November 19, 2015

KOREA

Company News & Analysis Major Indices Close Chg Chg (%) KB Insurance (002550/Hold) KOSPI 1,988.91 26.03 1.33 Treasury stock sale signals easing uncertainties KOSPI 200 244.79 3.35 1.39 KOSDAQ 680.57 9.90 1.48

Turnover ('000 shares, Wbn) Volume Value KOSPI 402,673 4,469 KOSPI 200 65,863 3,163 KOSDAQ 846,246 3,821

Market Cap (Wbn) Value KOSPI 1,263,319 KOSDAQ 196,702

KOSPI Turnover (Wbn) Buy Sell Net Foreign 1,253 1,266 -13 Institutional 902 606 296 Retail 2,151 2,576 -425

KOSDAQ Turnover (Wbn) Buy Sell Net Foreign 208 155 52 Institutional 126 108 18 Retail 3,478 3,533 -55

Program Buy / Sell (Wbn) Buy Sell Net KOSPI 925 757 168 KOSDAQ 41 37 5

Advances & Declines Advances Declines Unchanged KOSPI 590 232 55 KOSDAQ 698 347 71

KOSPI Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Hanmi Pharm 775,000 51,000 268 Electronics 1,289,000 8,000 244 KODEX LEVERAGE 9,995 270 143 KODEX INVERSE 8,215 -125 123 SBW 2,900 0 107

KOSDAQ Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value 90,700 1,500 226 SEJONG TELECOM 2,265 175 150 Netishion.com 3,300 760 143 Komipharm 54,700 10,650 139 CCS Cable TV 1,450 55 132 Note: As of November 19, 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.

KB Insurance (002550 KS/Hold)

Treasury stock sale signals easing Insurance uncertainties

News Comment ¢ KB Insurance to sell its entire treasury stock (8.29mn shares, or 13.82% of total shares issued) to KBFG November 19, 2015 ¢ Capital surplus to limit BPS dilution to 5.1%

¢ Sale should improve the insurer’s RBC ratio, and also suggests US branch cleanup is Daewoo Securities CCo.,o., Ltd.

progressing well

[Securities/Insurance] ¢ We plan to reconsider our Hold rating if we see no further distress from the US

Gil-won Jeong branch in 4Q +822-768-3256 [email protected]

Ju-hyun Kim KB Insurance to sell entire treasury stock to KBFG

+822-768-4149 th [email protected] On November 18 , KB Insurance said that it would sell all of its treasury stock (8.29mn shares, or 13.82% of total shares issued) to KB Financial Group (KBFG). The insurer will sell the shares at W28,050/share, near the previous day’s closing price (W27,850), for a total of W232.5bn. KBFG will see its stake increase to 33.29%, meeting the minimum requirement for subsidiary ownership. The move had been widely anticipated, as financial holding companies are required to own at least 30% of a listed subsidiary within a year of acquisition (Article 43-2 of the Financial Holding Companies Act). Uncertainties to ease modestly

While the resulting increase in float is negative to the insurer’s valuation, we believe the capital surplus from the sale will limit BPS dilution to 5.1%.

Overall, we think the positives outweigh the negatives. The sale should boost the insurer’s RBC ratio, but it also signals uncertainties related to its US branch are easing.

The treasury stock disposal should increase the insurer’s equity capital by roughly W190bn, lifting its RBC ratio (based on the end-September figure) by 14%p to 182%. As such, worries over the insurer’s RBC ratio, which is currently the lowest in the non-life sector, should somewhat ease.

Losses from the US subsidiary have significantly eroded overall margins since 2013. In 3Q15, massive IBNR and outstanding loss reserves at the US branch led to a quarterly earnings shock. However, the fact that the treasury stock sale came just one month after the US branch set aside around US$69mn in additional outstanding loss reserves suggests that the insurer’s efforts to clean up the US branch’s balance sheet are coming along well. The remaining question now is when and how the insurer will further increase its capital. The answer should become clear after KBFG’s ongoing acquisition bid comes to a close. If we do not see further signs of distress from the US branch in 4Q, we plan to reconsider our Hold rating on the stock. FY (Dec.) 03/13 12/13 12/14 12/15F 12/16F 12/17F Earned premiums (Wbn) 8,044 5,986 7,806 8,124 8,366 8,558 OP (Wbn) 232 172 180 133 364 403 NP (Wbn) 164 118 139 98 262 285 EPS (W) 3,180 2,290 2,683 1,629 4,370 4,758 BPS (W) 29,920 28,189 33,542 35,415 39,035 42,943 P/E (x) 7.5 14.4 10.2 17.1 6.4 5.9 P/B (x) 0.8 1.2 0.8 0.8 0.7 0.6 ROE (%) 11.5 7.9 8.7 5.1 11.7 11.6 Dividend yield (%) 2.3 1.5 1.8 2.7 3.0 3.0 Stockholders’ equity (Wbn) 1,547 1,458 1,734 2,125 2,342 2,577 Notes: All figures are based on non-consolidated K-IFRS; 12/13 figures are based on a 9-month period due to changes in accounting standards. 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 19, 2015

