Film Content (Overweight/Maintain)

BIFF, the rise of China, and 2016 movie lineup

¢ This year’s BIFF puts spotlight on Chinese and Indian films; Asian Film Market launches world’s first intellectual property market Sector Update ¢ 2016 lineup: CJ E&M unveils wide range of genres and a number of US/Asia co- October 6, 2015 productions; focuses on dramas, action films, and disaster films; NEW bets on fantasy and disaster films ¢ Maintain Buy and TP of W110,000 for CJ E&M; Maintain Buy and TP of W11,000 for Daewoo Securities CCo.,o., Ltd. Showbox; Maintain Trading Buy and TP of W17,000 for NEW

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Jee-hyun Moon BIFF and Asian films of today +822-768-3615 [email protected] 1) BIFF puts spotlight on Chinese and Indian films

At the 2015 International Film Festival (BIFF), which celebrates its 20th anniversary this year, films from two of the biggest emerging markets, China and India, have taken center stage. The festival officially opened on October 1st with the Indian film Zubaan (directed by

Mozez Singh) and is set to close on the 10th with the China-US co-production Mountain Cry (directed by Larry Yang). Monster Hunt, which has become China’s highest grossing film of all time, was also screened at the festival on October 4th.

This year’s Window on Asian Cinema section featured a number of international co- productions, including the China-Korea film Bad Guys Always Die (starring Son Ye-jin) and the Korea-Indonesia film A Copy of My Mind. The Korean Cinema Today-Panorama section showcased several domestic blockbusters that have sold more than 10 million tickets, such as Ode to My Father, Assassination, and Veteran, but also smaller indie films like Stop (directed by Kim Ki-duk) and Right Now, Wrong Then (directed by Hong Sang-soo).

2) Asian Film Market launched E-IP market The Asian Film Market, an event that started in 2006 and runs annually during the BIFF, brings together industry experts to discuss all stages of filmmaking, from pre-production to sales. This year, the event also includes the world’s first entertainment intellectual property (E-IP) market, which is a trading zone for rights to a variety of films and original works, including story-format web dramas and games on new media platforms (web, mobile, etc.).

Notably, one of the forums scheduled for this year’s Asian Film Market—titled “Producing Blockbusters in China,” and set to be held on October 6th—will bring together top Chinese film producers to discuss key factors for success, the current status of co-productions, and the future of China’s film market. One of the participants is Jacky Y. H. Liu, CEO of Huace Union Pictures, which made the China-US co-productions Wedding Invitation and Miss Granny. The Chinese performance of Miss Granny will be reflected in CJ E&M’s 3Q earnings.

Figure 111.1. 202020 ththth Busan International Film Festival poster and authorauthor’’’’ss entrance badge

Source: Busan International Film Festival, KDB Daewoo Securities Research Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including tthehe U.S. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.

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Perspectives of distributors, producers, and investors

1) Film investors/distributors: Looking to improve domestic profitability while expanding overseas Major listed film distributors, including CJ E&M (130960 KQ), Showbox (086980 KQ) and Next Entertainment World (NEW; 160550 KQ), are looking to improve profitability in the domestic market while expanding their presence overseas (especially in China).

Companies that have theater operators within their corporate groups, such as CJ E&M and (a division of Lotte Shopping), each have around 20 films lined up for 2016. Companies without theater operating affiliates, such as Showbox and NEW, have relatively fewer movies—about 10 each—in their pipeline. On one hand, the number of Korean films breaking the 10mn admissions mark is increasing, but on the other, there are fewer “semi-hit” films selling around 4-6mn tickets. As such, we believe it will become increasingly important for domestic film distributors to break even on each individual project, not just on tentpole films, in order to maintain stable earnings.

On the overseas front, domestic firms are focusing their efforts on China. In 2016, CJ E&M plans to co-produce five films with China, one with the US, and four with Southeast Asia (Vietnam and Indonesia). Showbox has a co-production deal with China’s Huayi Brothers to make six Chinese movies over a three-year period, with the first film possibly hitting theaters next summer. Meanwhile, NEW has unveiled plans to produce three films in China through its joint venture with Chinese firm Huace Media, its second-largest shareholder. The local box-office performance of co-productions will likely serve as important share catalysts for these stocks.

