Equity research done in end June 2012 for Summum Investment Fund.

1. DRAFT
The blank t-shirt company.
Equity research done for:
June 2012 | Summum Capital | Mo Yang

2. DRAFT
Business model
• Vertical integration and international
operations.
• manufacture basic, non-fashion, frequent-
replenishment products:
– T-shirt
– Fleece
– Sox
• Cost leadership based on high
volume, capacity and supply chain efficiency.
June 2012 | Summum Capital | Mo Yang

3. DRAFT
Global T-shirt company
Manufacturing plant :
Pakistan Head office: Montreal
Bangladesh Sales and marketing: Barbados
Caribbean Retail distribution centre: South Carolina
Honduras (Rio Nance)
Nicaragua
Distribution:
Australia Germany Norway
Austria Greece Poland
Belgium Guadeloupe Portugal
Brazil Holland Puerto Rico
Canada Hong King Spain
China Cyprus Hungary Suriname
Czech Republic Iceland Sweden
Denmark Ireland Taiwan Heavy CAPEX in Honduras to refurbish existing
Dominican Italy United Kingdom
Republic Japan USA plant. GIL has shifted production to low cost
Finland Mexico
June 2012 | Summum Zealand | Mo Yang
France New Capital geographics to ensure cost advantage.

4. DRAFT
Textile/apparel Industry
Gildan Brands Strategic partners Competitors
Public:
Privately held:
June 2012 | Summum Capital | Mo Yang

5. DRAFT
What do they sell?
T-Shirt Fleece Sox Underwear
Cost effective, unbranded, frequently changed clothing.
Average retail price of items ~ $10. Most business are generated through
screenprinter which are really t-shirt decorators.
At 1.7B of sales, that represents 170M items sold yearly.
June 2012 | Summum Capital | Mo Yang

6. DRAFT
Retail and print wear has more potential for growth but also a lot
smaller market than screen print
Sox fabricated
Distribtion/wholesaler Gildan direct web site
under license
Decorate the
white label Retail stores Licensor
product
Corporate (uniform, organization brand
Consumer
apparel, sportswear )
Screenprint business (75%) Retail / print wear business (25%)
The bigger higher margin business The smaller, less profitable business
June 2012 | Summum Capital | Mo Yang

7. DRAFT
Performance highlight
Sales per region 2009-2011
12% growth
2,500
1920
Sales in millions of $
2,000 Europe and other
1726
Canada
1,500 1311
United states
1,000
1037
500
0
2009 2010 2011 2012E
Main customer 2011 PPE per region 2011
Canada Other
Customer A Bangladesh 1% 2%
19% 2%
United States
15%
Customer B
12%
Honduras
Caribbean Basin 59%
Other 21%
69%
Gildan sales dependant on the economic situation of their big accounts. Higher Capex in Bangladesh expected to remain competitive.
June 2012 | Summum Capital | Mo Yang

8. DRAFT
Historical results
(in millions of $) 2012 2011 2010
Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
Sales 483 304 482 530 383 331 369 395 327 220
COS 397 297 383 380 274 250 268 288 236 155
Gross margin 86 7 99 150 109 81 101 107 91 65
% 18% 2% 21% 28% 28% 24% 27% 27% 28% 30%
Selling and admin 56 51 35 36 51 42 27 25 23 20
Earning before tax 28 -47 40 91 57 38 54 63 50 29
EBITDA adjustment
Interest 3 2 2 1 0 3 0 0 0 0
Depreciation 21 18 22 22 39 15 17 17 16 16
EBITDA 51.54 -26.52 63.58 113.92 96.2 56.1 71.28 79.73 66.07 45.14
% 11% -9% 13% 21% 25% 17% 19% 20% 20% 21%
Sales of T-shirt fabricated with high cost cotton purchased in 2011 when
Average gross margin 23.4% cotton reached plateau of $200 cents per pound and decrease in selling price
Average EBITDA margin 16% due to adjustment to current price of ~100 cents per pound.
June 2012 | Summum Capital | Mo Yang

9. DRAFT
Stock risk
Risk are anything that can reduce earnings:
• Cotton price;
• Economy /consumption;
• Foreign currency risk exposure;
• Transportation cost, petroleum price;
• Defined benefit plan;
• Negative publicity caused by sweatshop
practice.
June 2012 | Summum Capital | Mo Yang

10. DRAFT
The one single biggest production cost risk: Cotton price
• Cotton and polyester fibers are the primary raw materials used in the manufacture of Gildan’s products.
• Chemicals, dyestuffs and trims purchased from a variety of suppliers also affect directly production cost.
Cotton fibers is affected by:
– Consumer demand;
– Weather;
– Speculation on the commodities market;
– The relative valuations;
– Fluctuations of the currencies of producer the one of the purchaser.
• Operations are also affected by fluctuations in crude oil and petroleum prices, which can also influence
transportation costs and the cost of related items used in our business, such as polyester fibers, chemicals,
dyestuffs and trims.
Cotton price vs. GIL stock price
250
Cotton price in cents per pound
200
Cotton price and stock price
Cotton price
150
Stock price
uncorrelated due :
100 1- Forward on cotton
2- GIL ability to adjust selling
50
price
0 3- Expensive cotton shirt only
Jan/09 Jul/09 Jan/10 Jul/10 Jan/11 Jul/11 Jan/12 sold much later due to
Cotton price correlation until July 10 2010 inventory build-up. Impact is
June 2012 | Summum Capital | Mo Yang often delayed by 3-6 months.

11. DRAFT
Sales seasonality exist in the fashion
clothing industry
Sales seasonality exist:
• Low demand in Q1 due to lower demand for
700 T-shirt.
600 • Highest demand in Q3. Client stock up for
Sales in million of $
2012
500
2011
peak summer season and back to school
400
season stock up.
300 2010
200 • Historical seasonality factor: Q1: Nil, Q2:
100 40%, Q3: 38%, Q4: -13%.
0 • Management guidance is 1.9B in sales for
Q1 Q2 Q3 Q4 2012.
Q1 (bottom) Q2 Q3 (peak) Q4
Nov Dec Jan Feb Mar April June July Aug Sept Oct Nov
+- 0% +40% +38% -13%
June 2012 | Summum Capital | Mo Yang

12. DRAFT
Valuation and multiples
Strong balance sheet: Attractive multiple:
• Enterprise value = ~ 3.53B • EBITDA margin: 11.5%
• Revenue: 1.8B • EV/Revenue = 1.96
• Debt to equity: 26.12% • P/S: 1.80
• EV/EBITDA = 16.93 • EPS: 1.32$
• P/B: 2.53 • PE: 20.57x
GIL vs. peers
Co. Price Ticker Currency Sales Yield % Market cap Net debt/ total cap Gross margin P/S P/B ROE Trailing PE Trailing EPS
Gildan 27 GIL USD 1.80B 1.14% 3.22B 16.50% 27.0% 1.84 2.59 12.22% 26.34 1.00
Others:
Delta 14 DLA USD 0.492B 0.00% 0.117B 113.50% 24.0% 0.24 0.89 0.95% 92.25 0.15
Hanesbrand 27 HBI USD 4.51B 0.00% 2.6B 82.30% 33.4% 0.57 4.02 30.00% 13.77 1.94
Ennis 14.9 EBF USD 0.516B 4.80% 3.82B 22.20% 25.0% 0.76 1.09 6.67% 16.08 0.92
VF Corp 135 VFC USD 10.06B 2.10% 14.81B 17.00% 43.0% 1.51 3.4 21.08% 16.76 8.07
Competitor Average 58.75% 31.35% 0.77 2.35 14.68% 34.715 2.77
Unspectacular yield with payout of Lowest leverage but probably not the optional Based on target PE 23x, stock should be
30% capital structure. trading at $30.
Gross Margin is 435bps below industry average
June 2012 | Summum Capital | Mo Yang

13. DRAFT
What explain 2011 35% growth and is it
sustainable?
• Acquisition of Golden Toe in Q2 2011, added 280$ of revenues.
Organic growth was 10%.
• Goldentoe was acquired for $350M.
• Acquisition of Anvil Holding in Q2 2012 for $88M:
– Reason for acquisition: solidify US distribution network and entry into
the organic and eco-responsible business;
– Increase sales by $200M;
– EBITDA margin of 8.5%;
– Increase EPS by 20 cents, thus accretive.
June 2012 | Summum Capital | Mo Yang

14. DRAFT
Opportunity
• Improve margins by further improving vertical
integration.
• Growth of direct consumer market.
• Profit from lower commodities price in Q3 and
Q4.
• Improved margin due to use of lower cost
cotton and decrease in transportation cost
(overall bearish commodity market).
June 2012 | Summum Capital | Mo Yang

15. DRAFT
2012 Earning estimate
Q1 Q2 Q3 Q4 Total
Mgmt guidance -.38 .23 .80 .66 1.31
Consensus EPS trend -.39 .21 .78 .80 1.40
Mo -.38 .22 .77 .68 1.29
Earning surprise none 9.5%
Peak cost cotton used in COGS and Mo’s assumption: Cotton price, lower
customer lower order (operating on fuel price, higher interest, higher Anvil
lower level of stock) due to destocking sales at 8.5% margin. Organic growth of
season. 8% and seasonality effect.
Management forecast growth of 12% yearly to boost sales from $1.7B to 1.9B.
June 2012 | Summum Capital | Mo Yang

16. DRAFT
Very positive outlook by Bay and Wall
Street
Explanation:
Consensus
Mean consensus OUTPERFORM EPS is strongly correlated with stock price, thus
# of analysts 16 expected strong second half of the year will
bring sales to $1.9B which represent growth of
Average price traget 30
12%.
Last close price 27
Better growth perspective with acquisition of
Anvil which will solidify US supply and sales
channel and strategic t-shirt market.
June 2012 | Summum Capital | Mo Yang

17. DRAFT
Looking forward
• Gildan will have to continue to invest in manufacturing in
low cost countries such as Bangladesh to remain
competitive in the long-term.
• Bangladesh offers a capable labor force at a very lost cost
as well as offers duty free access to Europe, Canada, China,
Japan and Australia amongst others.
• Moreover negotiations are under way between the US and
Bangladesh to import BGD goods into the US duty free.
• Also considering the increased operational costs in Central
America, Gildan should pursue an aggressive investment
plan in Asia notably in BGD, India and Pakistan.
June 2012 | Summum Capital | Mo Yang

18. DRAFT
Conclusion
• We believe GIL.TO represent a solid stock priced correctly by the market
– Low leverage
– Trading range should be between 24$ - 30$ based on PE and potential growth
of 12% yearly.
– Overall, analysts are positive and consensus target is of $30
• How to increase current EP:
– GIL has to increase margin its operating margin to match its peers ~33%
– Profit from lower commodities cost
– Develop European market and Asian market
• Q3 earning call : first week of August 2012. Q3 Mgmt guidance EPS: 0.80 and YTD
sales of $1.9B
June 2012 | Summum Capital | Mo Yang