※All data as of close November 18, 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 189,869 1,289,000 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 35,134 159,500 3.1 15.6 -1.2 12.6 1.1 6.1 6.0 0.6 0.6 11.4 10.5 015760 KEPCO 32,483 50,600 3.0 8.3 0.5 -46.9 -1.5 4.8 4.9 0.5 0.4 9.8 8.9 012330 24,531 252,000 1.4 15.0 7.2 22.5 5.8 6.5 6.2 0.8 0.7 13.4 12.6 090430 AmorePacific 23,062 394,500 0.3 33.4 31.0 25.2 31.7 35.1 26.7 6.6 5.4 20.6 22.3 000270 Motors 22,862 56,400 2.4 27.7 14.0 25.8 10.9 6.1 5.5 0.8 0.7 14.2 13.9 000660 SK Hynix 22,714 31,200 1.3 -21.9 10.7 -22.9 11.3 6.8 6.1 0.9 0.8 14.1 13.8 051910 LG Chem 21,604 326,000 1.2 17.6 33.5 35.9 34.2 13.8 10.3 1.6 1.4 12.6 15.0 032830 Samsung Life 20,900 104,500 - - - - 0.0 0.0 055550 20,557 43,350 - - - - 0.0 0.0 035420 NAVER 20,074 609,000 0.2 33.3 22.4 35.7 21.6 27.1 22.3 5.1 4.2 27.7 26.0 018260 Samsung SDS 19,809 256,000 0.2 12.2 1381.5 8.3 1338.7 41.3 2.9 4.0 1.7 10.1 82.3 017670 SK Telecom 18,733 232,000 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 17,449 248,000 0.8 9.0 13.4 4.3 -49.4 20.5 40.4 3.1 3.0 19.8 8.9 051900 LG Household & Health Care 15,400 986,000 0.5 21.6 16.8 22.7 18.6 29.6 25.0 6.6 5.4 25.7 24.4 033780 KT&G 14,896 108,500 3.3 -4.9 0.7 -9.4 2.0 15.6 15.3 2.1 2.0 14.7 13.9 005490 POSCO 14,778 169,500 4.7 10.9 11.3 593.2 33.2 10.1 7.6 0.3 0.3 3.5 4.6 000810 Samsung F&M 14,449 305,000 - - - - 0.0 0.0 105560 KB Financial Group 13,793 35,700 - - - - 0.0 0.0 003550 LG Corp. 12,545 72,700 1.4 10.0 0.0 7.3 2.2 11.5 11.2 0.9 0.9 8.3 8.0 096770 SK Innovation 11,558 125,000 2.0 -34.7 48.8 -29.1 58.6 15.1 9.5 0.7 0.7 4.7 7.2 066570 LG Electronics 9,213 56,300 1.4 63.8 18.6 153.4 21.4 10.8 8.9 0.8 0.7 7.6 8.5 010130 Korea Zinc 8,558 453,500 1.4 22.0 16.2 23.5 17.4 12.8 10.9 1.5 1.3 12.4 13.0 047810 Korea Aerospace Industries 8,422 86,400 0.3 27.7 23.5 42.2 26.2 27.9 22.1 5.6 4.5 22.1 22.7 010950 S-Oil 8,387 74,500 3.7 -8.9 15.1 0.0 15.1 11.2 9.8 1.4 1.3 13.2 13.8 035250 8,344 39,000 3.3 11.5 5.2 14.7 9.5 16.2 14.8 2.4 2.2 16.4 16.4 006400 Samsung SDI 8,286 120,500 0.8 468.2 5.0 385.4 -81.4 5.4 29.2 0.6 0.6 12.3 2.2 011170 Lotte Chemical 8,226 240,000 0.4 7.6 12.6 19.0 16.8 6.4 5.4 0.9 0.8 15.8 15.8 128940 7,929 775,000 63.1 28.5 73.0 36.4 124.8 91.5 14.2 12.3 12.1 14.5 030200 KT 7,729 29,600 2.7 1.1 0.3 -13.4 4.2 10.3 9.9 0.6 0.6 6.5 6.4 086790 7,696 26,000 - - - - 0.0 0.0 024110 7,651 13,750 - - - - 0.0 0.0 034220 LG Display 7,639 21,350 2.3 -40.9 85.2 -43.9 110.7 12.3 5.9 0.6 0.5 4.9 9.7 086280 7,275 194,000 1.0 9.5 8.4 57.8 2.4 12.5 12.2 2.0 1.8 17.6 15.6 009540 7,083 93,200 - 86.1 - 146.5 28.9 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 035720 6,921 115,300 0.2 92.2 38.3 76.3 40.8 44.0 31.3 2.6 2.4 6.0 7.9 004020 6,832 51,200 1.5 4.8 9.0 -4.6 18.8 5.7 4.8 0.4 0.4 7.0 7.7 021240 Coway 6,756 87,600 4.1 11.8 21.2 9.6 21.3 18.4 15.2 4.5 4.0 28.1 30.2 088350 Hanwha Life 6,662 7,670 - - - - 0.0 0.0 001800 Orion 6,257 1,047,000 0.7 14.8 8.2 23.0 13.5 29.8 26.3 3.9 3.5 14.1 14.2 139480 Emart 6,147 220,500 0.7 19.1 14.7 -25.7 13.1 14.4 12.8 0.8 0.8 5.8 6.2 161390 6,027 48,650 0.9 7.1 14.0 7.7 14.9 8.4 7.3 1.0 0.9 12.8 13.0 009150 Samsung Electro-Mechanics 5,258 70,400 0.9 25.4 29.0 240.2 32.7 20.2 15.2 1.1 1.1 6.0 7.5 009240 Hanssem 5,072 215,500 0.5 44.2 27.9 41.7 32.7 30.8 23.3 7.9 6.0 32.1 31.7 002380 KCC 4,771 453,500 2.0 6.3 15.5 4.5 13.5 21.3 18.8 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 4,650 10,650 2.7 2.0 1.8 5.4 4.8 10.8 10.3 1.0 0.9 9.2 9.0 036570 NCSOFT 4,638 211,500 1.8 29.6 21.8 34.4 24.9 17.8 14.3 2.6 2.3 16.5 18.1 051600 KEPCO KPS 4,635 103,000 - - - - 0.0 0.0 Source: KDB Daewoo Securities Research

