May 17, 2019 Korea Morning Focus

Sector News & Analysis Major Indices Close Chg Chg (%) Biotech/Healthcare (Overweight) KOSPI 2,067.69 -25.09 -1.20 2019 ASCO meeting abstracts: Pay attention to Hanmi Pharmaceutical and KOSPI 200 265.99 -3.65 -1.35 /Oscotec KOSDAQ 717.59 -12.01 -1.65

Turnover ('000 shares, Wbn) Volume Value KOSPI 733,269 6,042 KOSPI 200 75,355 3,473 KOSDAQ 894,432 4,878

Market Cap (Wbn) Value KOSPI 1,369,732 KOSDAQ 246,286

KOSPI Turnover (Wbn) Buy Sell Net Foreign 1,482 1,950 -468 Institutional 1,230 1,193 37 Retail 3,287 2,876 411

KOSDAQ Turnover (Wbn) Buy Sell Net Foreign 387 549 -162 Institutional 197 226 -29 Retail 4,265 4,068 197

Program Buy / Sell (Wbn) Buy Sell Net KOSPI 1,355 1,618 -263 KOSDAQ 335 502 -168

Advances & Declines Advances Declines Unchanged KOSPI 297 542 55 KOSDAQ 331 900 45

KOSPI Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Electronics 41,550 -1,000 570 Namsun Aluminum 4,070 900 330 KODEX Leverage 11,675 -325 310 Hynix 71,900 -2,600 253 KODEX 200 Futures 7,895 210 236 Inverse 2X

KOSDAQ Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Nexon GT 14,750 1,050 296 Kukil Paper 3,970 -305 248 Woori Technology 4,610 100 207 LB Semicon 9,850 -600 145 TK Chemical 3,060 195 88 Note: As of May 16, 2019

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Biotech/Healthcare (Overweight/Maintain)

2019 ASCO meeting abstracts: Pay attention to Hanmi Pharmaceutical and Yuhan/Oscotec  2019 ASCO meeting abstracts are released Issue Comment  Hanmi Pharmaceutical and Yuhan/Oscotec merit attention May 17, 2019  Watch for medium/long-term value appreciation rather than immediate share price gains

Mirae Asset Daewoo Co., 2019 ASCO meeting abstracts are released Ltd. [Biotech/Healthcare] The 2019 American Society of Clinical Oncology (ASCO) meeting abstracts were published yesterday. The ASCO meeting, which will be held from May 31st to June 4th in Chicago, is Taehee Kim widely considered one of the biggest industry events, alongside the JP Morgan Healthcare +822-3774-6813 Conference. Many pharmaceutical and biotech companies present their latest clinical data [email protected] at the annual meeting, which is attended by more than 30,000 oncology specialists and multinational pharmaceutical officials every year.

Among Korean companies, Hanmi Pharmaceutical, Yuhan/Oscotec, Genexine, HLB, ABL Biol, and Samsung Bioepis are set to present at this year’s ASCO meeting. Hanmi Pharmaceutical and Yuhan/Oscotec merit attention

Among participating domestic firms, we believe Hanmi Pharmaceutical and Yuhan/Oscotec deserve attention.

1) Hanmi Pharmaceutical: HM30181A, HM95573, and Rolontis This year’s meeting has a total of seven abstracts related to Hanmi Pharmaceutical; five involve HM30181A, one involves HM95573, and one involves Rolontis.

Of the five HM30181A abstracts, three are for the drug Oraxol, one is for Oratecan, and the last is for Eribulin ORA. All of these drugs apply the Orascovery platform, which converts intravenous formulations to oral formulations, and all are being developed in combination with existing therapies, such as paclitaxel, irinotecan, and ramucirumab. The latest abstracts reveal data supporting the successful conversion to oral therapies. A phase 1 study of Oraxol showed a 42.3% partial response rate and a 46.2% stable disease rate (progressive disease rate was 11.5%).

As for HM95573 (RAF inhibitor), data on phase 1 studies involving solid tumor patients will be presented at the meeting. According to the abstracts, two out of nine patients with NRAS-mutant melanoma, two out of six patients with BRAF-mutant melanoma, and two out of seven patients with BRAF-mutant colorectal cancer had partial responses.

The Rolontis abstract contains data from two phase 3 trials involving breast cancer patients. As was widely expected, the trial results demonstrated a similar safety profile to pegfilgrastim.

2) Yuhan/Oscotec: Lung cancer treatment lazertinib The lazertinib abstract provides updated results from phase 1/2 studies on non-small cell lung cancer (NSCLC) patients. The studies showed an objective response rate (ORR) of 60% in all patients, 64% in T790M+ patients, and 50% in brain metastases patients. The median progression-free survival (PFS) was 8.1 months in all patients and 9.5 months in T790M+ patients. Lazertinib was even more effective in the high-dosage group; patients administered more than 120mg showed an ORR of 65% (+5%p) and PFS of 12.2 months (+4.1 months). The drug also proved to be safe, with the most common side effects being pruritus (27%), rash (24%), constipation (20%), decreased appetite (19%), and diarrhea (14%).

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

May 17, 2019 Biotech/Healthcare

Watch for medium/long-term value appreciation rather than immediate share price gains

Past experience suggests the biotech sector is unlikely to see upside momentum during the ASCO meeting. However, we do think the meeting will be instrumental in gradually driving up the value of biotech firms by exposing their clinical data to multinational drug companies and paving the way for potential licensing deals and partnerships.

We maintain our Overweight recommendation on the biotech/healthcare sector. Recently, the sector has come under pressure, hit by investigations into , the Invossa ingredient scandal, and heightened US-China trade tensions. Still, we note that domestic firms boast strong technological competitiveness, as illustrated by the increasing interest in the American Association for Cancer Research (AACR) and ASCO meetings. In addition, we expect earnings to improve in 2H19, led by biosimilar and botulinum toxin- related firms. We also look for positive R&D developments, both small and big, such as data presentations and licensing deals. Lastly, the IPOs of attractive biotech firms, such as AptaBio Therapeutics, SK Biopharmaceuticals, and MedPacto, should provide a boost to investor sentiment.

Among top-tier drug companies, we maintain Hanmi Pharmaceutical as our top pick, as a number of the company’s clinical trials are progressing smoothly, and licensing deals are expected for the company’s NASH and obesity treatments. Among biotech names, we highlight OliX Pharmaceuticals, Oscotec, PharmAbcine, and AbClon in light of their superior technology and R&D momentum expected in 2H19.

Mirae Asset Daewoo Research

Mirae Asset Daewoo Research Key Universe Valuations May 17, 2019

※All data as of close May 15, 2019, unless otherwise noted.

19F Earnings growth Mkt Cap Price P/E (x) P/B (x) ROE (%) Ticker Company Div Yield OP EPS (Wbn) (W) (%) 19F 20F 19F 20F 19F 20F 19F 20F 19F 20F 005930 248,044 41,550 3.4 -54.2 38.9 -46.7 34.7 12.9 9.6 1.1 1.0 8.8 11.1 000660 SK Hynix 52,343 71,900 2.1 -78.7 60.6 -78.6 55.5 15.7 10.1 1.0 0.9 6.9 10.1 005380 Hyundai Motor 27,243 127,500 3.1 40.1 30.5 139.2 15.0 10.0 8.7 0.5 0.5 5.1 5.7 068270 Celltrion 25,143 196,500 - - - - 0.0 0.0 051910 LG Chem 23,684 335,500 1.8 -3.8 47.4 -1.3 48.7 18.1 12.1 1.4 1.3 8.3 11.4 055550 21,197 44,700 12.5 3.1 10.5 0.7 6.1 6.0 0.5 0.5 9.4 8.8 017670 SK Telecom 20,832 258,000 3.9 5.8 9.8 -34.9 53.0 10.2 6.7 0.8 0.7 8.8 12.5 051900 LG H&H 20,538 1,315,000 0.9 12.5 9.5 15.3 10.4 26.1 23.6 5.6 4.8 19.9 18.8 005490 POSCO 20,532 235,500 4.7 -16.7 1.8 69.3 2.3 7.2 7.0 0.4 0.4 6.5 6.3 012330 20,253 212,500 1.6 9.1 10.2 27.0 7.4 8.6 8.0 0.6 0.6 7.5 7.6 035420 NAVER 19,613 119,000 0.3 -15.1 26.3 -31.4 68.6 44.0 26.1 2.8 2.6 8.2 12.5 105560 KB Financial Group 19,275 46,100 9.7 3.8 10.8 4.0 5.7 5.5 0.5 0.5 9.3 9.0 028260 Samsung C&T 18,590 98,000 2.0 5.4 20.1 -4.2 20.7 14.7 12.2 0.7 0.7 5.2 5.9 034730 SK Holdings 17,203 244,500 1.9 13.3 12.9 -32.3 20.1 11.4 9.5 0.9 0.9 8.9 9.8 000270 Motors 17,167 42,350 1.9 20.5 19.7 54.5 16.7 9.6 8.2 0.6 0.6 6.3 7.0 015760 KEPCO 16,531 25,750 ------0.2 0.3 - - 032830 Samsung Life 15,960 79,800 - - - - 0.0 0.0 018260 Samsung SDS 15,862 205,000 1.4 11.6 16.5 12.7 15.4 22.4 19.4 2.4 2.2 11.3 12.0 096770 SK Innovation 15,534 168,000 4.8 -7.3 6.3 -14.0 6.6 11.1 10.4 0.8 0.8 7.7 7.9 006400 Samsung SDI 14,853 216,000 0.5 16.8 45.7 -1.0 42.4 21.9 15.4 1.2 1.1 5.6 7.5 033780 KT&G 13,661 99,500 4.2 12.8 5.6 17.5 5.1 12.9 12.3 1.5 1.4 12.7 12.6 000810 Samsung F&M 13,170 278,000 - - - - 0.0 0.0 003550 LG Corp. 12,338 71,500 3.2 17.2 15.4 5.5 15.6 6.4 5.5 0.6 0.6 10.5 11.1 090430 AmorePacific 11,692 200,000 0.6 6.0 20.7 6.9 22.4 32.9 26.9 2.9 2.7 7.8 8.9 066570 LG Electronics 11,619 71,000 1.1 7.1 20.0 23.7 39.9 8.4 6.0 0.8 0.7 10.3 12.9 035720 11,134 133,500 0.1 167.0 116.1 127.8 160.4 95.6 36.7 2.1 2.0 2.2 5.6 086790 11,049 36,800 8.6 8.1 9.5 8.2 4.5 4.1 0.4 0.4 9.0 9.1 036570 NCsoft 10,970 500,000 1.2 30.9 27.2 48.0 18.0 17.7 15.0 3.3 2.8 23.7 23.1 251270 10,075 118,000 44.5 59.7 57.2 39.0 33.7 24.3 2.1 1.9 6.6 8.5 091990 Celltrion Healthcare 9,823 68,300 - 192.4 1119.2 156.4 70.5 27.5 5.3 4.6 8.2 18.6 010950 S-Oil 9,434 83,800 3.7 91.9 60.5 185.0 86.8 13.3 7.1 1.4 1.2 10.8 18.0 011170 Lotte Chemical 9,014 263,000 4.0 -15.9 14.9 -7.2 13.8 5.8 5.1 0.6 0.6 11.5 11.9 024110 8,049 14,000 5.4 3.9 2.0 3.3 5.1 5.0 0.4 0.4 8.3 8.1 010130 Korea Zinc 7,963 422,000 2.6 8.9 6.0 19.1 2.4 12.7 12.4 1.2 1.1 9.7 9.3 009540 HHI 7,714 109,000 - 594.6 - - - 64.8 0.7 0.6 - 1.0 009150 Samsung Electro-Mechanics 7,342 98,300 1.1 -19.1 28.9 -17.5 31.2 14.1 10.7 1.4 1.3 10.7 12.6 030200 KT 7,298 27,950 3.9 2.0 3.0 28.2 5.6 8.3 7.8 0.5 0.5 6.5 6.6 032640 LG Uplus 6,746 15,450 4.2 -2.9 11.7 2.0 18.2 13.7 11.6 0.9 0.9 7.0 7.9 034220 LG Display 6,154 17,200 - - - - - 19.4 0.4 0.4 - 2.3 018880 Hanon Systems 6,085 11,400 - - - - 0.0 0.0 086280 5,756 153,500 2.1 8.8 2.2 20.2 8.7 11.0 10.1 1.2 1.1 11.8 11.7 004020 5,598 41,950 1.8 2.5 16.1 42.1 23.3 9.9 8.0 0.3 0.3 3.3 3.8 000720 Hyundai E&C 5,434 48,800 1.0 24.6 6.1 20.7 0.6 11.8 11.7 0.8 0.8 7.2 6.8 267250 5,016 308,000 6.0 78.7 2.1 154.0 4.5 7.4 7.0 0.6 0.6 8.6 8.5 Holdings 010140 SamsungHvyInd 4,895 7,770 - - - - - 63.3 0.6 0.6 - 1.2 128940 Hanmi Pharmaceutical 4,755 409,500 0.1 37.5 -0.2 141.7 -12.3 79.0 90.1 6.1 5.8 8.2 6.8 023530 Lotte Shopping 4,696 166,000 3.1 6.5 3.9 - 10.5 11.7 10.6 0.4 0.4 3.4 3.7 005830 DB Insurance 4,340 61,300 - - - - 0.0 0.0 097950 CJ CheilJedang 4,313 286,500 1.2 15.4 12.7 -64.8 23.7 15.0 12.1 0.9 0.8 6.3 7.3 035760 CJ ENM 4,217 192,300 - - - - 0.0 0.0 Source: Mirae Asset Daewoo Research

Mirae Asset Daewoo Research Market Data May 17, 2019

※All data as of close May 16, 2019, unless otherwise noted.

Other Major Indices Economic Indicators Close Net Chg 1D (%) YTD (%) Close 1D ago 1M ago 1Y ago MSCI Korea* 417.45 2.12 0.51 -2.68 USD/KRW 1,189.40 1,187.00 1,133.90 1,072.60 KOSPI 2,067.69 -25.09 -1.20 2.87 JPY100/KRW 1,085.96 1,082.58 1,012.55 973.10 KOSDAQ 717.59 -12.01 -1.65 7.20 EUR/KRW 1,332.90 1,330.33 1,281.70 1,268.40 Dow Jones* 25,648.02 115.97 0.45 9.95 3Y Treasury 1.68 1.71 1.77 2.29 S&P 500* 2,850.96 16.55 0.58 13.58 3Y Corporate 2.15 2.18 2.23 2.89 NASDAQ* 7,822.15 87.66 1.13 17.35 DDR2 1Gb* 1.06 1.06 1.06 1.34 Philadelphia Semicon* 1,454.50 11.67 0.81 24.82 NAND MLC 64G* 2.49 2.52 2.38 3.72 FTSE 100* 7,296.95 55.35 0.76 8.36 Oil (Dubai)* 70.46 69.70 70.32 75.30 Nikkei 225 21,062.98 -125.58 -0.59 7.67 Gold* 1,297.80 1,296.30 1,286.80 1,290.30 Hang Seng* 28,268.71 146.69 0.52 12.49 Customer deposits (Wbn)* 25,966 26,058 26,548 28,903 Taiwan (Weighted) 10,474.61 -86.10 -0.82 9.63 Equity type BC (Wbn)(May. 14) 81,097 81,043 85,086 80,849 Note: * as of May 15, 2019 Source: KSDA, FnGuide, 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 Kakao 14.10 Samsung Electronics 146.18 KODEX 200 57.78 KODEX Leverage 51.74 Korea 8.24 KODEX 200 64.03 Hyundai Motor 23.49 LG Electronics 14.87 Namsun Aluminum 6.30 Hyundai Motor 43.38 KODEX KOSDAQ150 INVERSE 15.14 ORION 10.38 SK Telecom 4.53 emart 25.66 KODEX 200 Futures Inverse 2X 12.63 KODEX Kosdaq150 Leverage 10.00 LG Uplus 4.46 Hynix 20.72 Shinhan Financial Group 12.04 SEMCO 8.14 LG Electronics 3.84 SEMCO 18.58 KODEX Inverse 11.45 Hynix 7.79 KAL 3.28 15.03 Hyundai Mobis 9.95 LG Display 5.29 NC Soft 3.04 LG Chem 13.75 Kia Motors 9.59 Daewoong Pharm. 4.88 Hana Financial Group 2.97 Hyundai Mobis 12.80 Samsung F&M Insurance 6.09 LG Uplus 4.15 NAVER 2.69 Shinhan Financial Group 12.64 Daesang Corp. 5.05 SK Telecom 3.99 Source: KSDA, FnGuide

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 OSSTEM IMPLANT 2.53 Insun ENT 7.46 SM 3.54 Ace Technology 10.18 Com2us 2.42 Cafe24 Corp. 5.90 Celltrion Healthcare 2.79 Insun ENT 9.21 ANA Pass 2.42 RFHIC 5.31 Chunbo 2.73 KMW 3.49 Seojin System 2.25 Emerson Pacific 5.13 FST 2.67 Ebest Securities 2.99 Innowireless 1.94 Celltrion Healthcare 5.00 PearlAbyss 2.54 INNOX Advanced Materials 2.74 YG Entertainment 1.93 Winix 4.65 Medy-tox 2.39 LB Semicon 2.57 Partrion 1.93 ViroMed 4.42 Shinwha Intertek 2.13 ECHO 2.29 Nepes 1.86 CMG Pharm. 4.15 Systems Technology 1.98 Paradise 2.28 Gabia 1.30 Deutsch Motors 3.64 YG Entertainment 1.86 Amotech 2.26 FST 1.25 Posco Chemtech 3.38 Solid Technologies 1.51 Seojin System 2.15 Source: KSDA, FnGuide

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 41,550 -1,000 248,044 Celltrion Healthcare 68,300 -300 9,823 Hynix 71,900 -2,600 52,343 CJ ENM 192,300 -1,900 4,217 Samsung Electronics (P) 33,550 -1,000 27,608 SillaJen 55,900 -100 3,940 Hyundai Motor 127,500 -500 27,243 ViroMed 224,300 -15,100 3,579 Celltrion 196,500 500 25,143 Posco Chemtech 52,400 -1,700 3,196 LG Chem 335,500 -5,000 23,684 Medy-tox 526,000 10,000 3,059 Shinhan Financial Group 44,700 -250 21,197 HLB 75,100 -2,400 2,947 SK Telecom 258,000 0 20,832 PearlAbyss 182,300 -200 2,373 LG Household & Health Care 1,315,000 13,000 20,538 82,500 -800 2,314 POSCO 235,500 -4,500 20,532 Celltrion 54,100 -300 1,844 Source: