November 20, 2015

KOREA

Company News & Analysis Major Indices Close Chg Chg (%) NCSOFT (036570/Buy/TP: W270,000) KOSPI 1,989.86 0.95 0.05 Lineage I update effects continuing into November KOSPI 200 244.80 0.01 0.00 KOSDAQ 685.16 4.59 0.67

Turnover ('000 shares, Wbn) Volume Value KOSPI 409,589 3,981 KOSPI 200 96,472 2,804 KOSDAQ 849,659 3,478

Market Cap (Wbn) Value KOSPI 1,263,199 KOSDAQ 198,201

KOSPI Turnover (Wbn) Buy Sell Net Foreign 906 1,085 -179 Institutional 758 613 145 Retail 2,144 2,262 -118

KOSDAQ Turnover (Wbn) Buy Sell Net Foreign 184 161 22 Institutional 121 108 12 Retail 3,160 3,192 -33

Program Buy / Sell (Wbn) Buy Sell Net KOSPI 677 696 -19 KOSDAQ 41 32 9

Advances & Declines Advances Declines Unchanged KOSPI 513 297 65 KOSDAQ 660 374 84

KOSPI Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Hyundai Merchant Marine 5,730 1,200 241 Electronics 1,285,000 -4,000 217 Hanmi Pharm 791,000 16,000 162 KOAS 3,840 885 116 LG Chem 322,500 -3,500 80

KOSDAQ Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value SEJONG TELECOM 2,380 115 146 New Pride 13,850 -950 134 Komipharm 51,000 -3,700 119 CCS Cable TV 1,355 -95 100 91,400 700 94 Note: As of November 20, 2015

This document is a summary of a report prepared by Daewoo Securities Co., Ltd. (“Daewoo”) and published on our website. Please review the compliance notices contained in the original report. Information and opinions contained herein have been compiled in good faith from sources deemed to be reliable. However, the information has not been independently verified. Daewoo makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy or completeness of the information and opinions contained in this document. Daewoo accepts no responsibility or liability whatsoever for any loss arising from the use of this document or its contents or otherwise arising in connection therewith. Information and opinions contained herein are subject to change without notice. This document is for informational purposes only. It is not and should not be construed as an offer or solicitation of an offer to purchase or sell any securities or other financial instruments. This document may not be reproduced, further distributed or published in whole or in part for any purpose.

NCSOFT (036570 KS) Lineage I update effects continuing into November

Game Lineage I update to fuel strong growth in 2016 Lineage I has shown a meaningful increase in its number of players and playtime since its Company Update content update on October 14 th , its first in seven years. According to Gametrics , which November 20, 2015 collects data on internet café games, Lineage I accounts for 4.1% of internet café playtime as of November 17 th , almost double its pre-update level of 2.07% between

October 1 st and October 14 th . (Maintain) Buy Lineage I internet café playtime is up 63.2% to a daily average of 187,000 hours as of November 17 th from 115,000 hours between October 1 st and October 14 th . Given that Target Price (12M, W) 270,000 the November daily average is 178,000 hours, this suggests that the title’s playtime in internet cafés has more recently increased. Share Price (11/19/15, W) 211,500 We estimate the title generated ARPU of W51,000 from 440,000 players in 3Q. Given Expected Return 28% the recent increase in user metrics , we believe the company will continue to see a steady cash flow for quite some time.

OP (15F, Wbn) 242 Mobile titles, global service, and blockbuster momentum in 2016 Consensus OP (15F, Wbn) 254 NCSOFT plans to release a number of mobile titles based on its original intellectual EPS Growth (15F, %) -15.9 property, starting with Blade & Soul China mobile, which will be published by Tencent in Market EPS Growth (15F, %) 21.0 early 2016. There are currently two mobile titles based on Lineage I and another two P/E (15F, x) 24.0 based on Lineage II (developed by for Korea and Snail Games for China) in the Market P/E (15F, x) 11.3 works. KOSPI 1,988.91 At this year’s G-Star trade show, the company provided more details on its planned Market Cap (Wbn) 4,638 release of the shooting game Master X Master (MXM). The company said additional beta Shares Outstanding (mn) 22 tests will be conducted in February 2016 in Korea, Japan, and Taiwan using a single Free Float (%) 87.8 server, and added that it is also developing a mobile version of the title. Foreign Ownership (%) 32.9 Beta (12M) 0.88 The company is also set to reveal Lineage Eternal , its first blockbuster title in five years 52-Week Low 159,500 since the 2012 launch of Blade & Soul . A large-scale beta test for Lineage Eternal is 52-Week High 244,000 scheduled to begin in 1H16.

(%)(%)(%) 1M1M1M 6M6M6M 12M12M12M Maintain Buy and TP of W270,000 Absolute 9.0 0.5 24.0 Game stocks tend to swing wildly whenever the release of a highly anticipated game is Relative 11.3 7.1 22.7 delayed or a new title fails to deliver. Nevertheless, we think now is a good time to Buy

160 NCSOFT KOSPI NCSOFT for the following reasons:

140 1) Lineage I , the company’s cash cow, has been performing strongly following its recent

120 update, and should continue to support stable earnings in 2016. 2) T he market has yet to price in expectations on the forthcoming events in 2016. 100

80 We maintain our Buy rating on NCSOFT with a target price of W270,000. 11.14 3.15 7.15 11.15

Daewoo Securities CCo.,o., Ltd. FY (Dec.) 12/12 12/13 12/14 12/15F 12/16F 12/17F Revenue (Wbn) 754 757 839 843 964 1,110 [Internet/Game/Entertainment] OP (Wbn) 151 205 278 242 314 382

Chang-kwean Kim OP margin (%) 20.0 27.1 33.1 28.7 32.6 34.4 +822-768-4321 NP (Wbn) 156 159 230 193 260 325 [email protected] EPS (W) 7,120 7,245 10,487 8,824 11,863 14,817 ROE (%) 16.8 14.8 18.4 13.6 16.5 18.1 Jeong-yeob Park +822-768-4124 P/E (x) 21.1 34.3 17.4 24.0 17.8 14.3 [email protected] P/B (x) 3.0 4.4 2.7 2.9 2.6 2.3 Notes: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Source: Company data, KDB Daewoo Securities Research estimates

Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including t he U.S. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.

Key Universe Valuations November 20, 2015

※All data as of close November 19, 2015, unless otherwise noted.

