November 9, 2015

KOREA

Company News & Analysis Major Indices Close Chg Chg (%) CJ CheilJedang (097950/Buy/TP: W530,000) KOSPI 2,025.70 -15.37 -0.75 Four key variables in 2016 KOSPI 200 249.21 -1.04 -0.42 KOSDAQ 671.84 -22.37 -3.22 CJ CGV (079160/Buy/TP: W150,000) New growth story to begin in 2016 Turnover ('000 shares, Wbn) Volume Value Lotte Himart (071840/Buy/TP: W100,000) KOSPI 435,389 6,058 Bet on earnings in the near term, and qualitative changes in the long term KOSPI 200 75,324 4,023 KOSDAQ 715,399 3,955

BNK Financial Group (138930/Buy/TP: W21,000) Market Cap (Wbn) In-line results Value KOSPI 1,283,556 DGB Financial Group (139130/Buy/TP: W17,400) KOSDAQ 192,050 Recovery of non-interest income is key KOSPI Turnover (Wbn) Wonik IPS (030530/Buy/TP: W16,000) Buy Sell Net Foreign 1,049 1,046 3 Semiconductor and OLED investment prospects are improving Institutional 758 946 -189 Retail 4,060 3,987 73 JB Financial Group (175330/Buy/TP: W8,500) Stabilizing earnings KOSDAQ Turnover (Wbn) Buy Sell Net Jeju Air (089590/Buy/TP: W45,000) Initiate coverage Foreign 181 232 -51 Ready for takeoff Institutional 106 160 -54 Retail 3,639 3,536 104

Sector News & Analysis Program Buy / Sell (Wbn) Buy Sell Net Airlines (Overweight) KOSPI 773 816 -42 October IIA data: Coming out of the MERS tunnel KOSDAQ 41 48 -7 Advances & Declines Economy & Strategy Update Advances Declines Unchanged KOSPI 138 698 37 Fixed Income Weekly KOSDAQ 135 940 31 Focus more on liquidity than on the Fed decision KOSPI Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Hanmi Pharm 824,000 113,000 1,267 Hanmi Science 175,000 -3,000 613 Samsung Electronics 1,344,000 6,000 248 KODEX LEVERAGE 10,425 -80 117 Hynix 31,250 50 110

KOSDAQ Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value New Pride 15,700 3,600 255 Timo Technology 5,050 1,160 154 SHINHOO 7,730 -270 136 Kolon Life Science 190,600 -37,200 125 SEJONG TELECOM 2,520 100 120 Note: As of November 9, 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.

CJ CheilJedang (097950 KS) Four key variables in 2016

3Q15 review Food & Beverage For 3Q, CJ CheilJedang (CJCJ) reported a 13.2% YoY increase in revenue, a 30% YoY rise in operating profit , and a 248% YoY jump in net profit. Operating profit was in line with the consensus, but net profit fell short due to currency-related losses (W30.1bn). For Results Comment the company’s mainstay businesses (foodstuff, processed food, feed, biotech , and November 6, 2015 pharma), revenue and operating profit grew 14.6% and 29.5% YoY, respectively. The foodstuff and processed food units performed better than expected, but the biotech unit lagged behind. It is worth noting that the company’s net debt fell to W3.7tr ( or W5tr including CJ Korea Express), from W3.9tr (W5.3tr) at end-2014. (Maintain) Buy Foodstuff operating profit expanded 69.1% YoY, benefiting from lower grain prices . Target Price (12M, W) 530,000 Processed food revenue and operating profit increased 15.3% and 7.5% YoY , respectively, boosted by robust sales of new products (Bibigo, canned salmon, premium Dashida, pudding, etc.) and Chuseok holiday gift sets. Biotech operating profit grew Share Price (11/6/15, W) 362,000 124% YoY, but contracted 51.2% QoQ, as lysine, t ryptophan and threonine margins worsened due to price declines, offsetting the solid performance of methionine Expected Return 46% (utilization rose to the 80% level).

Four key variables in 2016 OP (15F, Wbn) 823 Looking forward to 2016, we believe CJCJ’s share performance will largely hinge on 1) Consensus OP (15F, Wbn) 845 lysine and methionine prices, 2) fluctuations in F/X rates and grain prices, 3) processed food margins, and 4) M&A activities. EPS Growth (15F, %) 147.0 Market EPS Growth (15F, %) 21.6 We think lysine prices could slightly pick up in 2016 (from US$1,250/tonne in 3Q15), P/E (15F, x) 23.0 given capacity cuts by China’s GBT and Eppen, and CJCJ’s price hike efforts (15% Market P/E (15F, x) 11.7 increase in July). We expect the lysine business to break even in 2016. As for methionine, we see ASP remaining similar to 2015 levels at US$5/kg. The company’s KOSPI 2,041.07 methionine plant should run at full capacity from 4Q15. For 2016, we forecast Market Cap (Wbn) 4,763 methionine revenue at around W400bn (assuming 80,000 tonnes at US$5/kg) and OP Shares Outstanding (mn) 14 margin at 25%. Free Float (%) 59.0 We expect the average US$/W rate to slightly rise YoY to 1,200 in 2016. Grain prices Foreign Ownership (%) 20.4 should also move marginally higher in 2016. But given the limited extent of the Beta (12M) 0.96 increases, we think any negative impact on shares will be short-lived. 52-Week Low 303,000 Looking at processed food, we anticipate r evenue growth to decelerate to 6.8% YoY, 52-Week High 458,500 but operating profit should outpace revenue, expanding 11.9 % YoY on the effects of (%)(%)(%) 1M1M1M 6M6M6M 12M12M12M marketing initiatives executed in 2015 and the stable footing of new products. Absolute -10.4 -14.1 -3.1 Another important factor will be M&A activities. As the CJ Group seeks M&A deals (e.g. Relative -12.6 -11.4 -8.0 Coway) domestically and overseas, there will be much interest in who the buyer will be and the specifics of deal financing.

130 CJ CheilJedang KOSPI 120 Maintain Buy and TP of W530,000 110 CJCJ’s key earnings determinants are biotech prices, F/X rates, and processed food 100 profits. 1) Biotech profit is expected to grow in 2016 on stronger methionine sales, 2) 90 the US$/W rate has been stabilizing since October, and 3) processed food sales are 80 better than ever. And with an attractive valuation relative to other processed food 70 11.14 3.15 7.15 11.15 names (Ottogi, Dongwon F&B, Pulmuone, etc.), we think CJCJ offers good long-term investment potential.

