Provide an investment recommendation

Email to management
Dear Team at WorldWide Brewing Co.,

We hope this email finds you well. Following the recent fire incident, we have revised our DCF model and would like to share our
updated valuation along with some key considerations.

Key Considerations:

1.Potential Compensatory Factors:

1. Despite the immediate impact of the fire, we have identified several compensatory factors that may mitigate the long-term
effects. These include insurance payouts, potential cost savings from improved efficiency in rebuilding, and the strategic
importance of the affected facility.

2.Long-Term Significance of the Fire:

1. While the fire has a short-term operational impact, we believe the long-term significance can be minimized through
effective crisis management and leveraging the incident to enhance safety protocols and operational resilience.

3.Credibility of Bid Amount Report:

It is crucial
1. value
Net present basedtoon
assess the credibility
perpetuity of the report valuing HappyHour Co. at over USD$650 million by DownUnder Brewing
growth method
Co. and consider its implications on our valuation and bid strategy.
Preliminary valuation Revised valuation (post-fire)
Revised
Value Based on Valuation:
8.5% WACC & 0.5% TGR Amount ($m) % of NPV
Present Value of Cash flows 409 50.9% Management Estimates:Revenue Projections (2021)
•Our
PV revised
of Terminal Valuevaluation post-fire is [insert revised valuation],
394 49.1% compared to the preliminary:Revised
valuation of [insert
Revenue: preliminary
$1,100 million valuation].
Implied Firm NPV 803 100.0%
This adjustment reflects the updated revenue
Net debt as of Mar-20E (85)
and gross margin assumptions for FY21, alongside the(%):GM:
Gross Margin anticipated
50.0% long-term recovery
Gross
trajectory.
Implied equity value 718 Margin Calculation:Gross
Implied offer share price (c) 361 Margin: $550 million (50.0% of $1,100 million)
% premium to current 118.8%

Source: Company Business Plan (January 2020); Equity research; J.P. Morgan analysis

WORLDWIDE BREWING 1