2) Producers: Planning is the most important step in film production We had the opportunity to hear from Realies Pictures, which produced Masquerade and is currently producing With God (based on a NAVER webtoon). The firm emphasized that, from the perspective of film producers, planning is the most important step in film production. This includes budgeting, choosing a director, and casting; such choices are critical to a project’s reception by investors (who make investment decisions largely based on the lineup of actors, who, in turn, choose projects based largely on who the director is) and ultimately by consumers. Planning is all the more crucial to producers, as receiving their share of box-office revenue is contingent on sales exceeding the break-even point.

Korean producers are keenly interested in the Chinese market. Currently, Chinese producers who are interested in hiring Korean directors and actors for their projects often contact them individually. However, to ensure equal and sustainable partnerships between Korean and Chinese producers, Realies Pictures thinks it would be better if efforts at cooperation involved comprehensive packages (story, director, production staff, and actors). In this sense, it is positive that distributors are seeking Korea-China co-productions.

3) Film investors: Investors have a greater role in China than in Korea Union Investment Partners, a venture capital firm that mainly invests in cultural content, offered useful insights into the structure of the Chinese and co-productions.

Most notably, the revenue and profit sharing ratios among stakeholders differ between the Korean and Chinese film industries. In Korea, box office revenue is shared equally by theaters and distributors, whereas in China, theaters take about 60%. Moreover, while investors and filmmakers share profits at around a 6:4 ratio in Korea, investors in China take a much bigger share, at around 80%. As Korean distributors have difficulty directly distributing films in the Chinese market, they often switch to investing to recognize profits. Indeed, Shanghai Yiheya Media Co. (CJ E&M’s wholly owned subsidiary in China) is an investment entity, and Showbox’s Chinese operations are also in the form of project investments.

Korean film investors are now well aware of the need to improve their project packaging capabilities (story, staff, actors/actresses, investments, etc.) to advance deeper into the Chinese market. As part of such efforts, Union Investment Partners has invested in Bounty Hunters (a co-production involving a Korean director and Korean and Chinese actors) via its Global Content Fund no. 1.

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Policy makers’ perspective

1) Understanding the Chinese film industry The Korean Film Council shared insights from its effort to better understand the Chinese film industry, both quantitatively (market size and growth potential) and qualitatively (regulations and consumer preferences).

China is the world’s only movie market that is showing explosive growth. It expanded 32% YoY last year, with total movie attendance of 830mn people (four times higher than Korea’s). Chinese films grossed RMB16.2bn (market share of 55%), and foreign films RMB13.5bn (45%). In terms of distributorship, state-run enterprises dominated the market, with China Film Group and Huaxia holding market shares of 33% and 23%, respectively.

Given the tight regulations, the strong performances of foreign films are particularly impressive. China has an annual quota system restricting foreign movie imports to 34 titles a year on a revenue-sharing basis, and 30 titles that are purchased with a lump-sum payment without a revenue-sharing condition. Imported movies are mostly Hollywood films, and China is increasingly making investments in such movies, including Transformers: Age of Extinction (2014), Furious 7 (2015), and Mission: Impossible - Rogue Nation (2015).

Of note, Monster Hunt , released in July, has become the highest-grossing film ever in China. Based on Strange Stories from a Chinese Studio, a collection of tales written in classical Chinese, Monster Hunt is a fantasy about a baby monster with a human father. The movie’s success stemmed in part from Chinese regulators’ designation of August as a “protective month” for domestic films, when foreign films typically are not shown.

Fantasy and comedy films are popular with Chinese audiences, with Hollywood films dominating the fantasy segment and Chinese films driving the comedy segment. There have been few cases of other genres finding commercial success, largely because of the constraints on film producers in China. The absence of a movie rating system means that all movies must be eligible for all ages, and in addition, strict screening makes it difficult for producers to seek creativity and diversity.

Furthermore, even highly anticipated films often fail to make a splash in China. This summer, the lackluster results of Wild City , Lady of the Dynasty , and The Crossing 2 showed that a combination of prestigious directors, famous casts, and high production costs is no longer sufficient. On the other hand, The Hundred Regiments Offensive , featuring battles between Chinese communists and the Japanese military, found huge commercial success, likely because of its overt attempt to appeal to Chinese audiences’ sense of patriotism.

2) Possible Korea-China co-production The KOFIC stressed that, because of differences in culture and regulatory environments, movies that become hits in Korea will not necessarily succeed in China. Even Korean films that make it through China’s screening process must then overcome the hurdle of the screen quota system, and in many cases need re-editing (often to the detriment of the overall story) to be eligible for all ages. Considering such factors, it might seem better to target the Chinese market in the first place, from a film’s earliest planning stages.

As noted above, strict screening and the absence of a rating system have limited Chinese audiences’ familiarity with diverse genres, contributing to the popularity of family dramas and comedies. However, demand for more diverse genres should increase if Chinese audiences develop more sophisticated tastes. Notably, China replaced Japan last year as the largest importer of Korean movies. And given the growing film infrastructure in China (with new theaters springing up around the country) combined with the relative shortage of highly capable Chinese production staff, we believe Korea has strong potential to become a key player in the Chinese content market, especially now that the two countries have reached an agreement on film co-production.

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3) Key statistics regarding the Chinese movie market

Figure 222.2. Chinese film market size Figure 333.3. Number of admissions in Chinese film market

(RMBbn) Overseas sales (L) (%) (bn people) (%) 40 Other revenue (L) 80 0.9 60 Box office receipts (L) Admissions (L) Growth rate of box office receipts (R) Growth rate (R) Growth rate of film market (R) 0.8 30 60 45 0.6 0.6

20 40 30 0.5

0.3 0.3 10 20 15 0.2

0 0 0.0 0 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014

Source: KOFIC, KDB Daewoo Securities Research Source: KOFIC, KDB Daewoo Securities Research

Figure 555.5. Box office revenue from domestic/foreign filmsfilmsfilms in Figure 444.4. Number of cinemas and screens in China China

(units) (RMBbn) Box office receipts for foreign films (L) (%) 30,000 Number of cinemas 30 Box office receipts for Chinese films (L) 70 M/S of Chinese films (R) Number of screens 24,317 M/S of foreign films (R) 13.5

20,000 18,398 20 50 9 13,118 8.8 9,286 10,000 10 6.1 30 6,256 5,813 4.4 16.2 4,583 12.8 3,680 2,000 2,800 8.3 5.7 7 0 0 10 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Source: KOFIC, KDB Daewoo Securities Research Source: KOFIC, KDB Daewoo Securities Research

Figure 666.6. Number of movies with box office revenue exceeding Figure 777.7. Share of Chinese box office and of total number of

RMBRMBRMB100mnRMB 100mn films by genre (as of 2014)

(units) (%) Share of box office 75 Total number of films 35 Share of total number of movies Number of Chinese films 66 60 28 24 23.9

50 21 18.4 41 35 36 33 14 10.7 9.7 27 7 5.2 25 20 21 3.5 17 1.4 2.5 0.6 0.1 0

0 2010 2011 2012 2013 2014 Source: KOFIC, KDB Daewoo Securities Research Source: KOFIC, KDB Daewoo Securities Research

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2016 lineup: Host of domestic films set to open; Move into China to gain steam

1) CJ E&M (Buy/TP: W110,000): Most extensive lineup; Co-production in 4 countries Among major domestic distributors, CJ E&M has the largest number of films across a wide range of genres lined up for 2016. Some of the most highly anticipated projects include Young Lady (directed by Park Chan-wook), Asura (directed by Kim Sung-soo and starring Jung Woo-sung), A Night of Seven Years (directed by Chu Chang-min), and The Map Maker (directed by Kang Woo-suk).

Near term, the company has several movies hitting the big screen in 4Q15, including The Advocate: A Missing Body , Collective Invention , The Priests , and Himalaya . The company’s 4Q tentpole film is probably Himalaya , which is based on the true story of mountaineer Uhm Hong-gil’s expedition to Mount Everest to recover the body of his late friend Park Moo-taek. CJ E&M has around 10 international co-productions opening next year in four countries. The film The Peaceful Island is the company’s next co-production to be released in China, which will be followed by Final Recipe , the Chinese versions of Sunny and The Renegades, and A Man in Labor . The company also has three co-productions coming out in Vietnam, one in Indonesia and one in the US. The company’s domestic lineup will be large next year, and its overseas lineup, comprising 10 movies, is as extensive as if it were an entirely new movie studio. Domestically, much will depend on the box-office performance and profitability of the company’s films. Overseas, any meaningful success in the box office should provide a lift to shares.

TableTableTable 111.1. CJ E&ME&M’’’’ss film lineup for 4Q15 and 2016 Country TitleTitleTitle Director CastCastCast The Advocate: A Missing Korea (action, thriller) Heo Jong-ho Lee Sun-gyun, Kim Go-eun Body (Oct.) The Priests (Nov.) Jang Jae-hyun Kim Yun-seok, Kang Dong-won

Home Sweet Home Lee Kyung-mi Son Ye-jin, Kim Joo-hyuk (tentatively named) A Night of Seven Years Ryoo Seung-ryong, Jang Dong-gun Choo Chang-min AsuraAsuraAsura Kim Seong-su Jeong Woo-seong, Hwang Jung-min, Ju Ji-hun

Fabricated City Park Kwang-Hyun Ji Chang Wook, Shim Eun Kyung

Young Lady Park Chan-uk Kim Min-hee, Ha Jung-woo, Jo Jin-woong

Detective Hong Gil-dong Jo Sung-hee Lee Jae-hoon, Kim Sung-gyun

Time Renegade Kwank Jae-yong Lim Soo-jung, Lee Jin-wook, Jo Jung-seok

Korea (drama, romance) Himalaya (Dec.) Lee Seok-hoon Hwang Jung-min, Jung Woo Brothers Kwon Soo-kyeong Jo Jung-suk, Doh Kyung-soo (tentatively named) Remember O Goddess Lee Yoon-jung Jeong Woo-seong, Kim Ha-neul

Happy Facebook Lee Mi-yeon, Yoo Ah-in, Kim Joo-hyuk, Choi Park Hyeon-jin (tentatively named) Ji -woo , Kang Ha -neul , Lee Som Korea (historical drama) The Map Maker Kang Woo-suk Cha Seung-won, Jun-Sang Yu Kim Sun-dal Park Dae-min Yoo Seung-ho, Cho Jae-hyun

The Hymn (Dorihwaga ) Lee Jong-pil Ryu Seung-ryong,

Marital Harmony Hong Chang-pyo Shim Eun-kyung, Lee Seung-gi

Korea (diverse genres) Collective Invention (Oct.) Kwon Oh-kwang Lee Kwang-soo, Lee Chun-hee, Park Bo-young Schoolmistress Kim Tae-yong Kim Ha-neul, Yoo In-young, Lee Won-keun

Glory Days Choi Jeong-Yeol Jisoo, Suho

Our World Yoon Ga-eun Choi Soo-In, Seol Hye-in

China The Peaceful Island Chang Yoon-hyun Stanley Huang, Leon Dai Final Recipe Jin-ah Kim Michelle Yeoh, Henry Lau

Sunny Undecided In preparation for production

The Renegades Han Yan Undecided

A Man in Labor Ji-hoon Kim Undecided

Vietnam Sweet 20 Phan Gia Nhat Linh Miu Lê, Hua Vi Van Love Viet Max Chi Pu, Gil Le

Housemaid Derek Nguyen Undecided

Indonesia A Copy of My Mind Joko Anwar Tara Basro, Chicco Jerikho US The Young Messiah Cyrus Nowrasteh Sean Bean, David Bradley Note: Films set to be released in 2015 have the opening month in parentheses; other titles are anticipated to be released in 2016 or 2017 Source: CJ E&M, KDB Daewoo Securities Research

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2) Showbox (Buy/TP: W11,000): Drama/action/disaster films; Huayi co-production Showbox’s 2016 domestic film lineup is geared towards dramas, action films, and disaster films. The company has two major dramas awaiting release: A Man and Woman , which stars Jeon Do-yeon and and is set in Finland, and Mood of the Day , which features Moon Chae-won and Yoo Yeon-seok on a train bound for Busan. The two films are expected to hit theaters either at the end of this year or in 1H16.

We believe next year’s tentpoles will be A Violent Prosecutor and The Tunnel . The former is an action film featuring Hwang Jung-min and Kang Dong-won that tells the story of a former prosecutor falsely accused of murder taking revenge with the help of a con artist. The Tunnel is a disaster movie set inside a collapsed tunnel, starring Ha Jung-woo and directed by Kim Sung-hoon. Meanwhile, Showbox’s Chinese language co-productions with Huayi Brothers are expected to come to theaters starting next summer.

TableTableTable 222.2. ShowboxShowbox’’’’ss film lineup for 4Q15 and 2016 Country TitleTitleTitle Director CastCastCast Sorry, I Love You, and Thank You Korea Jeon Yoon-soo Ji Jin-hee, Seong Yu-ri, Kim Seong-gyun (Oct.) Lee Byung-hun, Jo Seung-woo, Baek Yun- The Insiders (Nov.) Woo Min-ho sik A Man and Woman Lee Yoon-gi Jeon Do-yeon, Gong Yu In the Mood for Love Jo Kyu-jang Moon Chae-won, Yu Yeon-seok Family Plan Kim Tae-gon Kim Hye-soo, Ma Dong-seok A Violent Prosecutor Lee Il-hyung Hwang Jung-min, Kang Dong-won Revival (tentative) Kwak Kyung-taek Kim Rae-won, Kim Hae-sook, Sung Dong-il Garyeojin Sigan (tentative) Eom Tae-hwa Kang Dong-won Love Virus (tentative) Kang Yi-Kwan Lee Sun-kyun A Murderer's Guide to Won Shin-yeon Kyung-gu Sol, Kim Nam-gil, Seolhyun Memorization Insufficient Evidence Yoon Jong-seok Not finalized The Tunnel Kim Sung-hoon Ha Jung-woo, Oh Dal-su Key of Life Lee Gye-Byeok Yu Hae-jin, Lee Joon, Jo Yoon-hee Korea Six Korean movies to be released over a (co-production (Blumhouse and Ivanhoe) five-year period with US) Six Chinese movies to be released over a China (Huayi Brothers) three-year period Note: Films set to be released in 2015 have the opening month in parentheses; other titles are anticipated to be released in 2016 or 2017 Source: Showbox, media reports, KDB Daewoo Securities Research

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3) NEW (Trading Buy/TP: W17,000): Fantasy/disaster films; China JV launched NEW’s 2016 domestic films are focused on the fantasy and disaster genres. The upcoming movie Lucid Dream is a fantasy thriller, while Bound for Busan and Station are a mix of the fantasy and disaster genres. We think next year’s tentpole will be the nuclear-power disaster film Pandora directed by Park Jung-woo.

In the more immediate term, the company’s tentpole film The Tiger: An Old Hunter’s Tale is scheduled to be released at the end of the year. The movie, which brings together the director and star of the film New World , depicts the story of the Joseon Dynasty’s last tiger hunter.

In China, the company has begun working on three projects through Huace & New, its joint venture with Huace Media.

TableTableTable 333.3. NEWNEWNEW’NEW ’’’ss film lineup for 4Q15 and 2016 Country TitleTitleTitle Director CastCastCast The Phone Korea Kim Bong-joo Son Hyun-joo, Uhm Ji-won (Oct .) You Sound Like Passion Jung Gi-hoon Jung Jae-young, Park Bo-young (Nov.) The Tiger: An Old Hunter’s Park Hoon-jung Choi Min-sik, Lee Eun-woo Tale (Dec .) Thinking of Elder Brother Lee Han Yim Si-wan, Go Ah-sung Lucid Dream Kim Joon-seong Ko Soo, Seol Gyung-goo, Kang Hye-jung Waiting For You Mo Heung-jin Sim Eun-kyung, Yoon Je-moon Bound for Busan Yeon Sang-ho Gong Yu, Ma Dong-seok, Jung Yu-mi Jangsanbeom (tentative) Heo Jeong Yum Jung-ah Pandora Park Jeong-woo Kim Nam-gil, Kim Myung-min Because I Love Joo Ji-hong Cha Tae-hyun, Kim Yoo-jung Letter from Jail Kwon Jong-kwan Kim Myung-min, Kim Sang-ho, Kim Hyang Seoul Station Yeon Sang-ho RyuGi Seung-ryong, Shim Eun-kyung, Lee Jun Witch Kim Dae-woo Not finalized China (Huace & Not finalized Witch Leste Chen NEW, JV) (remake of Kang Full’s web-based cartoon) Beauty Inside Baek Jong-yeol Not finalized (Chinese version) The Phone Not finalized Not finalized (Chinese version) Note: Films set to be released in 2015 have the opening month in parentheses; other titles are anticipated to be released in 2016 or 2017 Source: NEW, media reports, KDB Daewoo Securities Research

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APPENDIX 1

Important Disclosures & Disclaimers 222-2---YearYear Rating and Target Price History

Company (Code) DateDateDate RatingRatingRating Target Price Company (Code) DateDateDate RatingRatingRating Target Price CJ E&M(130960) 08/11/2015 Buy 110,000 No Coverage 07/26/2015 Buy 100,000 Showbox(086980) 09/30/2015 Buy 11,000 05/11/2015 Buy 80,000 07/26/2015 Trading Buy 10,000 Next Entertainment 03/29/2015 Buy 70,000 08/16/2015 Trading Buy 17,000 World(160550) 02/06/2015 Buy 51,000 07/26/2015 Trading Buy 16,000 11/26/2014 Buy 48,000

(W) CJ E&M (W) Showbox (W) Next Entertainment World 120,000 12,000 40,000

100,000 10,000 30,000 80,000 8,000

60,000 6,000 20,000

40,000 4,000 10,000 20,000 2,000

0 0 0 Oct 13 Oct 14 Oct 15 Oct 13 Oct 14 Oct 15 Oct 13 Oct 14 Oct 15

Stock Ratings Industry Ratings Buy : Relative performance of 20% or greater Overweight : Fundamentals are favorable or improving Trading Buy : Relative performance of 10% or greater, but with volatility Neutral : Fundamentals are steady without any material changes Hold : Relative performance of -10% and 10% Underweight : Fundamentals are unfavorable or worsening Sell : Relative performance of -10% Ratings and Target Price History (Share price ( ─), Target price ( ▬), Not covered ( ■), Buy ( ▲), Trading Buy ( ■), Hold ( ●), Sell ( ◆)) * Our investment rating is a guide to the relative return of the stock versus the market over the next 12 months. * Although it is not part of the official ratings at Daewoo Securities, we may call a trading opportunity in case there is a technical or short-term material development. * The target price was determined by the research analyst through valuation methods discussed in this report, in part based on the analyst’s estimate of future earnings. * The achievement of the target price may be impeded by risks related to the subject securities and companies, as well as general market and economic conditions.

Equity Ratings Distribution BuyBuyBuy Trading Buy HoldHoldHold SellSellSell 72.36% 13.57% 14.07% 0.00% * Based on recommendations in the last 12-months (as of June 30, 2015)

Disclosures As of the publication date, Daewoo Securities Co., Ltd and/or its affiliates do not have any special interest with the subject company and do not own 1% or more of the subject company's shares outstanding.

Analyst Certification The research analysts who prepared this report (the “Analysts”) are registered with the Korea Financial Investment Association and are subject to Korean securities regulations. They are neither registered as research analysts in any other jurisdiction nor subject to the laws and regulations thereof. Opinions expressed in this publication about the subject securities and companies accurately reflect the personal views of the Analysts primarily responsible for this report. Daewoo Securities Co., Ltd. policy prohibits its Analysts and members of their households from owning securities of any company in the Analyst’s area of coverage, and the Analysts do not serve as an officer, director or advisory board member of the subject companies. Except as otherwise specified herein, the Analysts have not received any compensation or any other benefits from the subject companies in the past 12 months and have not been promised the same in connection with this report. No part of the compensation of the Analysts was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report but, like all employees of Daewoo Securities, the Analysts receive compensation that is impacted by overall firm profitability, which includes revenues from, among other business units, the institutional equities, investment banking, proprietary trading and private client division. At the time of publication of this report, the Analysts do not know or have reason to know of any actual, material conflict of interest of the Analyst or Daewoo Securities Co., Ltd. except as otherwise stated herein.

Disclaimers This report is published by Daewoo Securities Co., Ltd. (“Daewoo”), a broker-dealer registered in the Republic of Korea and a member of the Korea Exchange. Information and opinions contained herein have been compiled from sources believed to be reliable and in good faith, but such information has not been independently verified and Daewoo makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy, completeness or correctness of the information and opinions contained herein or of any translation into English from the . If this report is an English translation of a report prepared in the Korean language, the original Korean language report may have been made available to investors in advance of this report. Daewoo, its affiliates and their directors, officers, employees and agents do not accept any liability for any loss arising from the use hereof. This report is for general information purposes only and it is not and should not be construed as an offer or a solicitation of an offer to effect transactions in any securities or other financial instruments. The intended recipients of this report are sophisticated institutional investors who have substantial knowledge of the local business environment, its common practices, laws and accounting principles and no person whose receipt or use of this report would violate any KDB Daewoo Securities Research 8