Daewoo Securities CCo.,o., Ltd. FY (Dec.) 12/12 12/13 12/14 12/15F 12/16F 12/17F Revenue (Wbn) 9,878 10,848 11,702 12,981 14,067 14,982 [F&B/Tobacco] OP (Wbn) 616 345 580 823 893 979

Woon-mok Baek OP margin (%) 6.2 3.2 5.0 6.3 6.3 6.5 +822-768-4158 NP (Wbn) 255 117 92 228 293 390 [email protected] EPS (W) 17,691 8,089 6,369 15,728 20,203 26,904 ROE (%) 9.0 4.0 3.1 7.4 8.9 10.8

P/E (x) 20.1 34.2 48.1 23.0 17.9 13.5 P/B (x) 1.7 1.3 1.4 1.6 1.5 1.3 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.

CJ CGV (079160 KS) New growth story to begin in 2016

Entertainment 3Q15 review: CGV China remains in the black For 3Q, CJ CGV announced consolidated revenue of W358bn (+16.3% YoY ) and Results Comment operating profit of W38.9bn (+15% YoY). CGV China posted a profit (W2.3bn) for the November 9, 2015 second straight quarter, while subsidiary CJ 4DPLEX also recorded a profit (W1.6bn). Based on a simple sum of all local sites, CGV China’s 3Q revenue jumped 84% YoY. The

company currently has a total of 56 sites in China and is expected to open eight more by (Maintain) Buy year-end. Non-consolidated domestic revenue grew 4% YoY, but operating profit fell 1% YoY, weighed down by MERS-related sterilization expenses and higher marketing spend. Target Price (12M, W) 150,000 Indonesia- and 4DPLEX-driven growth story to begin in 2016 Share Price (11/6/15, W) 107,000 CJ CGV acquired a stake in Indonesia’s Blitzmegaplex (renamed CGV Blitz) in 2014, with the option to buy additional shares through 2017. CGV Blitz has 15 sites and is expected Expected Return 40% to increase that number to 80 by 2020.

The entertainment technology firm IMAX Corporation owns 934 theater systems (828 OP (15F, Wbn) 77 commercial) in 62 countries. The company’s stock has been moving upward since 2000, Consensus OP (15F, Wbn) 79 and showed strong rallies in 2009 and 2010 following the release of the movie Avatar .

EPS Growth (15F, %) 93.6 CJ 4DPLEX (93.6% stake) has lately been attracting increasing attention. CJ 4DPLEX has Market EPS Growth (15F, %) 21.6 a profile similar to that of IMAX, in the sense that both companies specialize in supplying P/E (15F, x) 35.2 systems and services to theater operators around the world. Established in 2010, Market P/E (15F, x) 11.7 4DPLEX is aiming to operate 225 4DX screens in 41 countries by the end of 2015 and KOSPI 2,041.07 1,000 4DX screens by 2020. We see several events on the horizon that could boost 4DX demand, including the simultaneous production of the next three installments of the Market Cap (Wbn) 2,264 Avatar series and the release of the third Avengers movie. Shares Outstanding (mn) 21 Free Float (%) 60.9 Retain Buy and TP of W150,000 Foreign Ownership (%) 14.6 Beta (12M) 1.13 We reiterate our Buy rating and target price of W150,000, which represents the sum of 52-Week Low 47,000 the values of Korea, China, and Vietnam operations. We estimate the value of CGV 52-Week High 131,000 Korea at W1.1tr (17.2x our 2016F EPS) and CGV Vietnam (which has high earnings visibility) at W178.5bn. (%)(%)(%) 1M1M1M 6M6M6M 12M12M12M Absolute -8.5 34.8 127.7 Stripping away the value of the domestic and Vietnam businesses from the company’s Relative -10.8 39.0 116.0 current market cap (W2.26tr), we believe the market is pricing the China business at roughly W1tr. In comparison, China’s leading cinema operator, Wanda Cinema Line, has

280 CJ CGV KOSPI seen its market cap recover to W19.9tr on the back of China’s strong box-office market 230 in 3Q. We note that we have not yet reflected 4DPLEX (which has eked out a profit for

180 the second quarter in a row) and the Indonesia subsidiary (which is in the early stages of the integration process) in our valuation. 130

80 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) 665 773 865 904 957 1,009 [Internet/Game/Entertainment] OP (Wbn) 72 68 71 77 88 100

Chang-kwean Kim OP margin (%) 10.8 8.8 8.2 8.5 9.2 9.9 +822-768-4321 NP (Wbn) 73 43 33 64 73 81 [email protected] EPS (W) 3,528 2,062 1,572 3,044 3,430 3,844 ROE (%) 20.4 10.3 7.2 12.8 12.9 12.9 Jeong-yeob Park +822-768-4124 P/E (x) 9.1 21.1 34.3 35.2 31.2 27.8 [email protected] P/B (x) 1.7 2.0 2.4 4.3 3.8 3.4 Note: All figures are based on non-consolidated K-IFRS Source: Company data, KDB Daewoo Securities Research estimates

Lotte Himart (071840 KS) Bet on earnings in the near term, and qualitative changes in the long term

Retail 3Q15 review: A closer look reveals a more upbeat picture For 3Q, Lotte Himart reported revenue of W1.06tr (+4.6% YoY) and operating profit of Results Comment W56.2bn (-2.3% YoY). Adjusting for last year’s one-off gains from mobile sales November 9, 2015 incentives, we estimate 3Q operating profit actually grew 15.9% YoY. Same can be said for gross margin, which we estimate improved 0.1%p YoY when factoring out last year’s

one-time profits. (Maintain) Buy The 3Q earnings report fell short of market expectations, but also offered glimmers of hope. Despite the impact of MERS, which lasted through July, revenue still grew 4.6% Target Price (12M, W) 100,000 YoY. Given that major store openings were largely completed in 3Q14, it would be safe to say that present top-line growth corresponds to same-store sales (SSS) growth. Share Price (11/06/15, W) 59,600 Biggest positive is top-line growth Expected Return 68% We largely attribute the top-line growth to three factors: 1) pent-up demand for air conditioners, 2) brisk mobile device sales, and 3) stronger sales of small household OP (15F, Wbn) 177 appliances. Consensus OP (15F, Wbn) 181 We estimate mobile device sales increa sed nearly 10% YoY in 3Q, despite an unfavorable EPS Growth (15F, %) 27.3 comparison caused by the surge in demand ahead of the introduction of the new Market EPS Growth (15F, %) 21.6 handset distribution law in September 2014. We believe small household appliance sales P/E (15F, x) 11.5 also continued to grow in the teens in 3Q. The company is expe cted to increase the Market P/E (15F, x) 11.7 number of pilot shops (which help drive sales of small appliances) to 30 by year-end KOSPI 2,041.07 (from 26 currently) and also raise its stock-keeping units (SKU) to 15,000 by year-end (from 8,000 in 2014). Market Cap (Wbn) 1,407 Shares Outstanding (mn) 24 Looking to 4Q, we forecast revenue and operating profit to expand 8.1% and 45.5% Free Float (%) 38.4 YoY, respectively, aided by a favorable comparison and robust mobile sales . In 1Q16, Foreign Ownership (%) 11.0 however, operating profit growth should slow to 2.6% YoY due to timing differences in Beta (12M) 0.94 recognizing revenue and expenses. In the near term, we expect earnings to fluctuate 52-Week Low 51,600 sharply due to such one-off factors. 52-Week High 84,000 Maintain Buy and TP of W100,000; Bet on earnings in the near term (%)(%)(%) 1M1M1M 6M6M6M 12M12M12M Absolute -8.6 -17.1 -9.6 Lotte Himart’s stock has lately come under pressure amid concerns about earnings. Relative -10.8 -14.5 -14.2 However, given the bullish 4Q earnings outlook, we think a more positive stance is due. Over the long term, we believe the company will exhibit two positive changes that will

150 Lotte Himart KOSPI strengthen its competitiveness as the largest category killer in the domestic retai l 130 sector: 1) revenue growth and margin gains driven by product diversification, and 2)

110 online revenue expansion. Looking beyond near-term earnings, we believe investors should pay attention to the company’s gradual reinvention in 2016. We slightly adjusted 90 down our earnings estimates, but kept our target price unchanged at W100,000 , as our 70 changes were insignificant. 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) 3,212 3,519 3,754 3,923 4,155 4,386 [Retail] OP (Wbn) 162 185 144 177 198 223

Aiden Lee OP margin (%) 5.0 5.3 3.8 4.5 4.8 5.1 +822-768-3297 NP (Wbn) 71 129 96 123 141 166 [email protected] EPS (W) 3,023 5,469 4,085 5,201 5,968 7,033 ROE (%) 4.9 8.4 5.9 7.0 7.5 8.3

P/E (x) 22.8 16.0 16.5 11.5 10.0 8.5 P/B (x) 1.1 1.3 0.9 0.8 0.7 0.7 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

BNK Financial Group (138930 KS) In-line results

Banks 3Q15 review: Net profit of W148.1bn (-10.5% QoQ, +27.2% YoY) BNK Financial Group (BNKFG) reported 3Q net profit of W148.1bn (-10.5% QoQ, Results Comment +27.2% YoY), broadly in line with our estimate and the consensus. November 9, 2015 Net interest income expanded sharply QoQ, as net interest margin (NIM) rose 3bps QoQ thanks to improvements at Kyongnam Bank. Non-interest income swung to red QoQ, weighed down by one-off losses at BNK Capital and smaller gains related to investment (Maintain) Buy securities. SG&A expenses remained flat QoQ, while loan loss provisions declined significantly as a result of write-backs and a high base of comparison. Target Price (12M, W) 21,000 4Q15 outlook: Net profit of W83.9bn (-43.4% QoQ, -83.0% YoY) Share Price (11/06/15, W) 13,800 For 4Q, we forecast net profit to decline to W83.9bn (-43.4% QoQ, -83.0% YoY). Asset growth should decelerate in 4Q, but net interest income should still modestly grow Expected Return 52% QoQ, supported by a stabilizing NIM. Despite losses from distressed bonds, non-interest income should return to black on the back of smaller one-off losses and a pickup in OP (15F, Wbn) 767 profits from investment securities. SG&A expenses should increase visibly QoQ due to Consensus OP (15F, Wbn) 753 seasonal factors. While credit cost ratio has fallen significantly, loss provisions should increase QoQ as a result of conservative year-end provisioning. EPS Growth (15F, %) -38.1 Market EPS Growth (15F, %) 21.6 We trimmed our 2015 and 2016 net profit forecasts by 2.9% and 1.1%, res pectively, P/E (15F, x) 6.5 reflecting the non-interest loss in 3Q. Market P/E (15F, x) 11.7 KOSPI 2,041.07 Maintain Buy and TP of W21,000 We retain our Buy rating on BNKFG with a target price of W21,000. We believe our Market Cap (Wbn) 3,532 target P/B of 1x is reasonable, as ROE is expected to remain above 10% in the coming Shares Outstanding (mn) 256 years. Free Float (%) 83.9 Foreign Ownership (%) 51.9 Our investment recommendation is premised on the following points. 1) We expect the Beta (12M) 0.55 bank’s NIM to remain stable, supported by Kyongnam Bank’ s ongoing efforts to improve 52-Week Low 12,750 its loan portfolio. 52-Week High 17,300 2) Asset quality has remained healthy, even as the group rapidly expanded its loans. (%)(%)(%) 1M1M1M 6M6M6M 12M12M12M Going forward, we believe the group will focus on managing risks rather than on loan Absolute -0.7 -15.3 -19.5 growth, keeping asset quality at current levels. Relative -3.2 -12.7 -23.7

3) The stock is trading at a P/B of 0.6x, slightly higher than other peers. But, given the 120 BNK Financial Group KOSPI 110 stock’s higher ROE, we think valuation remains supportive. 100 90 80 70 FY (Dec.) 12/12 12/13 12/14 12/15F 12/16F 12/17F 60 11.14 3.15 7.15 11.15 Total OP (Wbn) 1,230 1,215 1,972 2,222 2,403 2,474 PPOP (Wbn) 656 642 1,221 1,131 1,257 1,282 Daewoo Securities CCo.,o., Ltd. Net OP (Wbn) 488 413 941 767 928 911 Pretax NP (Wbn) 479 403 919 773 934 918 [Banks] NP (Wbn) 361 305 810 547 692 696

Joong-han Kim EPS (W) 1,868 1,575 3,455 2,139 2,705 2,719 +822-768-4152 BPS (W) 16,833 18,104 20,333 21,932 24,096 26,271 [email protected] P/E (x) 7.1 10.2 4.1 6.5 5.1 5.1 P/B (x) 0.8 0.9 0.7 0.6 0.6 0.5 Yong-uk Ku +822-768-4494 ROE (%) 11.6 9.0 19.6 10.5 11.8 10.8 [email protected] ROA (%) 0.9 0.7 1.0 0.6 0.7 0.7 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

DGB Financial Group (139130 KS) Recovery of non-interest income is key

Banks 3Q15 review: Net profit of W81.2bn (-14.4% QoQ, +8.6% YoY) DGB Financial Group’s (DGBFG) 3Q net profit came in at W81.2bn (-14.4% QoQ, +8.6% Results Comment YoY), beating our estimate and the consensus by 8.9% and 3.5%, respectively. November 9, 2015 Net interest margin (NIM) continued to decline (-5bps QoQ), but at a much slower pace compared to in the previous quarter. As a result, net interest income marginally picked up QoQ. Non-interest income swung to negative due to one-off s and sluggish profits (Maintain) Buy from investment securities. SG&A expenses expanded QoQ partly because of bonus payouts, while loss provisions jumped 22% QoQ on conservative provisioning . Pretax Target Price (12M, W) 17,400 profit fell significantly QoQ, but net profit came in better than expected thanks to tax refunds related to dormant accounts. Share Price (11/06/15, W) 10,900 4Q15 outlook: Net profit of W39.9bn (-50.8% QoQ, +38.2% YoY) Expected Return 60% For 4Q, we expect net profit of W39.9bn (-50.8% QoQ, +38.2% YoY). The decline in NIM should slow further, but weaker asset growth will likely keep net interest income flat OP (15F, Wbn) 387 QoQ. Non-interest income should return to black on smaller one-off losses, but upside is Consensus OP (15F, Wbn) 419 likely to be limited due to continued weakness in investment securities-related profits . SG&A expenses should seasonally increase QoQ, while provisions are projected to decline EPS Growth (15F, %) 11.0 QoQ on a high base of comparison. Market EPS Growth (15F, %) 21.6 P/E (15F, x) 5.7 We adjusted down our 2015 and 2016 net profit estimates by 3.8% and 2.3%, Market P/E (15F, x) 11.7 respectively, in light of 1) the persistent decline in NIM and 2) the fall in non-interest KOSPI 2,041.07 income (excluding one-offs) caused by weaker profits from investment securities.