16F Earnings growth Mkt Cap Price P/E (x) P/B (x) ROE (%) Ticker Company Div Yield OP EPS (Wbn) (W) (%) 16F 17F 16F 17F 16F 17F 16F 17F 16F 17F 005930 189,280 1,285,000 2.1 2.2 5.1 5.3 7.6 10.0 9.3 1.1 1.0 11.7 11.4 005380 Hyundai Motor 34,804 158,000 3.2 15.6 -1.2 12.6 1.1 6.0 5.9 0.6 0.6 11.4 10.5 015760 KEPCO 32,355 50,400 3.0 8.3 0.5 -46.9 -1.5 4.8 4.9 0.5 0.4 9.8 8.9 012330 24,628 253,000 1.4 15.0 7.2 22.5 5.8 6.6 6.2 0.8 0.7 13.4 12.6 090430 AmorePacific 23,296 398,500 0.3 33.4 31.0 25.2 31.7 35.5 27.0 6.7 5.4 20.6 22.3 000660 SK Hynix 22,568 31,000 1.3 -21.9 10.7 -22.9 11.3 6.7 6.1 0.9 0.8 14.1 13.8 000270 Motors 22,538 55,600 2.4 27.7 14.0 25.8 10.9 6.0 5.4 0.8 0.7 14.2 13.9 051910 LG Chem 21,372 322,500 1.2 17.6 33.5 35.9 34.2 13.7 10.2 1.6 1.4 12.6 15.0 032830 Samsung Life 21,000 105,000 - - - - 0.0 0.0 035420 NAVER 20,668 627,000 0.2 33.3 22.4 35.7 21.6 27.9 23.0 5.3 4.3 27.7 26.0 055550 20,485 43,200 - - - - 0.0 0.0 018260 Samsung SDS 20,002 258,500 0.2 12.2 1381.5 8.3 1338.7 41.7 2.9 4.0 1.7 10.1 82.3 017670 SK Telecom 18,814 233,000 4.3 4.8 1.4 0.4 1.8 11.3 11.1 1.0 1.0 10.1 9.7 034730 SK Holdings 17,098 243,000 0.8 9.0 13.4 4.3 -49.4 20.1 39.6 3.1 2.9 19.8 8.9 051900 LG Household & Health Care 15,290 979,000 0.5 21.6 16.8 22.7 18.6 29.4 24.8 6.6 5.3 25.7 24.4 005490 POSCO 14,822 170,000 4.7 10.9 11.3 593.2 33.2 10.1 7.6 0.3 0.3 3.5 4.6 033780 KT&G 14,690 107,000 3.4 -4.9 0.7 -9.4 2.0 15.4 15.1 2.1 1.9 14.7 13.9 000810 Samsung F&M 14,165 299,000 - - - - 0.0 0.0 105560 KB Financial Group 13,619 35,250 - - - - 0.0 0.0 003550 LG Corp. 12,597 73,000 1.4 10.0 0.0 7.3 2.2 11.5 11.3 0.9 0.9 8.3 8.0 096770 SK Innovation 11,466 124,000 2.0 -34.7 48.8 -29.1 58.6 15.0 9.4 0.7 0.7 4.7 7.2 066570 LG Electronics 9,230 56,400 1.4 63.8 18.6 153.4 21.4 10.8 8.9 0.8 0.7 7.6 8.5 006400 Samsung SDI 8,561 124,500 0.8 468.2 5.0 385.4 -81.4 5.6 30.2 0.7 0.6 12.3 2.2 010130 Korea Zinc 8,492 450,000 1.4 22.0 16.2 23.5 17.4 12.7 10.9 1.5 1.3 12.4 13.0 010950 S-Oil 8,466 75,200 3.6 -8.9 15.1 0.0 15.1 11.4 9.9 1.4 1.3 13.2 13.8 011170 Lotte Chemical 8,415 245,500 0.4 7.6 12.6 19.0 16.8 6.5 5.6 1.0 0.8 15.8 15.8 047810 Korea Aerospace Industries 8,315 85,300 0.3 27.7 23.5 42.2 26.2 27.5 21.8 5.5 4.5 22.1 22.7 128940 8,093 791,000 63.1 28.5 73.0 36.4 127.4 93.3 14.5 12.6 12.1 14.5 034220 LG Display 8,069 22,550 2.2 -40.9 85.2 -43.9 110.7 13.0 6.2 0.6 0.6 4.9 9.7 035250 8,023 37,500 3.4 11.5 5.2 14.7 9.5 15.6 14.3 2.3 2.1 16.4 16.4 030200 KT 7,742 29,650 2.7 1.1 0.3 -13.4 4.2 10.4 9.9 0.6 0.6 6.5 6.4 086790 7,696 26,000 - - - - 0.0 0.0 024110 7,567 13,600 - - - - 0.0 0.0 086280 7,331 195,500 1.0 9.5 8.4 57.8 2.4 12.6 12.3 2.1 1.8 17.6 15.6 009540 7,053 92,800 - 86.1 - 146.5 28.8 11.7 0.4 0.4 1.7 4.1 023530 Lotte Shopping 6,991 222,000 0.7 12.6 - 13.4 - 8.1 0.4 4.8 0.0 021240 Coway 6,934 89,900 4.0 11.8 21.2 9.6 21.3 18.9 15.6 4.6 4.1 28.1 30.2 035720 6,933 115,500 0.1 92.2 38.3 76.3 40.8 44.1 31.3 2.6 2.4 6.0 7.9 004020 6,819 51,100 1.5 4.8 9.0 -4.6 18.8 5.7 4.8 0.4 0.4 7.0 7.7 088350 Hanwha Life 6,618 7,620 - - - - 0.0 0.0 001800 Orion 6,329 1,059,000 0.7 14.8 8.2 23.0 13.5 30.2 26.6 3.9 3.5 14.1 14.2 139480 Emart 6,063 217,500 0.7 19.1 14.7 -25.7 13.1 14.2 12.6 0.8 0.8 5.8 6.2 161390 6,051 48,850 0.9 7.1 14.0 7.7 14.9 8.5 7.4 1.0 0.9 12.8 13.0 009150 Samsung Electro-Mechanics 5,221 69,900 0.9 25.4 29.0 240.2 32.7 20.0 15.1 1.1 1.1 6.0 7.5 009240 Hanssem 5,036 214,000 0.5 44.2 27.9 41.7 32.7 30.6 23.1 7.9 6.0 32.1 31.7 036570 NCSOFT 4,781 218,000 1.8 29.6 21.8 34.4 24.9 18.4 14.7 2.7 2.4 16.5 18.1 002380 KCC 4,755 452,000 2.0 6.3 15.5 4.5 13.5 21.2 18.7 0.7 0.7 3.4 3.8 078930 GS Holdings 4,739 51,000 2.6 -8.4 17.6 15.9 28.9 8.5 6.6 0.5 0.5 5.9 7.3 032640 LG Uplus 4,715 10,800 2.7 2.0 1.8 5.4 4.8 11.0 10.4 1.0 0.9 9.2 9.0 051600 KEPCO KPS 4,613 102,500 - - - - 0.0 0.0 Source: KDB Daewoo Securities Research