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laws and regulations or subject Daewoo and its affiliates to registration or licensing requirements in any jurisdiction should receive or make any use hereof. Information and opinions contained herein are subject to change without notice and no part of this document may be copied or reproduced in any manner or form or redistributed or published, in whole or in part, without the prior written consent of Daewoo. Daewoo, its affiliates and their directors, officers, employees and agents may have long or short positions in any of the subject securities at any time and may make a purchase or sale, or offer to make a purchase or sale, of any such securities or other financial instruments from time to time in the open market or otherwise, in each case either as principals or agents. Daewoo and its affiliates may have had, or may be expecting to enter into, business relationships with the subject companies to provide investment banking, market-making or other financial services as are permitted under applicable laws and regulations. The price and value of the investments referred to in this report and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur.

Distribution United Kingdom: This report is being distributed by Daewoo Securities (Europe) Ltd. in the United Kingdom only to (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), and (ii) high net worth companies and other persons to whom it may lawfully be communicated, falling within Article 49(2)(A) to (E) of the Order (all such persons together being referred to as “Relevant Persons”). This report is directed only at Relevant Persons. Any person who is not a Relevant Person should not act or rely on this report or any of its contents. United States: This report is distributed in the U.S. by Daewoo Securities (America) Inc., a member of FINRA/SIPC, and is only intended for major institutional investors as defined in Rule 15a-6(b)(4) under the U.S. Securities Exchange Act of 1934. All U.S. persons that receive this document by their acceptance thereof represent and warrant that they are a major institutional investor and have not received this report under any express or implied understanding that they will direct commission income to Daewoo or its affiliates. Any U.S. recipient of this document wishing to effect a transaction in any securities discussed herein should contact and place orders with Daewoo Securities (America) Inc., which accepts responsibility for the contents of this report in the U.S. The securities described in this report may not have been registered under the U.S. Securities Act of 1933, as amended, and, in such case, may not be offered or sold in the U.S. or to U.S. persons absent registration or an applicable exemption from the registration requirements. Hong Kong: This document has been approved for distribution in Hong Kong by Daewoo Securities (Hong Kong) Ltd., which is regulated by the Hong Kong Securities and Futures Commission. The contents of this report have not been reviewed by any regulatory authority in Hong Kong. This report is for distribution only to professional investors within the meaning of Part I of Schedule 1 to the Securities and Futures Ordinance of Hong Kong (Cap. 571, Laws of Hong Kong) and any rules made thereunder and may not be redistributed in whole or in part in Hong Kong to any person. All Other Jurisdictions: Customers in all other countries who wish to effect a transaction in any securities referenced in this report should contact Daewoo or its affiliates only if distribution to or use by such customer of this report would not violate applicable laws and regulations and not subject Daewoo and its affiliates to any registration or licensing requirement within such jurisdiction.

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Beijing Representative Office Shanghai Representative Office Ho Chi Minh Representative Office 2401A, 24th Floor, East Tower, Twin Towers Room 38T31, 38F SWFC Suite 2103, Saigon Trade Center B-12 Jianguomenwai Avenue 100 Century Avenue 37 Ton Duc Thang St,

Chaoyang District, Beijing 100022 Pudong New Area, Shanghai 200120 Dist. 1, Ho Chi Minh City, China China Vietnam Tel: 86-10-6567-9299 Tel: 86-21-5013-6392 Tel: 84-8-3910-6000 Daewoo Investment Advisory (Beijing) Co., Ltd. Daewoo Securities (Mongolia) LLC PT. Daewoo Securities Indonesia 2401B, 24th Floor, East Tower, Twin Towers #406, Blue Sky Tower, Peace Avenue 17 Equity Tower Building Lt.50 B-12 Jianguomenwai Avenue, 1 Khoroo, Sukhbaatar District Sudirman Central Business District Jl.

Chaoyang District, Beijing 100022 Ulaanbaatar 14240 Jendral Sudirman Kav. 52-53, Jakarta Selatan China Mongolia Indonesia 12190 Tel: 86-10-6567-9699 Tel: 976-7011-0807 Tel: 62-21-515-1140

KDB Daewoo Securities Research 9