Market Cap (Wbn) 1,843 Reaffirm Buy and TP of W17,400 Shares Outstanding (mn) 169 We maintain our Buy call and target price of W17,400, which implies a 2015F P/B of Free Float (%) 88.5 0.8x. We believe our target multiple is reasonable, given our 2015F and 20 16F ROE of Foreign Ownership (%) 70.4 Beta (12M) 1.17 10.0% and 9.3%, respectively. 52-Week Low 9,620 Our investment thesis is based on the following points. 1) The decline in NIM is sharply 52-Week High 14,607 slowing, which is positive to earnings stability. 2) Asset quality should remain sound, (%)(%)(%) 1M1M1M 6M6M6M 12M12M12M further contributing to earnings stability. 3) One potential concern is the sharp Absolute 3.3 -10.3 -25.1 deterioration in non-interest income. But given that this is primarily du e to falling Relative 0.8 -7.5 -29.0 profits from investment securities, the situation is likely to turn around once the stock market gains momentum.

130 DGB Financial Group KOSPI

110

70 FY (Dec.) 12/12 12/13 12/14 12/15F 12/16F 12/17F 50 11.14 3.15 7.15 11.15 Total OP (Wbn) 964 987 1,039 1,204 1,266 1,308 PPOP (Wbn) 470 479 495 601 651 669 Daewoo Securities CCo.,o., Ltd. Net OP (Wbn) 359 339 324 387 468 479 Pretax NP (Wbn) 362 329 317 388 469 481 [Banks] NP (Wbn) 273 238 230 322 341 350

Joong-han Kim EPS (W) 2,039 1,777 1,714 1,902 2,020 2,071 +822-768-4152 BPS (W) 18,883 20,208 21,797 20,729 22,749 24,821 [email protected] P/E (x) 7.1 9.3 6.6 5.7 5.4 5.3 P/B (x) 0.8 0.8 0.5 0.5 0.5 0.4 Yong-uk Ku +822-768-4494 ROE (%) 11.3 9.1 8.2 10.0 9.3 8.7 [email protected] ROA (%) 0.8 0.7 0.6 0.7 0.7 0.6 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

Wonik IPS (030530 KQ) Semiconductor and OLED investment prospects are improving

Technology 3Q15 review: Revenue of W225.6bn (+85% YoY), OP of W43.5bn (+148% YoY) For 3Q, Wonik IPS delivered record-breaking earnings, with consolidated revenue of Results Comment W225.6bn (+85% YoY) and operating profit of W43.5bn (+148% YoY) , beating our November 8, 2015 expectations (revenue of W203.4bn and OP of W43.2bn). By business segment, semiconductor equipment revenue expanded considerably to W112.2bn (+130% QoQ, +169% YoY), bolstered by Samsung Electronics’ (SEC) 3D NAND (48-layer) capex in Xi’an. Total gas solution (TGS) revenue grew materially to W32.6bn (+115% QoQ, +5% (Maintain) Buy YoY). After a sluggish 1H, display equipment revenue also improved to W26.8bn (+991% QoQ, +90% YoY) thanks to 8G LCD investments in Suzhou. The company’s consolidated Target Price (12M, W) 16,000 subsidiary Wonik Materials continued robust growth in 3Q, posting revenue of W50.4bn (+17% QoQ, +39% YoY) and operating profit of W9.3bn (+4% QoQ, +33% YoY). Share Price (11/06/15, W) 9,860 Despite the record quarterly results, the company’s stock is still down 40% from its prior Expected Return 62% peak. This is largely because of the anticipated lack of orders in 1H16, as equipment stocks typically lead customers’ order placements by six months. For 4Q, we estimate consolidated revenue and operating profit to decline to W175.5bn (-22% QoQ, -13% OP (15F, Wbn) 111 YoY) and W26.1bn (-40% QoQ, -28% YoY) , respectively. While earnings momentum is Consensus OP (15F, Wbn) 112 likely to weaken through 1H16, we think such risks have been fully priced in. Rather, we expect to see positive share momentum on the back of increasing prospects of EPS Growth (15F, %) 74.2 semiconductor and OLED capex expansions. Market EPS Growth (15F, %) 21.6 P/E (15F, x) 9.7 3D NAND capex to continue and OLED capex to expand in 2016 Market P/E (15F, x) 11.7 Last week, Tsinghua Unigroup announced plans to raise W14tr in a private placement KOSDAQ 694.21 and invest W11tr in a new memory chip plant. Meanwhile, Intel has unveiled plans to spend US$5.5bn to convert its processor chip plant in Dalian to produce memory chips. Market Cap (Wbn) 794 Following a three-year up-cycle, the memory chip sector is now entering a new phase. Shares Outstanding (mn) 81 With competition in the NAND space gathering steam , domestic chipmakers can no Free Float (%) 66.5 longer afford to delay investments. SEC, the only company currently mass producing 3D Foreign Ownership (%) 18.7 NAND, is likely to make continued investments to maintain its one-year technology lead. Beta (12M) 1.02 SEC has recently begun mass producing 48-layer TLC and is expected to invest in 64- 52-Week Low 8,840 layer 3D NAND in 2016. 52-Week High 16,150 Samsung Display’s (SDC) OLED panel shipments expanded 40% QoQ in 3Q, as increased (%)(%)(%) 1M1M1M 6M6M6M 12M12M12M cost competitiveness led to applications in mid/low-end smartphone s and stronger Absolute 6.3 -15.0 -28.3 external sales to China. The company is now looking to invest in large-sized OLED TV Relative 5.5 -18.5 -45.1 panels and foldable OLEDs. For commercialization in 2017, capex woul d need to start in 2016. Such an event would be positive to OLED equipment suppliers. 150 Wonik IPS KOSDAQ 130 Maintain Buy and TP of W16,000 110 We keep our Buy rating and target price of W16,000 on Wonik IPS . We believe risks 90 have been fully discounted and expect to see positive share momentum on improving 70 prospects of 3D NAND and OLED investments in 2016. We believe now is the time to 50 buy, considering the customer capex expected in 2H16. 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) 349 423 557 666 649 790 [Semiconductor] OP (Wbn) 26 55 92 111 97 137

Jonathan Hwang OP margin (%) 7.4 13.0 16.5 16.7 14.9 17.3 +822-768-4140 NP (Wbn) 8 27 47 82 77 106 [email protected] EPS (W) 108 373 581 1,012 956 1,313 ROE (%) 3.0 9.3 13.8 20.5 16.1 18.6

P/E (x) 43.3 23.0 24.0 9.7 10.3 7.5 P/B (x) 1.2 2.0 3.0 1.7 1.5 1.2 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

JB Financial Group (175330 KS) Stabilizing earnings

Banks 3Q15 review: Net profit of W31.4bn (-26.1% QoQ, +92.7% YoY) JB Financial Group’s (JBFG) 3Q net profit came in at W31.4bn (-26.1% QoQ, +92.7% Results Comment YoY), in line with the consensus and 33% ahead of our estimate. The difference between November 9, 2015 our projection and the result was largely due to reversals of loss provisions . Overall, we believe the 3Q results were decent.

Despite a 2bp QoQ fall in net interest margin (NIM), net interest income expanded (Maintain) Buy sharply QoQ thanks to solid asset growth. Non-interest losses widened QoQ due to one- off items. SG&A expenses increased significantly QoQ as a result of Kwangju Bank’s early Target Price (12M, W) 8,500 retirement plan, while provisioning declined markedly QoQ on a high base of comparison and reversals. Share Price (11/6/15, W) 6,050 4Q15 outlook: Net profit of W27.5bn (-12.2% QoQ, -94.5% YoY) Expected Return 40% For 4Q, we forecast net profit of W27.5bn (-12.2% QoQ, -94.5% YoY) . NIM should stabilize, but asset growth is likely to slow heading into year end, resulting in only a OP (15F, Wbn) 194 marginal increase QoQ in net interest income. Non-interest loss es are likely to narrow Consensus OP (15F, Wbn) NM QoQ on smaller one-off losses. Despite so me seasonal items, SG&A expenses should shrink QoQ due to a high base of comparison. Loss provisions should sharply increase EPS Growth (15F, %) NM QoQ, affected by an unfavorable comparison and more conservative provisioning. Market EPS Growth (15F, %) 21.6 P/E (15F, x) 7.9 We are raising our 2015 and 2016 net profit estima tes by 9.9% and 4.6%, respectively, Market P/E (15F, x) 11.7 on account of 1) the much better-than-expected 3Q results, 2) healthy NIM trends , and KOSPI 2,041.07 3) declining provisions.

Market Cap (Wbn) 765 Reiterate Buy and TP of W8,500 Shares Outstanding (mn) 127 We maintain our Buy rating and target price of W8,500 on JBFG. Our target price is Free Float (%) 81.6 based on a 2015F P/B of 0.6x, which we believe is reasonable, as we expect ROE to rise Foreign Ownership (%) 14.9 Beta (12M) 0.61 to 6.9% in 2016 on earnings improvements (from 5.9% in 2015). 52-Week Low 5,730 We highlight three key investment points. 1) We expect Kwangju Bank’ s loan portfolio 52-Week High 7,200 adjustments to continue to have a positive impact on NIM and asset growth. 2) The (%)(%)(%) 1M1M1M 6M6M6M 12M12M12M latest 3Q results should ease concerns over credit costs stemming from several one-off Absolute 2.0 -13.6 -4.0 provisions in 2Q. 3) The stock looks attractively priced at a P/B of 0.3-0.4x. We see Relative -0.5 -10.9 -8.9 strong potential for appreciation, once M&A-related worries dissipate.

120 JB Financial Group KOSPI

110

100

90 FY (Dec.) 12/12 12/13 12/14 12/15F 12/16F 12/17F 80 11.14 3.15 7.15 11.15 Total OP (Wbn) 423 399 535 906 953 1,012 PPOP (Wbn) 218 187 197 342 373 409 Daewoo Securities CCo.,o., Ltd. Net OP (Wbn) 93 90 82 194 237 264 Pretax NP (Wbn) 91 83 580 198 240 267 [Banks] NP (Wbn) 65 53 549 120 152 172

Joong-han Kim EPS (W) 970 791 4,340 769 976 1,109 +822-768-4152 BPS (W) 12,311 11,789 14,769 13,846 14,647 15,556 [email protected] P/E (x) 4.3 8.0 1.4 7.9 6.2 5.5 P/B (x) 0.3 0.5 0.4 0.4 0.4 0.4 Yong-uk Ku +822-768-4494 ROE (%) 8.6 3.4 41.3 5.9 6.9 7.3 [email protected] ROA (%) 0.5 0.2 1.5 0.3 0.4 0.4 Note: 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

Jeju Air (089590 KS) Ready for takeoff

Initiate coverage with Buy and target price of W45,000 Airlines We initiate our coverage on Jeju Air with a Buy rating and a target price of W45,000. Our investment recommendation is premised on the following points: 1) In our view, Jeju Air is best positioned to benefit from the fast-growing low-cost carrier (LCC) Initiation Report market. 2) The carrier is expanding its market position on the back of lower pricing. 3) It November 5, 2015 is also less vulnerable to external headwinds thanks to its solid balance sheet.

Our target price of W45,000 was derived by using a residual income model (COE of 8.2%) and is equivalent to a 2016F P/E of 18.8x and a 2016F P/B of 3.1x. We believe our (Initiate) Buy target valuation is highly achievable, given the stock’s high ROE (2015F-17F average of 22.3%) and EPS growth (3-year CAGR of 28.2%). Target Price (12M, W) 45,000 Key risks are 1) stiffer competition and 2) unfavorable moveme nts in oil prices and F/X. In developed markets, the entry of competitors (such as “ultra” LCCs in the US) has Share Price (11/04/15, W) - increased the size of the market, leading to stronger earnings for most carriers. Meanwhile, Jeju Air has very little foreign currency-denominate d debt and is therefore Expected Return - less vulnerable to F/X-translation losses. As for oil, we expect prices to remain stable.

A perfect mix of top-line growth and cost savings OP (15F, Wbn) 58 1) Strong market growth and market share gains: We see plenty of room for growth in Consensus OP (15F, Wbn) 68 the LCC market. In terms of total available seat kilometers (ASK), the LCC segment still EPS Growth (15F, %) 60.8 accounts for less than 20% of the domestic airline market, compared to over 30% in Market EPS Growth (15F, %) 19.7 developed markets. By 2020, Jeju Air plans to expand its fleet to 40 aircraft (average o f four aircraft per annum, or 15% CAGR ) from 20 currently, which should support P/E (15F, x) - continuous market share gains. Market P/E (15F, x) 12.0 KOSPI 2049.41 2) Potential for cost savings: Jeju Air’s cost per ASK (CASK) has fallen about 7% on average annually, mainly due to economy of scale effects fr om fleet expansion. Over the Market Cap (Wbn) - long term, the rate of decline could somewhat slow as oil prices move up, but we believe Shares Outstanding (mn) - unit cost excluding fuel will drop nearly 2-3% per year. Free Float (%) - Foreign Ownership (%) - 3) Ancillary revenue growth: While Jeju Air’s fares are lower than those of traditional Beta (12M) - airliners, the carrier has seen revenue from ancillary services—such as advance seat 52-Week Low - assignments, in-flight meals, and duty-free sales—increase to 6.9% of overall revenue in 1H15. Because these services have much lower COGS ratios, higher anci llary revenue 52-Week High - should drive higher earnings. (%)(%)(%) 1M1M1M 6M6M6M 12M12M12M Focus on long-term growth rather than near-term earnings Absolute - - - Relative - - - For 3Q15, we see revenue and operating profit coming in at W157.5bn (+9.7% YoY) and W16.5bn (-1.0% YoY), respectively, weighed by 1) the continued im pact of MERS, and 2) increased heavy maintenance costs due to the return of leased aircraft. In 4Q15, however, we expect revenue to grow 18% YoY and operating profit to return to positive growth YoY (+9.9% YoY to W10.8bn).

Looking to 2016, we forecast revenue growth to recover to 23%. That said, net profit is likely to stall temporarily due to higher oil prices and taxes. In the long term, we expect the carrier to maintain its status as a growth stock, generating revenue and operating profit growth of 16% and 28.9% CAGR (2014-2020), respectively.

Daewoo Securities CCo.,o., Ltd. FY (Dec.) 12/12 12/13 12/14 12/15F 12/16F 12/17F Revenue (Wbn) 341 434 511 601 736 873 [Transportation/Energy] OP (Wbn) 2 17 30 58 74 88

Jay JH Ryu OP margin (%) 0.6 3.9 5.9 9.7 10.1 10.1 +822-768-4175 NP (Wbn) 5 20 32 61 62 71 [email protected] EPS (W) 239 893 1,454 2,339 2,391 2,755 ROE (%) 17.0 47.8 49.6 31.1 18.2 17.5 Choong-hyun Kim +822-768-4126 P/E (x) [email protected] P/B (x) ------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

Airlines October IIA data: Coming out of the MERS tunnel

October IIA data: China passenger demand finally returns to positive growth Overweight (Maintain) 1) Passenger: According to Incheon International Airport (IIA) data, international passenger traffic climbed 9.6% YoY in October (vs. +5.3% YoY in September). Demand Sector Update continued to grow on most routes, particularly on Japan routes, where traffic jumped 24.5% YoY (vs. +13.2% YoY in September). Traffic on Germany and US routes also November 6, 2015 meaningfully improved, rising 13.7% and 11.6% YoY, respectively (vs. +4.5% and +7.0% YoY in September). Traffic on China routes expanded 6.1% YoY (vs. -0.4% YoY in September), return ing to positive growth for the first time since the MERS outbreak. Daewoo Securities CCCo.,Co., Ltd. Supply increased 7.3% YoY, helping to push the load factor indicator up 2.5%p YoY (vs. +0.5%p YoY in September). [Transportation/Energy] 2) Cargo: In October, cargo traffic rose 2.1% YoY, but the pace of growth slowed Jay JH Ryu compared to the previous month (vs. +3.9% YoY in September). Traffic growth +822-768-4175 recovered to 9.4% YoY on Germany routes (vs. +2.2% YoY in September), but remained [email protected] largely unchanged on China and US routes at 7.9% and -4% YoY, respectively (vs. +8.5%

Choong-hyun Kim and -4.9% YoY in September). The continued weakness of US routes remains a concern. +822-768-4126 The number of cargo flights inched up 0.3% YoY (vs. +1.9% YoY in September), keeping [email protected] the load factor on an upward trend.

3) Traffic by carrier: In October, passenger traffic expanded 10.7% YoY at Korean Air and 6.6% YoY at Asiana Airlines (vs. +5.9% and +1.6% YoY, respectively, in September). Traffic on short-haul routes recovered to some extent, but traffic on long-haul routes continued to grow faster, benefiting Korean Air. Meanwhile, cargo traffic growth slowed to 1.9% YoY at Korean Air and 2.3% YoY at Asiana Air (vs. +3.2% and +3.1% YoY, respectively, in September). In our view, a pickup in developed economies, particularly the US, is critical for cargo to recover.

Domestic LCCs gain further market share In October, low-cost carrier (LCC) traffic jumped 24.8% YoY (vs. +20.4% YoY in September). In the domestic segment, LCCs’ market share slightly fell MoM to 54.5% (vs. 55.8% in September). In the short-haul international s egment, LCCs held a 24.6% market share (vs. 24.2% in September), with domestic LCCs’ market share expanding MoM to 18.2% (vs. 17.6% in September). Jeju Air held the top spot with a 6% market share (traffic: +62.6% YoY). Jin Air took second place at 3.8%, c losely followed by Air Busan at 3.2% and Eastar Jet at 2.9%.

Maintain bullish view We maintain our Overweight stance on the airline sector. In particular, we believe LCCs deserve close attention, given the outperformance of the passenger segment relativ e to cargo. Moreover, the recent Jeju Air IPO appears to be boosting investor sentiment towards LCCs.

IIA passenger demand growth by route (%, YoY) US 50 Europe China 40

-10

-20

-30 05 06 07 08 09 10 11 12 13 14 15

Source: IIA, KDB Daewoo Securities Research

Fixed Income Weekly Focus more on liquidity than on the Fed decision

Bond prices falling more sharply than expected; Price burden easing

UST yields have rebounded to the levels seen ahead of the September FOMC meeting (when market concerns were running high), and KTB yields have exceeded the upper Fixed Income Report bounds of our forecast ranges (1.7% for three-year; 2.2% for 10-year). Under the current November 9, 2015 circumstances, we do not believe that bond pr ices will turn robust for the remainder of the year.

Daewoo Securities CCo.,o., Ltd. Still, we advise investors to view the ongoing rebound in yields as a buying opportunity.

[Fixed Income] Bond yields have now reached the upper levels of the ranges we estimated in early October following hawkishness at last month’s MPC meeting. Currently, bond yields Yeo-sam Yoon have begun to reflect potential tightening. However, we do not expect to see a rate hike +822-768-4022 next year, and investors should look to buy at the current levels. [email protected]

Domestic yields rose sharply in the first week of November after bottoming in October. Given stronger-than-expected 3Q domestic indicators, as well as lingering expectations for a US rate hike, three- and 10-year KTB yields jumped by a whopping 20bps each. In particular, with expectations for a domestic rate cut diminishing, short-term yields were

more bullish than long-term yields (e.g., 30-year KTBs). The spread between the FRA (6x9) and the 3M CD rate has switched to positive territory (reflecting monetary tightening) for the first time since 2H14. In addition, the spread between the three-year KTB yield and the base rate has widened to 23bps, indicating that short-term yields have climbed to levels that reflect neutral monetary policy.

These developments are partially attributable to foreigners ’ massive sell-offs of KTB futures. Foreigners net bought 90,000 KTB and 25,000 LKTB futures contracts amid rising domestic rate cut expectations and falling UST yields between June and mid- October. Notably, foreigners ’ KTB futures positions typically move inv ersely with UST yields, and current movements are not deviating from this pattern.

Foreign investorinvestorssss are selling KTB and LKTB futures due to US rate hike burden

('000 contracts) KTB futures cumulative foreign net buying (L) (%) 150 10Y KTB yield (inverted, R) 1.5

1.7 100 1.9 50 2.1

0 2.3

2.5 -50 2.7 -100 KTBfutures net buying: 20,000 shy of July level 2.9 LKTB futures net buying: 5,000 shy of July level -150 3.1 1/13 7/13 1/14 7/14 1/15 7/15

Note: Cumulative net buying = KTB contracts + LKTB contracts x 3 Source : KRX, Bloomberg

Key Universe Valuations November 9, 2015

※All data as of close November 6, 2015, unless otherwise noted.

15F Earnings growth Mkt Cap Price P/E (x) P/B (x) ROE (%) Ticker Company Div Yield OP EPS (Wbn) (W) (%) 15F 16F 15F 16F 15F 16F 15F 16F 15F 16F 005930 Samsung Electronics 197,970 1,344,000 1.9 8.6 2.2 -10.0 5.3 11.0 10.5 1.2 1.1 12.2 11.7 005380 Hyundai Motor 36,346 165,000 2.4 -9.7 15.6 -9.1 12.6 7.1 6.3 0.7 0.7 11.1 11.4 015760 KEPCO 33,832 52,700 2.7 80.0 8.3 370.9 -46.9 2.7 5.0 0.5 0.5 21.2 9.8 012330 Hyundai Mobis 24,677 253,500 1.3 -5.9 15.0 -10.3 22.5 8.0 6.6 0.9 0.8 12.4 13.4 000270 Kia Motors 23,511 58,000 2.0 3.2 27.7 -0.5 25.8 7.9 6.3 0.9 0.8 12.6 14.2 000660 SK Hynix 22,750 31,250 1.3 7.6 -21.9 1.9 -22.9 5.2 6.8 1.0 0.9 21.5 14.1 032830 Samsung Life 22,400 112,000 - - - - 0.0 0.0 090430 AmorePacific 22,156 379,000 0.3 41.3 33.4 63.3 25.2 42.3 33.8 7.6 6.4 19.7 20.6 035420 NAVER 20,898 634,000 0.2 5.1 33.3 20.1 35.7 38.3 28.2 6.5 5.3 26.5 27.7 055550 Shinhan Financial Group 20,865 44,000 - - - - 0.0 0.0 051910 LG Chem 19,649 296,500 1.3 45.9 17.6 47.8 35.9 17.1 12.6 1.7 1.5 10.1 12.6 018260 Samsung SDS 19,538 252,500 0.2 4.4 12.2 7.3 8.3 44.1 40.7 4.3 3.9 10.3 10.1 017670 SK Telecom 18,491 229,000 4.4 -0.6 4.8 -8.2 0.4 11.2 11.1 1.0 1.0 10.9 10.1 034730 SK Holdings 18,047 256,500 0.8 23.2 9.0 356.4 4.3 22.1 21.2 3.7 3.2 22.7 19.8 005490 POSCO 15,519 178,000 3.4 -13.9 10.9 -66.1 593.2 73.2 10.6 0.4 0.4 0.5 3.5 000810 Samsung F&M 15,349 324,000 - - - - 0.0 0.0 033780 KT&G 15,239 111,000 3.2 16.7 -4.9 27.6 -9.4 14.5 16.0 2.3 2.2 17.7 14.7 105560 KB Financial Group 14,276 36,950 - - - - 0.0 0.0 051900 LG Household & Health Care 14,150 906,000 0.5 37.0 21.6 37.7 22.7 33.4 27.2 7.6 6.1 26.2 25.7 003550 LG Corp. 11,613 67,300 1.5 23.9 10.0 22.8 7.3 11.4 10.6 0.9 0.9 8.3 8.3 096770 SK Innovation 10,726 116,000 2.2 - -14.7 - -25.1 8.5 11.3 0.7 0.6 8.2 5.7 035250 Kangwon Land 9,146 42,750 2.6 16.8 12.2 25.3 14.2 20.3 17.8 2.9 2.7 15.8 16.4 047810 Korea Aerospace Industries 8,763 89,900 0.3 93.4 27.7 91.2 42.2 41.2 29.0 7.2 5.8 18.8 22.1 010130 Korea Zinc 8,709 461,500 1.4 3.9 22.0 7.6 23.5 16.1 13.1 1.7 1.5 11.1 12.4 128940 Hanmi Pharmaceutical 8,430 824,000 54.1 63.1 42.6 73.0 229.5 132.7 17.1 15.1 7.8 12.1 066570 LG Electronics 8,313 50,800 1.2 -38.2 63.8 -7.0 153.4 24.7 9.8 0.8 0.7 3.1 7.6 086790 Hana Financial Group 8,125 27,450 - - - - 0.0 0.0 011170 Lotte Chemical 7,935 231,500 0.4 366.0 7.6 639.9 19.0 7.3 6.1 1.1 0.9 15.5 15.8 024110 Industrial Bank of Korea 7,790 14,000 - - - - 0.0 0.0 034220 LG Display 7,729 21,600 2.3 30.9 -40.9 22.0 -43.9 7.0 12.5 0.6 0.6 9.2 4.9 010950 S-Oil 7,611 67,600 3.4 - -13.7 - 4.2 11.4 10.9 1.4 1.3 13.3 12.6 006400 Samsung SDI 7,564 110,000 0.9 -69.7 468.2 - 385.4 24.1 5.0 0.7 0.6 2.7 12.3 030200 KT 7,546 28,900 1.7 - 1.1 - -13.4 8.7 10.1 0.6 0.6 8.0 6.5 086280 Hyundai Glovis 7,425 198,000 1.0 7.4 9.5 -31.2 57.8 20.1 12.8 2.4 2.1 12.6 17.6 009540 Hyundai Heavy Industries 7,281 95,800 - - - - - 29.7 0.5 0.5 - 1.7 088350 Hanwha Life 7,191 8,280 - - - - 0.0 0.0 021240 Coway 7,041 91,300 3.0 23.1 11.8 33.9 9.6 21.1 19.2 5.2 4.7 29.5 28.1 035720 Kakao Corp. 6,902 115,000 0.2 -45.9 109.1 -76.5 85.0 79.9 43.2 2.7 2.6 3.4 6.1 023530 Lotte Shopping 6,897 219,000 0.7 11.3 12.6 37.8 13.4 9.1 8.0 0.4 0.4 4.4 4.8 004020 Hyundai Steel 6,859 51,400 1.5 10.8 4.8 44.4 -4.6 5.4 5.7 0.4 0.4 7.8 7.0 161390 Hankook Tire 6,169 49,800 0.8 -13.8 7.1 -5.3 7.7 9.3 8.6 1.2 1.0 13.6 12.8 001800 Orion 6,137 1,027,000 0.6 6.5 13.3 12.2 17.9 33.4 28.4 4.2 3.8 13.8 14.4 139480 Emart 6,049 217,000 0.7 -3.9 21.7 100.1 -23.2 10.4 13.6 0.8 0.8 8.3 6.1 009240 Hanssem 5,072 215,500 0.4 35.5 44.2 33.9 41.7 43.7 30.8 10.3 7.9 29.9 32.1 078930 GS Holdings 4,813 51,800 2.6 - -8.0 - -12.8 9.3 10.6 0.5 0.5 6.9 4.8 032640 LG Uplus 4,781 10,950 2.6 20.4 2.0 79.1 5.4 11.7 11.1 1.1 1.0 9.4 9.2 19814. 009150 Samsung Electro-Mechanics 4,736 63,400 0.8 25.4 -84.2 240.2 61.8 18.2 1.1 1.0 1.8 6.0 5 002380 KCC 4,692 446,000 2.0 2.5 6.3 -34.2 4.5 21.9 21.0 0.7 0.7 3.4 3.4 051600 KEPCO KPS 4,680 104,000 - - - - 0.0 0.0 005830 Dongbu Insurance 4,630 65,400 - - - - 0.0 0.0 Source: KDB Daewoo Securities Research

Market Data November 9, 2015

※All data as of close November 9, 2015, unless otherwise noted.

Other Major Indices Economic Indicators Close Net Chg 1D (%) YTD (%) Close 1D ago 1M ago 1Y ago MSCI Korea* 380.93 -3.19 -0.83 -1.49 USD/KRW 1,138.60 1,137.10 1,165.20 1,089.10 KOSPI 2,025.70 -15.37 -0.75 5.15 JPY100/KRW 923.33 934.19 971.28 945.19 KOSDAQ 671.84 -22.37 -3.22 21.33 EUR/KRW 1,220.69 1,237.34 1,309.74 1,348.47 Dow Jones* 17,910.33 46.90 0.26 0.43 3Y Treasury 1.80 1.73 1.62 2.09 S&P 500* 2,099.20 -0.73 -0.03 1.99 3Y Corporate 2.16 2.08 1.94 2.44 NASDAQ* 5,147.12 19.38 0.38 8.89 DDR2 1Gb* 1.11 1.11 1.13 1.40 Philadelphia Semicon* 676.47 17.11 2.59 -1.49 NAND 16Gb* 1.51 1.51 1.51 2.35 FTSE 100* 6,353.83 -11.07 -0.17 -2.96 Oil (Dubai)* 45.55 47.30 80.23 Nikkei 225 19,642.74 377.14 1.96 12.83 Gold* 1,087.70 1,104.20 1,146.80 1,142.60 Hang Seng* 22,867.33 -183.71 -0.80 -4.15 Customer deposits (Wbn)* 20,237 20,233 20,298 14,868 Taiwan (Weighted) 8,642.48 -51.09 -0.59 -6.81 Equity type BC (Wbn)(Nov. 5) 81,107 81,185 80,892 78,473 Note: * as of November 6, 2015Source: 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 Hanmi Pharm 48.19 Samsung Electronics (P) 20.99 KODEX LEVERAGE 19.88 Hanmi Science 59.51 KOREA AEROSPACE 13.91 POSCO 19.39 TIGER SYNTH-CHINA A LEVERAGE 13.91 Hanmi Pharm 37.83 HANKOOK TIRE 12.83 Hynix 15.53 Hynix 10.64 Samsung Electronics 32.09 Kia Motors 11.54 Samsung Electronics 14.33 Hyundai Mobis 10.52 Lotte Shopping 15.24 CJ CGV 8.54 SK Telecom 11.84 SK Telecom 7.79 KODEX INVERSE 13.96 Hyundai Merchant Marine 8.22 KT 10.01 Hyundai Motor 6.98 Honam Petrochemical 12.46 NHN 7.64 Hyundai Elevator 9.74 Samsung Life Insurance 5.93 SK C&C 11.18 Yuhan 6.46 LG Chem 6.23 LG Chem 5.75 Yuhan 8.62 NCsoft 4.78 SK C&C 5.67 Samsung F&M Insurance 5.28 Hanssem 6.95 KB Financial Group 4.73 Korea Zinc 5.24 LG Electronics 5.19 SK Energy 5.98 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 Bio Space 4.88 Com2us 9.38 KH Vatec 3.10 Bio Space 5.40 Paradise 3.97 SM 6.10 NEOWIZ Games 3.06 SM 5.37 DH PHARM 2.45 KH Vatec 5.14 Com2us 1.61 DoubleUGames 5.05 Wemade 2.44 ViroMed 2.99 Huons 1.49 CJ E&M 3.72 Interpark 1.87 Celltrion 2.94 iNtRON Bio 1.46 Boditech 3.06 Partrion 1.72 Emerson Pacific 2.63 Interpark 1.15 PEPTRON 2.69 New Pride 1.68 Daum Communications 2.55 EO Technics 1.14 Hyungkuk F&B 2.54 Solco Biomedical 1.43 Medipost 2.35 HLB 1.05 KREIT 2.24 KICA 1.37 Webzen 2.32 Viatron 0.94 YG Entertainment 2.09 WiSoL 1.22 Medy-tox 2.13 ATGen 0.83 OSSTEM IMPLANT 2.05 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 1,344,000 6,000 197,970 Celltrion 77,000 700 8,626 Hyundai Motor 165,000 500 36,346 Daum Communications 115,000 -4,000 6,902 KEPCO 52,700 0 33,832 Dongsuh 35,300 -550 3,519 SAMSUNG C&T 147,000 -500 27,884 CJ E&M 83,400 -600 3,230 Samsung Electronics (P) 1,139,000 -6,000 26,007 Medy-tox 480,700 -30,300 2,719 Hyundai Mobis 253,500 3,000 24,677 ViroMed 171,600 -11,200 2,436 Kia Motors 58,000 1,200 23,511 Paradise 22,900 -250 2,083 Hynix 31,250 50 22,750 LOEN 74,300 -1,900 1,879 Samsung Life Insurance 112,000 3,000 22,400 Komipharm 29,050 -900 1,549 Amore Pacific 379,000 -9,000 22,156 Com2us 115,500 -4,800 1,486 Source: Korea Exchange