Market Data November 19, 2015

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

Other Major Indices Economic Indicators Close Net Chg 1D (%) YTD (%) Close 1D ago 1M ago 1Y ago MSCI Korea* 359.30 0.32 0.09 -7.08 USD/KRW 1,173.40 1,169.20 1,128.90 1,098.90 KOSPI 1,988.91 26.03 1.33 3.24 JPY100/KRW 949.70 947.14 945.64 940.36 KOSDAQ 680.57 9.90 1.48 22.91 EUR/KRW 1,251.31 1,244.55 1,281.87 1,377.03 Dow Jones* 17,737.16 247.66 1.42 -0.54 3Y Treasury 1.74 1.75 1.62 2.18 S&P 500* 2,083.58 33.14 1.62 1.23 3Y Corporate 2.11 2.12 1.96 2.50 NASDAQ* 5,075.20 89.19 1.79 7.37 DDR2 1Gb* 1.11 1.11 1.13 1.38 Philadelphia Semicon* 662.14 6.32 0.96 -3.58 NAND 16Gb* 1.48 1.48 1.53 2.30 FTSE 100* 6,278.97 10.21 0.16 -4.11 Oil (Dubai)* 45.55 47.11 47.13 75.93 Nikkei 225 19,859.81 210.63 1.07 14.08 Gold* 1,068.70 1,068.60 1,183.60 1,197.10 Hang Seng* 22,188.26 -75.99 -0.34 -7.00 Customer deposits (Wbn)* 20,428 21,061 20,578 15,736 Taiwan (Weighted) 8,477.20 136.73 1.64 -8.59 Equity type BC (Wbn)(Nov 17) 80,231 80,077 81,303 78,964 Note: * as of November 18, 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 Hanmi Pharm 22.56 Samsung Electronics 83.56 LG Chem 29.73 KODEX 200 12.28 Samsung SDI 17.51 Dongbu Insurance 29.21 Samsung SDI 25.48 BNK Financial Group 7.00 S-Oil 15.00 Samsung Electronics (P) 27.16 SK Energy 21.11 Hana Financial Group 6.12 LG Electronics 14.99 17.87 S-Oil 20.75 SK Telecom 6.07 Hynix 12.86 POSCO 15.80 KODEX LEVERAGE 17.84 Samsung Electronics (P) 5.87 LG Chem 11.57 NCsoft 12.30 Amore Pacific 15.67 HANKOOK TIRE 5.03 LG Household & Health Care 11.49 SK C&C 11.79 LG Innotek 13.54 Kangwon Land 4.97 TIGER SYNTH- A Hanwha Chemical 10.67 9.33 Hanwha Chemical 13.49 4.94 LEVERAGE Hana Financial Group 10.55 SAMSUNG C&T 9.18 Dongbu Insurance 12.87 SK Networks 3.99 KT 7.58 Hyundai Mobis 6.69 LG Electronics 12.78 Hanmi Science 3.96 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 12.06 Semiconductor 3.45 Celltrion 15.52 CJ E&M 4.35 ViroMed 6.80 Daum Communications 3.01 TERA SEMICON 4.62 Kolon Life Science 2.63 EO Technics 5.98 Kwanglim 2.54 DoubleUGames 3.19 Medy-tox 2.39 Sansung P&C 4.83 Medy-tox 2.02 ATTO 2.30 iNtRON Bio 1.98 Kolon Life Science 4.49 Barunson E&A 1.79 Kornic Systems 1.64 ViroMed 1.95 Bio Space 2.75 GS Home Shopping 1.69 CJ O Shopping 1.61 Medipost 1.62 Amotech 2.52 YG Entertainment 1.25 PEPTRON 1.54 1.42 iNtRON Bio 2.21 Paradise 1.15 SFA Engineering 1.46 AT semicon 1.36 CJ E&M 1.94 Cell Biotech 1.05 ISPLUS 1.30 Techno Semichem 1.35 Viatron 1.89 SEEGENE 1.05 Com2us 1.24 Innocell 1.33 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 1,289,000 8,000 189,869 Celltrion 90,700 1,500 10,161 Hyundai Motor 159,500 1,500 35,134 Daum Communications 115,300 700 6,921 KEPCO 50,600 -200 32,483 Dongsuh 35,850 600 3,574 SAMSUNG C&T 142,500 1,000 27,031 CJ E&M 80,700 -100 3,126 Samsung Electronics (P) 1,150,000 20,000 26,258 Komipharm 54,700 10,650 2,917 Hyundai Mobis 252,000 1,500 24,531 Medy-tox 455,700 -6,100 2,578 Amore Pacific 394,500 8,000 23,062 ViroMed 179,300 1,400 2,546 Kia Motors 56,400 700 22,862 Paradise 20,050 150 1,823 Hynix 31,200 650 22,714 LOEN 71,300 900 1,803 LG Chem 326,000 13,000 21,604 Kolon Life Science 240,000 17,000 1,606 Source: