 47%
43%
54% 53% 53% 50% 49% 49%
43% 45%
48%
94% 94% 94% 94% 94% 91% 87% 83%
76%
2009A 2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017A
Nike (North America)
Adidas (North America & Western Europe)
Under Armour (North America)
% of sales derived from home market
Source: Euromonitor, BMI Research, Frost & Sullivan 5

6. LPHA CAPITAL
The sportswear industry is gradually moving from performance apparel to athleisure products.
Under Armour’s growth story is in its final chapters More players joining the high-margin athleisure industry
Industry Overview (cont’d)
12%
8% 10% 10%
6%
12%
3%
-1%
2% -3%
14%
25% 27%
32%
28%
22%
3%
2012A 2013A 2014A 2015A 2016A 2017A
Nike Adidas Under Armour
Yoy revenue growth (USD)
Under Armour’s growth slowing while Nike and Adidas hold steady Athleisure market
Pure play
Sportswear
Others
Pure-play enjoys higher margins
30%
40%
50%
60%
70%
80%
Luxury
Pure-play
Traditional
Mass
Porter’s 5 forces analysis
Bargaining
power of
suppliers
Bargaining
power of
buyers
Threat of
substitutes
Threat of
new
entrants
Industry
rivalry
Bargaining power
of suppliers
Bargaining power
of buyers
Threat of
substitutes
Threat of new
entrants
Industry rivalry
✓ High for Under Armour, low for larger players as suppliers are heavily dependent on them
✓ Under Armour’s supply chain is concentrated, with 50% of fabric coming from 6 suppliers
✓ Moderate for Under Armour as it derives large portion of revenue from wholesale
✓ Under Armour decides product and price sold, depending on inventory conditions
✓ Moderate for Under Armour as it focuses on performance sportswear through
partnerships with top athletes; however, there is potential for disruption by athleisure
✓ Low industry-wide, as new entrants need to compete with the scale and sponsorship
dollars invested by incumbents
✓ High industry-wide, as there is constant need to develop new products and invest in
marketing; e-commerce has also allowed for easier comparison between brands
Source: Euromonitor, BMI Research, Frost & Sullivan 6

7. LPHA CAPITAL
Overview of Investment Thesis
1 Ineffective inventory management to continue weighing down on margins
2
3
4
5
6
Inability to capitalize on fast-growing, high-margin athleisure market
Inability to pivot to Direct To Consumer (DTC) channels for margin expansion
Restructuring plans likely to be ineffective in generating savings for the firm
Bullish APAC growth projected by consensus failing to materialize
in the short to medium term
Poor corporate governance yet to be fully priced in
12-mth target price:
USD11.73 per share
Source: Alpha Capital 7

8. LPHA CAPITAL
Under Armour’s mismanagement of inventory has resulted in discounted sales, which have harmed gross margins. In 2017, gross margin decreased 140bps.
Accumulation of inventory despite stalling sales Inventory turnover inefficient compared to global leaders
Investment Thesis 1 – Ineffective inventory management to continue weighing down on margins
Resultant discounted sales to clear inventory stockpile have weighed down on gross margins
28% 31% 30% 28%
-4%
5% 6%
8%
36%
46% 44%
30%
22% 26% 27%
11%
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Sales Growth Inventory Growth
2015A 2016A 2017A 2018A
High growth phase Slowing growth
0.94x 0.97x 1.00x
0.93x 0.94x
1.02x
0.74x
0.69x
0.79x
0.68x
0.78x 0.75x
0.67x
0.57x 0.64x 0.66x
0.57x
0.52x
2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2
Nike Adidas Under Armour
Off-price products
49%
48%
46%
48% 47%
45%
45%
46% 46%
43%
45%
45%
2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2
Gross margins have fallen gradually since 2015
UA Threadborne Siro
USD17.99 USD29.99
UA Packable Duffle Bag
USD20.99 USD34.99
UA Threadborne Blur
USD50.00 USD100.00
Source: Capital IQ 8

9. LPHA CAPITAL
Despite management’s attempts to bring down inventory growth, the inventory buildup issue is likely to persist in the short to medium term, contrary to overly-optimistic
views from brokers and investors.
Difficult for inventory growth to normalize in the short term No desirable way to deal with inventory buildup
Investment Thesis 1 – Ineffective inventory management to continue weighing down on margins (cont’d)
Gross margins expected to remain low
49%
48%
46%
48% 47%
45%
45%
46% 46%
43%
45%
45%
43% 43%
44% 44%
45% 45%
2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4 2019 2020 2021 2022
Historical Forecast
✓ Under Armour has shown commitment to bring down inventory growth, as
seen in 2018Q2’s inventory growth of only 11% compared to management
guidance of 20%
✓ Management is further guiding for inventory growth for FY2018 to be in the
low single digits
✓ While this is possible, there remains a huge buildup of inventories from the
mismatch of inventory and demand over the past few years
✓ Clearing this buildup of inventories will continue to weigh down on margins
in the short to medium term
Accumulation of
buildup due to
mismatch of
demand and
supply
Selling at discount
Inventory writeoff
(USD5.1m was written off in 2017)
Source: Alpha Capital 9

10. LPHA CAPITAL
✓ 2015 investor day: Stated intention to enter the
market, repeated desire in 2017 and 2018
✓ Late entrant: no experience and brand equity
✓ Unable to enjoy same growth as peers
31,565 41,060 47,389
19,450
26,614
31,214
2012A 2017A 2022E
Performance apparel Athleisure
✓ Its ambassadors are performance athletes, not style icons
✓ Poorly positioned to enter the market as it is recognized as performance
brand, and products are viewed as “too sporty” for athleisure
✓ Lack of commitment to athleisure market, with management continuing
to focus on performance aspect of products
✓ Promoted celebrity ambassadors through Dwayne Johnson and Gisele
Bündchen, but showcased them in athletic instead of casual settings
✓ In 2016, launched Under Armour Sportswear, a high-end line combining
sports with fashion, but dissolved it in 2017
✓ Market leadership in bottom’s market
✓ USD4bn women’s sportswear business in 2012 drove
athleisure sales
✓ 5-year strategic plan in 2015: extend capabilities to fashion,
emphasize on “sports being a lifestyle”
✓ Marketing through style icons (e.g. Kanye West)
✓ Celebrity-backed marketing plan (e.g. Rihanna, Kylie
Jenner) from 2014 to promote athleisure products
Global peers have experienced stronger growth due to the athleisure trend, where sports apparel are worn for casual purposes. Despite growth opportunities offered by the
athleisure market, Alpha Capital is critical of Under Armour’s ability to gain market share due to its late entry and weak non-targeted marketing strategies.
Late to the now-concentrated athleisure market Weak non-targeted marketing strategies
Investment Thesis 2 – Inability to capitalize on fast-growing, high-margin athleisure market
Athleisure growing faster than performance apparel market in US
Market size (USDmn)
Competitors’ strategies are targeted at athleisure market
Under Armour’s strategies are not well-tailored to athleisure
Source: Alpha Capital, Euromonitor, news run 10
Competitors have existing presence in athleisure market
Under Armour late to the athleisure market
Established
since 2008
Established
since 2011

11. LPHA CAPITAL
Reliance on the use of discounts and inter-channel cannibalization pose roadblocks against a shift towards DTC channels, which further impedes Under Armour’s plans for
margin expansion.
Investment Thesis 3 – Inability to pivot to Direct To Consumer (DTC) channels for margin expansion
Management shift to DTC in pursuit of higher margins Cannibalization by wholesale partners to hurt DTC strategy
Continual use of discount wholesale channels
Wholesale:
61% of 2017
revenue
DTC:
35% of 2017
revenue
Increase in margins due to higher DTC mix is overly optimistic
✓ Management pushing for DTC sales over
wholesale for margin expansion
✓ Based on management expectations of
2018 margins, 2018Q4 GPM expected to
increase 90bps yoy, which Alpha Capital
finds to be overly optimistic
Cannibalization 1: wholesalers selling same product at lower prices
UA Speedform Intake 2 USD100
USD90
(comes with USD10 voucher
to be used within a week)
Cannibalization 2: newly launched products & bestsellers sold at
both wholesalers’ website and Under Armour’s website
UA HOVR Phantom
(3rd best selling footwear)
UA HOVR Havoc Low
(New arrival on UA website)
✓ Very little reason for consumers to buy via DTC channels as wholesalers
are offering cheaper prices, loyalty programs and wider selection
✓ Cannibalization of premium products to increase as Dick’s would start
selling more premium merchandise such as The Rock’s products
✓ Competitors such as Nike and Adidas are more selective with which
wholesale partners can hold their premium products, breeding
exclusivity
Source: Alpha Capital, Annual Report, news run 11
✓ Consumer perception of Under Armour could shift to that of a low-end
brand, following massive discounting in recent times
✓ This would lead to Under Armour continually selling lower-priced
products and having to generate revenue through low-price wholesale
partners
Low-price retailer
Sports-focus retailer
✓ Under Armour products have ”delivered very
strong growth”
✓ “Significant declines in Under Armour sales”
✓ Scaled back on Under Armour inventory

12. LPHA CAPITAL
Alpha Capital believes Under Armour’s restructuring plans to be ineffective in providing annual savings beyond 2019, contrary to what management proclaims.
Investment Thesis 4 – Restructuring plans likely to be ineffective in generating savings for the firm
2017 restructuring has not provided significant tangible cost savings
Inadequate visibility from management on restructuringAnticipated 2018 restructuring costs
Breakdown of restructuring costs Amount
Inventory writeoff USD5.1mn
Goodwill impairment USD28.6mn
Property & equipment impairment USD30.7mn
Employee-related costs USD14.6mn
Intangible asset impairment USD12.1mn
Contract exit costs USD12.0mn
Others USD26.1mn
✓ No clear justification behind announced expected USD75mn cost savings
✓ Only 2 restructuring items could potentially bring future cost savings:
▪ Employee-related costs, which include cost related to releasing staff in low-growth stores
▪ Contract exit costs, which include cost related to exiting from distribution facility space as
Under Armour plans to reduce SKUs in future
“Accordingly, we anticipate completing our diligence and recording all related one-time charges by
the end of this year with respect to the approximate USD75mn in annual savings that we
previously cited for 2019 and beyond”
CFO Dave Bergman (2018Q2 earnings call)
Breakdown of restructuring costs Amount
Inventory-related charges c.USD10mn
Intangibles and other asset-related
impairments
c.USD15mn
Facility and lease terminations c.USD55mn
Contract terminations and other
restructuring charges
c.USD50mn
✓ Additional USD80mn to pursue opportunities to
“better align cost structures with long-term goals”
USD210mn in
restructuring
charges
Inventory-related
charges and
asset-related
impairments
✓ Charges relate to disposal of inventory outside of
current liquidation channels
✓ Magnifies the issue that inventory buildup is
getting harder to clear
Facility and lease
terminations and
contract
terminations
✓ Plans to open stores in growth regions (to end
2018 with c.330 stores from 302 as at 2018Q2)
✓ Terminating leases is one-off cost that will not yield
savings (net # of stores still increase)
Additional
USD80mn
charges
✓ USD80mn is more than half of previous
restructuring guidance, and there is lack of clarity
regarding what these charges will be used for
Source: Alpha Capital, Annual Report 12

13. LPHA CAPITAL
Despite Asia being a growth story for consumer discretionary in general, market consensus is overlooking the fact that it takes more than a few financial years to get a
foothold in a competitive market, especially with the Chinese population which may not be receptive to a foreign and relatively unfamiliar brand.
Investment Thesis 5 – Bullish APAC growth projected by consensus failing to materialize in the short to medium term
Market is overly bullish on Under Armour’s potential in APAC Likely poor adoption in China
Alpha Capital forecasts APAC exposure growth to be modestAPAC makes up only 8.7% of Under Armour’s total revenue
12% 12% 11% 10% 10%
4% 5% 7% 3% 3%
23% 22% 22% 22% 23%
2018E 2019E 2020E 2021E 2022E
China Japan India
Bulls anticipate Under Armour to capture growth in China and Japan
Sportswear market growth
84%
61% 55%
43% 43% 41% 35%
82%
62%
53%
44% 46% 42% 40%
Adidas Nike Li-Ning Anta Puma Under
Armour
361˚
Athletic Apparel Athletic Shoes
% of current purchasers in China who would buy brand again
APAC
9%
Others
91%
✓ Under Armour has traditionally focused
on the North American market
✓ To get exposure to the growing APAC
market, Under Armour must:
▪ Compete with established brands
such as Nike and Adidas, which
means more SG&A expense as
providing discounts on new
products is unlikely
▪ Open new stores which would
incur more lease and salary
expense
Revenue breakdown by
region
3.7%
5.6%
8.7% 9.0% 9.3% 9.8% 10.2% 10.7% 11.3%
2015A 2016A 2017A 2018E 2019E 2020E 2021E 2022E 2023E
Under Armour’s APAC revenue share
Source: Alpha Capital, Euromonitor, Capital IQ 13

14. LPHA CAPITAL
Kevin Plank’s poor performance in guiding Under Armour is likely to persist given his entrenched ownership of the company via the holding of class B shares that have
superior voting rights.
Investment Thesis 6 – Poor corporate governance yet to be fully priced in
Non-optimal governance structure Continued misalignment of CEO’s interests
Uninspiring management team at the helmSuspicious financials
Board structure
Ownership and
control
✓ Kevin Plank holds both positions of CEO and
Board Chairman, which undermines
effectiveness of board oversight
✓ Plank holds c.16% of total shares yet controls
c.65% of voting rights
Goodwill impairment
✓ USD558mn goodwill recorded for acquisition
of Connected Fitness in 2015; business has
been underperforming
Questionable
transactions
Insider selling
✓ Plank found building an empire outside Under
Armour, funnelling USD715mn and human
capital to these projects
✓ Instead of leading a recovery, Plank sold
shares worth USD72mn in 2016, which
portrays weak business confidence
Investment income
masking slowing
organic growth
✓ Under Armour increased stake in its
Japanese licensee to 29.5%; shift to equity
accounting artificially inflates financial figures
Management turnover
rate
✓ High turnover amongst Under Armour’s
executives paint a bleak picture of its stability
and growth prospects
Underwhelming CEO
✓ Plank has been named one of the worst
CEOs in US and has been blamed for Under
Armour’s less than satisfactory performance
Source: Alpha Capital, news run 14

15. LPHA CAPITAL
Alpha Capital is bearish on Under Armour’s growth and margins rebound story contrary to brokers’ beliefs. Weak growth and continually sluggish margins are key reasons
behind Alpha Capital’s conviction to short.
Alpha Capital Estimates
Revenue projections (USDbn) Margins projections
Geographical mixLeverage ratios
4.98
5.20
5.38
5.54
5.67 5.80
5.18
5.40
5.62
5.86
6.10
2017A 2018E 2019E 2020E 2021E 2022E
Alpha Capital estimates Brokers' consensus
43.9% 44.0%
45.0%
45.1%
46.7%
3.0%
2.8%
-1.0%
2.4%
4.8%
Gross margins Profit margins
77.8% 77.6% 77.4% 76.9% 76.4% 75.7% 75.1%
9.6% 9.6% 9.5% 9.5% 9.5% 9.6% 9.6%
8.9% 9.2% 9.5% 9.9% 10.4% 10.9% 11.4%
3.7% 3.6% 3.6% 3.6% 3.7% 3.8% 3.8%
2017A 2018E 2019E 2020E 2021E 2022E 2023E
North America EMEA Asia Pacific Latin America
Gradual diversification away from NA market
0.19x
0.26x
0.46x 0.47x
0.53x
0.39x
0.33x 0.30x
0.26x 0.25x 0.24x
D/E ratio
Ramp-down of debt due to cash sweep and revolving debt facilities
Source: Alpha Capital, broker reports 15

16. LPHA CAPITAL
Alpha Capital’s internal DCF model yields an implied share price of USD10.2, giving a range of USD8.5 – USD12.5 per share under sensitivity analysis to a range of
terminal growth rates (2.25% – 2.75%) and WACCs (6.17% – 7.17%).
Alpha Capital DCF Model
Sensitivity analysis of enterprise value (USDmn) Sensitivity analysis of price target (USD/share)
Discount rate inputs
Terminal growth rate
WACC
2.00% 2.25% 2.50% 2.75% 3.00%
5.67% 5,885 6,264 6,704 7,219 7,830
6.17% 5,180 5,466 5,791 6,164 6,595
6.67% 4,628 4,850 5,100 5,380 5,700
7.17% 4,185 4,362 4,559 4,777 5,021
7.67% 3,822 3,966 4,124 4,298 4,491
Terminal growth rate
WACC
2.00% 2.25% 2.50% 2.75% 3.00%
5.67% 11.9 12.8 13.8 14.9 16.3
6.17% 10.3 11.0 11.7 12.5 13.5
6.67% 9.1 9.6 10.2 10.8 11.5
7.17% 8.1 8.5 8.9 9.4 10.0
7.67% 7.3 7.6 8.0 8.4 8.8
Source: Alpha Capital 16
Enterprise value to equity value bridge
5,110
4,528
779 197
Enterprise
value
Debt Cash and
cash
equivalents
Equity
value
USDmn
✓ No minority
interest or
preferred shares
✓ Based on
2018Q2 net debt
of USD583mn
CAPM Inputs Source
Risk-free rate 3.0% US10Y Treasury Bond Yield
Market return 8.1% Aswath Damodaran
Beta 0.78 Levered using peer group unlevered beta of 0.69
Cost of equity 7.0%
7.0% cost of equity
&
4.8% cost of debt
WACC of 6.67%
Long-run D/E ratio of 0.15
Marginal tax rate of 21%

17. LPHA CAPITAL
3.7x 1.9x 6.8x 1.4x 0.8x 0.8x
25.6x
15.7x
27.8x
16.7x
7.4x
13.3x
30.1x
18.3x
32.9x
20.9x
9.4x
25.9x
72.2x
28.5x
60.2x
39.0x
23.2x
69.8x
On a LTM EV/EBITDA basis, Under Armour is currently trading at a significant premium to peers (27.6x vs peer group average of 17.8x). This is largely due to perceived
growth potential in the short to medium term, which Alpha Capital highly doubts will be realised.
Comparable Companies Analysis
3.4x 1.8x 5.9x 1.3x 0.8x 0.8x
22.3x
14.2x
23.7x
13.7x
7.2x 10.1x
26.1x
16.8x
28.0x
16.8x
8.9x
15.1x
31.5x
24.1x
41.2x
28.4x
15.5x
24.0x
3.4x 1.7x 6.2x 1.3x 0.7x 0.7x
22.3x
13.0x
24.8x
12.5x
6.7x 9.5x
26.1x
15.3x
29.3x
15.1x
8.2x
13.8x
31.5x
21.7x
43.4x
25.1x
14.0x
21.6x
EV/Revenue EV/EBITDA EV/EBIT P/E
USD135,135mn USD49,442mn USD20,545mn USD7,455mn USD4,434mn USD2,766mn
USD133,700mn USD49,056mn USD19,868mn USD7,369mn USD3,772mn USD2,763mn
LTMmultiplesNTMmultiplesFY19multiples
Market cap
EV Average
EV/Revenue: 2.6x
EV/EBITDA: 17.8x
EV/EBIT: 22.9x
PE: 48.8x
EV/Revenue: 2.3x
EV/EBITDA: 15.2x
EV/EBIT: 18.6x
PE: 27.4x
EV/Revenue: 2.3x
EV/EBITDA: 14.8x
EV/EBIT: 18.0x
PE: 26.2x
Source: Capital IQ 17

18. LPHA CAPITAL
52-week trading range
✓ Low: USD11.6 (3 Nov 2017)
✓ High: USD24.3 (8 Jun 2018)
Brokers’ price targets
✓ Low: USD13.0 (J.P. Morgan)
✓ High: USD25.0 (Barclays)
CoCo’s LTM EV/EBITDA
✓ Based on LTM EBITDA of
USD329mn
CoCo’s FY2019 EV/EBITDA
✓ Based on FY2019 EBITDA of
USD503mn
CoCo’s LTM EV/EBIT
✓ Based on LTM EBIT of
USD147mn
CoCo’s FY2019 EV/EBIT
✓ Based on FY2019 EBIT of
USD281mn
CoCo’s NTM P/E
✓ Based on NTM earnings of
USD128mn
CoCo’s FY2019 P/E
✓ Based on FY2019 earnings of
USD161mn
DCF
✓ Based on 6.67% WACC and
2.5% terminal growth rate
8.5
7.8
6.9
7.6
5.0
10.3
9.0
13.0
11.6
12.6
10.8
8.8
13.4
8.3
21.3
16.0
25.0
24.3
Trading comparables and Alpha Capital’s DCF valuation indicate that Under Armour’s share has been grossly overvalued by brokers and investors.
Valuation Summary
USD per share
Source: Alpha Capital, Capital IQ, broker reports 18
TP:
USD11.7

19. LPHA CAPITAL
Alpha Capital is bearish on Under Armour’s growth and margins rebound story contrary to brokers’ beliefs. Weak growth and continually sluggish margins are key reasons
behind Alpha Capital’s conviction to short.
Investment Catalysts
Alpha Capital EPS estimates against brokers’ consensus Alpha Capital predicts earnings miss for upcoming FYs
One restructuring announcement away from troubleNews on further discounted sales
EPS estimates 2018E 2019E 2020E
Barclays 0.20 0.35 0.60
Credit Suisse 0.18 0.35 0.47
Evercore ISI 0.16 0.35 0.60
UBS 0.17 0.29 0.40
J.P. Morgan 0.15 0.20 0.33
Median 0.17 0.35 0.47
Alpha Capital 0.06 0.36 0.36
vs median -65% 3% -23%
Under Armour to miss street estimates for the 3 upcoming FYs
Management may do one of the following:
✓ Revise earnings downwards
✓ Implement additional restructuring efforts
✓ Reiterate current earnings guidance
Negative signal to spark selloff of shares
✓ After Dick’s Sporting Goods missed sales expectation on 29 Aug 2018,
they blamed Under Armour for moving into low-price retailers; news of
Under Armour’s discounted sales led to its share price falling as much as
7% during the trading day
✓ Under Armour has a serious inventory buildup issue that cannot be solved
just by providing discounts; it wrote off USD5.1mn of inventory in 2017
✓ With historical inventory growth rate higher than sales growth rate, Alpha
Capital expects Under Armour to accumulate inventory buildup in the next
3 financial years
✓ Future news on discounted sales and inventory write-offs will send
negative signals to the market
Market will catch on to Under Armour’s failing restructuring efforts
2017:
✓ Incurred USD129mn
in restructuring costs
Jul 2018:
✓ Identified additional
USD80mn
restructuring cost
Feb 2018:
✓ Announced
restructuring plan of
c.USD110 – 130mn
Source: Alpha Capital, broker reports 19

20. LPHA CAPITAL
The following upside risks would jeopardise a short position in Under Armour: (1) execution risks, (2) improving inventory management and (3) restructuring efforts
successfully translating to long-term cost cutting, (4) successful penetration into athleisure market and (5) materialization of consensus’ margin rebound story.
Investment Risks
EvaluationDescriptionUpside risks
Execution risks to short-selling
Better inventory management
Successful penetration into
athleisure market
Restructuring efforts resulting in
cost cutting
✓ Risky strategy to hold a short position for a medium-term
to long-term horizon
✓ Short-term loss positions are likely
✓ Miscellaneous costs include margin interest and
dividends
✓ Historically, Under Armour has revised earnings
downwards 30 times and upwards 0 times
✓ Under Armour is not dividend-paying, hence cost to short
would not include dividends
✓ Inventory turnover could improve to levels of peers
✓ An increase in inventory turnover would reduce
discounted sales, leading to higher profit margins and
higher EPS
✓ Restructuring changes involving leases, employees and
contracts could result in positive long-term cost benefits,
resulting in higher EPS
✓ Alpha Capital estimates EBITDA margins to be 9.0%,
9.3% and 9.5% for 2018E, 2019E and 2020E
respectively
✓ There is an upside risk that EBITDA margins can climb
back to higher historical ranges of 11.7% – 13.5%
✓ Inventory turnover tends to be sticky and is not likely to
improve drastically in the short to medium term
✓ Restructuring has historically not been effective
✓ No net benefit as cost cutting in low-growth areas is
counteracted with expansion in high-growth areas
✓ Margin rebound story is already priced in
✓ EBITDA margin of 13.5% from 2018E – 2023E will result
in a implied price of USD18.3 per share, still below
current price
EBITDA margin rebound
✓ Growth would rebound and margins would expand if
Under Armour can get a foothold into the athleisure
market
✓ Under Armour has tried and failed to enter the market
✓ Market is competitive, with different brands already
establishing presence, making it difficult to penetrate
Source: Alpha Capital 20

21. LPHA CAPITAL21
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