Market Data November 20, 2015

※All data as of close November 20, 2015, unless otherwise noted.

Other Major Indices Economic Indicators Close Net Chg 1D (%) YTD (%) Close 1D ago 1M ago 1Y ago MSCI Korea* 367.56 8.26 2.30 -4.95 USD/KRW 1,164.20 1,173.40 1,125.30 1,104.20 KOSPI 1,989.86 0.95 0.05 3.29 JPY100/KRW 947.08 949.70 941.44 934.57 KOSDAQ 685.16 4.59 0.67 23.74 EUR/KRW 1,249.48 1,251.31 1,274.80 1,385.05 Dow Jones* 17,732.75 -4.41 -0.02 -0.56 3Y Treasury 1.76 1.74 1.64 2.16 S&P 500* 2,081.24 -2.34 -0.11 1.12 3Y Corporate 2.13 2.11 1.98 2.48 NASDAQ* 5,073.64 -1.56 -0.03 7.34 DDR2 1Gb* 1.11 1.11 1.13 1.38 Philadelphia Semicon* 663.63 1.49 0.23 -3.36 NAND 16Gb* 1.48 1.48 1.53 2.30 FTSE 100* 6,329.93 50.96 0.81 -3.33 Oil (Dubai)* 45.55 47.11 46.37 74.87 Nikkei 225 19,879.81 20.00 0.10 14.19 Gold* 1,077.90 1,068.70 1,173.30 1,193.90 Hang Seng* 22,500.22 311.96 1.41 -5.69 Customer deposits (Wbn)* 20,527 20,428 20,466 15,257 Taiwan (Weighted) 8,465.45 -11.75 -0.14 -8.72 Equity type BC (Wbn)(Nov. 18) 80,227 80,231 81,303 79,118 Note: * as of November 19, 2015 Source: KSDA, Wisefn, DRAMeXchange, MSCI

KOSPI Top 10 Foreign Net Buy / Net Sell (Wbn) KOSPI Top 10 Institutional Net Buy / Net Sell (Wbn) Net Buy Net Sell Net Buy Net Sell Amore Pacific 17.53 Samsung Electronics 90.84 Hanmi Pharm 25.46 Kangwon Land 15.25 Samsung SDI 14.52 Samsung Electronics (P) 37.96 Samsung SDI 17.71 Hyundai Merchant Marine 12.32 S-Oil 11.71 Samsung F&M Insurance 15.62 LG Corp. 14.69 BNK Financial Group 9.96 5.86 LG Corp. 14.07 Samsung F&M Insurance 14.03 SAMSUNG C&T 9.44 LG Display 5.69 Hyundai Merchant Marine 9.12 NHN 12.18 KEPCO 6.96 MANDO 4.10 POSCO 9.03 LG Electronics 11.79 Samsung Electronics (P) 5.67 Hansol LCD 4.05 SAMSUNG C&T 8.57 Hyundai Mobis 10.54 SK Telecom 5.43 LG Chem 3.95 7.97 LG Display 10.37 Hana Tour 4.62 Hyundai M&F Insurance 3.92 Hanmi Pharm 7.91 NCsoft 9.90 Amore Pacific 4.51 TIGER200 3.84 Hyundai Mobis 7.59 LG Innotek 9.67 Hyundai M&F Insurance 4.41 Source: KSDA, Wisefn

KOSDAQ Top 10 Foreign Net Buy / Net Sell (Wbn) KOSDAQ Top 10 Institutional Net Buy / Net Sell (Wbn) Net Buy Net Sell Net Buy Net Sell Celltrion 18.85 Daum Communications 3.94 OCI Materials 5.68 CJ E&M 3.82 ViroMed 7.67 NICE e-Banking Services 2.99 ViroMed 3.83 MG Med 2.57 CrucialTec 4.38 Medy-tox 2.81 Celltrion 2.16 TVLogic 2.01 OCI Materials 2.69 Techno Semichem 2.76 i-SENS 2.07 YWDSP 1.78 Bio Space 2.68 Komipharm 2.42 Humedix 1.79 Komipharm 1.70 EO Technics 2.50 Caregen 2.05 TERA SEMICON 1.58 ATGen 1.56 SFA Engineering 2.23 MG Med 1.92 Viatron 1.52 Partrion 1.20 Semiconductor 1.89 Kolon Life Science 1.30 WIMCO 1.24 OSSTEM IMPLANT 1.13 Seoul auction 1.39 Webzen 1.30 DONG A ELTEK 1.23 SFA Engineering 0.92 OSSTEM IMPLANT 1.34 TERA SEMICON 1.17 YG Entertainment 1.14 ISC 0.91 Source: KSDA, Wisefn

KOSPI Top 10 by Market Cap (Wbn) KOSDAQ Top 10 by Market Cap (Wbn) Close (W) Chg (W) Mkt Cap Close (W) Chg (W) Mkt Cap Samsung Electronics 1,285,000 -4,000 189,280 Celltrion 91,400 700 10,239 Hyundai Motor 158,000 -1,500 34,804 Daum Communications 115,500 200 6,933 KEPCO 50,400 -200 32,355 Dongsuh 35,700 -150 3,559 SAMSUNG C&T 141,000 -1,500 26,746 CJ E&M 79,000 -1,700 3,060 Samsung Electronics (P) 1,133,000 -17,000 25,870 Komipharm 51,000 -3,700 2,720 Hyundai Mobis 253,000 1,000 24,628 Medy-tox 453,100 -2,600 2,563 Amore Pacific 398,500 4,000 23,296 ViroMed 180,200 900 2,558 Hynix 31,000 -200 22,568 LOEN 72,300 1,000 1,829 Kia Motors 55,600 -800 22,538 Paradise 20,050 0 1,823 LG Chem 322,500 -3,500 21,372 Kolon Life Science 243,000 3,000 1,626 Source: