November 24, 2015

KOREA

Company News & Analysis Major Indices Close Chg Chg (%) OCI Materials (036490/Buy/TP: W160,000) KOSPI 2,016.29 12.59 0.63 A fresh start KOSPI 200 247.51 1.59 0.65 KOSDAQ 687.86 -0.43 -0.06

Sector News & Analysis Turnover ('000 shares, Wbn) Display (Neutral) Volume Value KOSPI 409,942 4,229 LCD panel price trends KOSPI 200 67,819 2,986 Healthcare (Overweight) KOSDAQ 811,169 3,219 Healthcare Weekly Briefing Market Cap (Wbn) Value KOSPI 1,279,493 KOSDAQ 198,871

KOSPI Turnover (Wbn) Buy Sell Net Foreign 1,059 1,245 -185 Institutional 935 701 234 Retail 2,125 2,252 -128

KOSDAQ Turnover (Wbn) Buy Sell Net Foreign 181 161 20 Institutional 101 125 -24 Retail 2,927 2,927 0

Program Buy / Sell (Wbn) Buy Sell Net KOSPI 872 900 -28 KOSDAQ 87 84 4

Advances & Declines Advances Declines Unchanged KOSPI 437 369 69 KOSDAQ 534 508 76

KOSPI Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Electronics 1,299,000 17,000 198 Hanmi Pharm 820,000 -27,000 137 KODEX LEVERAGE 10,230 80 115 SAMSUNG C&T 152,000 500 110 KODEX INVERSE 8,135 -25 104

KOSDAQ Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value SHINHOO 7,300 480 128 CCS Cable TV 1,490 235 103 OCI Materials 104,000 -3,800 89 Celltrion 90,400 -300 87 New Pride 11,950 -700 87 Note: As of November 24, 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.

OCI Materials (036490 KQ) A fresh start

Technology Positives to outweigh negatives over a medium- to long-term We believe SK Holdings’ acquisition of OCI Materials offers more positives than Company Update negatives from a medium- and long-term perspective. Although OCI Materials might November 24, 2015 have achieved greater synergies with an acquisition by a global special ty gas producer, we believe SK’s acquisition will be positi ve as well. The deal will provide SK Hynix with

stable materials supply, while allowing OCI Materials to focus on the semiconductor (Maintain) Buy materials business without making unnecessary investments. Concerns over capital will likely dissipate. Given the capital-intensive nature of the Target Price (12M, W) 160,000 specialty gas business, growth requires more than technolog y and a sales network. Historically, a specialty gas producer that lacked sufficient capital often became an M&A Share Price (11/23/15, W) 107,800 target, even if it held stellar technologies.

Expected Return 48% There are worries of a supply glut arising from semiconductor makers pressuring other gas producers to further ramp-up NF3 production, due to concerns of supply disruption

from the acquisition of OCI Materials. We believe this is unlikely, as semiconductor OP (15F, Wbn) 110 makers have already requested a ramp-up in NF3 production to ensure a smooth supply Consensus OP (15F, Wbn) 109 (and ramp-ups are already underway). EPS Growth (15F, %) 461.5 SK Holdings will l ikely increase investments at OCI Materials, as the holding company Market EPS Growth (15F, %) 22.3 announced in October that the s emiconductor materials business will be one of its five P/E (15F, x) 14.9 growth drivers. OCI Materials, a supplier of NF3, disilane and WF6 , will likely look to Market P/E (15F, x) 11.4 bolster its semiconductor unit by cooperating with SK Hynix to develop a variety of KOSDAQ 688.29 other products. We believe the acquisition by SK Holdings will allow OCI Materials to Market Cap (Wbn) 1,137 take off as a semiconductor materials maker. Shares Outstanding (mn) 11 Free Float (%) 50.9 New beginning: Maintain Buy with TP of W160,000 Foreign Ownership (%) 15.6 We maintain our Buy recommendation on OCI Materials with a target price of Beta (12M) 0.81 W160,000. Although the acquisition price is lower than the current share price, we 52-Week Low 51,000 believe the deal will be positive for the company in the medium to the long term. 52-Week High 143,200 Furthermore, NF3 demand growth will likely continue through 2016, aided by 1) the (%)(%)(%) 1M1M1M 6M6M6M 12M12M12M development of 3D technology and tech migration in the semiconductor industry, 2) Absolute 26.1 7.8 93.9 rising demand for mobile OLED panels, and 3) OLED TV production growth, while Relative 24.9 11.8 53.2 earnings should be solid.

280 OCI Materials KOSDAQ

230

180

130

80 11.14 3.15 7.15 11.15

Daewoo Securities CCo.,o., Ltd. FY (12) 12/12 12/13 12/14 12/15F 12/16F 12/17F Revenue (Wbn) 254 191 212 334 397 435 [Display/IT Materials] OP (Wbn) 50 7 26 110 142 156

Young Ryu OP Margin (%) 19.7 3.7 12.3 32.9 35.8 35.9 +822-768-4138 NP (Wbn) 29 0 14 76 101 113 [email protected] EPS (W) 2,756 33 1,289 7,240 9,573 10,747 ROE (%) 8.6 0.1 4.3 21.4 23.1 21.1 Chuljoong Kim +822-768-4162 P/E (x) 13.9 891.8 39.7 14.9 11.3 10.0 [email protected] P/B (x) 1.2 1.0 1.7 2.9 2.4 1.9 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

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.

Display (Neutral/Maintain)

LCD panel price trends

¢ Off-season has arrived

Sector Update ¢ TV makers are maintaining conservative inventory management November 24, 2015 ¢ Key issue will be TV makers’ inventory drawdown in 4Q

Daewoo Securities CCo.,o., Ltd. TV panels: Price decline continues th th [Display/IT Materials] TV panel prices declined at an accelerated rate in the period November 6 to November 19 , falling 3.4% on average compared to the previous period (October 20 th to November 5th ). The price

Young Ryu decline continued across all panel sizes. We believe TV makers’ conservative inventory +822-768-4138 management and the operation of new production lines in China are continuing to weigh on prices. [email protected]

Chuljoong Kim We expect the decline in TV panel prices to continue for some time. While some suppliers +822-768-4162 have signaled utilization adjustments, the effects are likely to be limited as we are entering [email protected] the off-season. And Chinese suppliers are unlikely to curtail utilization for now given

government subsidies. Furthermore, inventory building ahead of the year-end holiday season is already over, and more Chinese capacity is expected to come online in 1H16. As such, we believe overall prices will remain on a downtrend through 1H16. A key issue will be how much inventory TV manufacturers clear in 4Q15.

In an effort to mitigate the impact of Chinese panel makers, top-tier panel manufacturers are concentrating even more on premium and large-sized panels, given that Chinese firms still lag behind in terms of yields and that sales of UHD TVs have recently been increasing. Some manufacturers are converting their aging LCD facilities to produce high-end panels, but we doubt such efforts will have a lasting effect, as yields in China are likely to improve over time. Given tepid demand and the absence of new innovative products that could revive consumer interest, we believe the outlook is more bearish than bullish.

IT panels: Continued weakness Desktop monitor and notebook panel prices remained weak in the period November 6th to November 19 th , falling 1.7% and 0.6% on average, respectively, compared to the previous period. Until inventory and demand issues begin to improve, prices are likely to remain under pressure.

Figure 111.1. InnoluxInnolux’s’s’s’s monthly revenue trend

(NT$bn) (%) 60 Innolux's monthly revenue (L) 50 YoY growth (R)

45 25

30 0

15 -25

0 -50 1/12 7/12 1/13 7/13 1/14 7/14 1/15 7/15

Source: Company data, 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.

Healthcare (Overweight/Maintain)

Healthcare Weekly Briefing

1. Major issues Sector Update November 23, 2015 Outpatient drug sales in October (November 16 th ) Overall outpatient prescription drug sales in October came in at W850bn (+1.5% YoY, +6.4% MoM, YTD -1.3% YoY); MoM growth turned positive for the first time in one month. Daewoo Securities CCo.,o., Ltd. Average daily outpatient prescription drug sales in October (based on business days) came in [Healthcare] at W40.5bn (+1.5% YoY, +1.4% MoM, YTD -1.8% YoY).

Hyun-tae Kim +822-768-3251 The top 10 domestic drugmakers’ combined market share rose 0.1%p MoM to 25.3%, while [email protected] that of the top 10 foreign drugmakers climbed 0.27%p MoM to 23.1%. Meanwhile, the market share of small/mid-sized drugmakers (excluding the top 10 domestic firms and top 10 foreign Seung-min Kim firms) fell 0.36%p MoM to 51.6%. +822-768-4157 [email protected] By company, LG Life Sciences (LGLS), Green Cross, , Chong Kun Dang, and Hanmi

Pharmaceutical outperformed in October, with YoY increases in outpatient drug sales of 18.2%, 12.7%, 5.7%, 5.6%, and 1.1%, respectively, while Daewoong Pharmaceutical and Dong-A ST underperformed (-3.6% and 7.4% YoY, respectively).

Of the five largest drugmakers, Chong Kun Dang held the biggest market share in October (3.76%), followed by (3.70%), Daewoong Pharmaceutical (3.37%), Yuhan (3.12%), and Dong-A ST (2.73%). Yuhan delivered the largest market share gain (+0.08%p MoM) among top drugmakers during the month.

The outpatient prescription drug market has been contracting YoY since the beginning of the year. In contrast, pharmacy costs, another important market indicator, increased 3.7% YoY in 3Q and 4.6% YTD. As such, the domestic prescription drug market appears to be growing compared to 2014.

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.

Key Universe Valuations November 24, 2015

※All data as of close November 23, 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 191,342 1,299,000 2.1 2.2 5.1 5.3 7.6 10.1 9.4 1.1 1.0 11.7 11.4 005380 Hyundai Motor 34,143 155,000 3.2 15.6 -1.2 12.6 1.1 5.9 5.8 0.6 0.6 11.4 10.5 015760 KEPCO 31,841 49,600 3.0 8.3 0.5 -46.9 -1.5 4.7 4.8 0.4 0.4 9.8 8.9 090430 AmorePacific 24,290 415,500 0.3 33.4 31.0 25.2 31.7 37.0 28.1 7.0 5.7 20.6 22.3 012330 24,044 247,000 1.4 15.0 7.2 22.5 5.8 6.4 6.0 0.8 0.7 13.4 12.6 000270 Motors 22,457 55,400 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 22,135 334,000 1.2 17.6 33.5 35.9 34.2 14.2 10.6 1.7 1.5 12.6 15.0 000660 SK Hynix 21,986 30,200 1.3 -21.9 10.7 -22.9 11.3 6.6 5.9 0.9 0.8 14.1 13.8 032830 Samsung Life 21,500 107,500 - - - - 0.0 0.0 035420 NAVER 20,470 621,000 0.2 33.3 22.4 35.7 21.6 27.6 22.7 5.2 4.3 27.7 26.0 018260 Samsung SDS 20,428 264,000 0.2 12.2 1381.5 8.3 1338.7 42.6 3.0 4.1 1.7 10.1 82.3 055550 20,225 42,650 - - - - 0.0 0.0 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 18,153 258,000 0.8 9.0 13.4 4.3 -49.4 21.3 42.1 3.3 3.1 19.8 8.9 051900 LG Household & Health Care 15,993 1,024,000 0.5 21.6 16.8 22.7 18.6 30.7 25.9 6.9 5.6 25.7 24.4 033780 KT&G 15,171 110,500 3.3 -4.9 0.7 -9.4 2.0 15.9 15.6 2.1 2.0 14.7 13.9 000810 Samsung F&M 14,852 313,500 - - - - 0.0 0.0 005490 POSCO 14,647 168,000 4.8 10.9 11.3 593.2 33.2 10.0 7.5 0.3 0.3 3.5 4.6 105560 KB Financial Group 13,754 35,600 - - - - 0.0 0.0 003550 LG Corp. 12,838 74,400 1.3 10.0 0.0 7.3 2.2 11.8 11.5 0.9 0.9 8.3 8.0 096770 SK Innovation 12,021 130,000 1.9 -34.7 48.8 -29.1 58.6 15.7 9.9 0.7 0.7 4.7 7.2 066570 LG Electronics 9,197 56,200 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 8,733 127,000 0.8 468.2 5.0 385.4 -81.4 5.7 30.8 0.7 0.7 12.3 2.2 010130 Korea Zinc 8,624 457,000 1.4 22.0 16.2 23.5 17.4 12.9 11.0 1.5 1.3 12.4 13.0 010950 S-Oil 8,579 76,200 3.6 -8.9 15.1 0.0 15.1 11.5 10.0 1.5 1.3 13.2 13.8 011170 Lotte Chemical 8,535 249,000 0.4 7.6 12.6 19.0 16.8 6.6 5.7 1.0 0.8 15.8 15.8 047810 Korea Aerospace Industries 8,432 86,500 0.3 27.7 23.5 42.2 26.2 27.9 22.1 5.6 4.5 22.1 22.7 034220 LG Display 8,427 23,550 2.1 -40.9 85.2 -43.9 110.7 13.6 6.5 0.7 0.6 4.9 9.7 128940 Hanmi Pharmaceutical 8,389 820,000 63.1 28.5 73.0 36.4 132.0 96.8 15.1 13.0 12.1 14.5 035250 8,130 38,000 3.4 11.5 5.2 14.7 9.5 15.8 14.5 2.4 2.2 16.4 16.4 030200 KT 7,781 29,800 2.7 1.1 0.3 -13.4 4.2 10.4 10.0 0.6 0.6 6.5 6.4 086790 Hana Financial Group 7,696 26,000 - - - - 0.0 0.0 024110 7,651 13,750 - - - - 0.0 0.0 086280 7,556 201,500 1.0 9.5 8.4 57.8 2.4 13.0 12.7 2.1 1.8 17.6 15.6 023530 Lotte Shopping 7,322 232,500 0.6 12.6 - 13.4 - 8.5 0.4 4.8 0.0 009540 6,931 91,200 - 86.1 - 146.5 28.3 11.5 0.4 0.4 1.7 4.1 004020 6,779 50,800 1.5 4.8 9.0 -4.6 18.8 5.6 4.7 0.4 0.4 7.0 7.7 035720 6,771 112,800 0.2 92.2 38.3 76.3 40.8 43.1 30.6 2.5 2.3 6.0 7.9 088350 Hanwha Life 6,679 7,690 - - - - 0.0 0.0 001800 Orion 6,597 1,104,000 0.6 14.8 8.2 23.0 13.5 31.5 27.7 4.1 3.6 14.1 14.2 021240 Coway 6,394 82,900 4.4 11.8 21.2 9.6 21.3 17.5 14.4 4.2 3.8 28.1 30.2 161390 6,064 48,950 0.9 7.1 14.0 7.7 14.9 8.5 7.4 1.0 0.9 12.8 13.0 139480 Emart 6,049 217,000 0.7 19.1 14.7 -25.7 13.1 14.2 12.6 0.8 0.8 5.8 6.2 009240 Hanssem 5,848 248,500 0.4 44.2 27.9 41.7 32.7 35.6 26.8 9.2 7.0 32.1 31.7 009150 Samsung Electro-Mechanics 5,341 71,500 0.9 25.4 29.0 240.2 32.7 20.5 15.4 1.2 1.1 6.0 7.5 002380 KCC 4,897 465,500 1.9 6.3 15.5 4.5 13.5 21.9 19.3 0.7 0.7 3.4 3.8 032640 LG Uplus 4,781 10,950 2.6 2.0 1.8 5.4 4.8 11.1 10.6 1.0 0.9 9.2 9.0 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 051600 KEPCO KPS 4,725 105,000 - - - - 0.0 0.0 036570 NCSOFT 4,715 215,000 1.8 29.6 21.8 34.4 24.9 18.1 14.5 2.7 2.3 16.5 18.1 Source: KDB Daewoo Securities Research

Market Data November 24, 2015

※All data as of close November 24, 2015, unless otherwise noted.

Other Major Indices Economic Indicators Close Net Chg 1D (%) YTD (%) Close 1D ago 1M ago 1Y ago MSCI Korea* 369.54 0.13 0.03 -4.44 USD/KRW 1,157.90 1,156.90 1,138.20 1,110.90 KOSPI 2,016.29 12.59 0.63 4.66 JPY100/KRW 942.07 941.56 942.73 942.00 KOSDAQ 687.86 -0.43 -0.06 24.22 EUR/KRW 1,231.14 1,230.88 1,263.23 1,374.07 Dow Jones* 17,792.68 -31.13 -0.17 -0.23 3Y Treasury 1.77 1.76 1.65 2.12 S&P 500* 2,086.59 -2.58 -0.12 1.38 3Y Corporate 2.15 2.14 1.99 2.44 NASDAQ* 5,102.48 -2.44 -0.05 7.95 DDR2 1Gb* 1.11 1.11 1.12 1.38 Philadelphia Semicon* 657.18 -8.58 -1.29 -4.30 NAND 16Gb* 1.48 1.48 1.52 2.30 FTSE 100* 6,305.49 -29.14 -0.46 -3.70 Oil (Dubai)* 45.55 47.11 44.22 75.84 Nikkei 225 19,929.42 49.61 0.25 14.48 Gold* 1,066.80 1,076.30 1,163.30 1,197.70 Hang Seng* 22,665.90 -88.82 -0.39 -5.00 Customer deposits (Wbn)* 20,787 20,051 20,701 15,195 Taiwan (Weighted) 8,400.14 -85.59 -1.01 -9.42 Equity type BC (Wbn)(Nov. 20) 80,263 80,284 81,499 79,129 Note: * as of November 23, 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 SK Energy 17.63 Samsung Electronics 54.93 Samsung Electronics 35.18 KODEX INVERSE 24.50 Amore Pacific 15.05 POSCO 33.29 KODEX LEVERAGE 26.83 BNK Financial Group 10.91 LG Display 12.29 Hynix 27.03 LG Chem 25.43 Samsung Electronics (P) 7.58 Hanwha Chemical 9.01 Samsung Electronics (P) 24.00 LG Display 24.77 Shinhan Financial Group 7.52 BGF Retail 6.97 19.51 Hyundai Mobis 12.42 KEPCO 6.72 LG Electronics 5.15 Hyundai Mobis 17.85 SK Energy 11.80 Hynix 5.47 Hyundai M&F Insurance 4.90 Hanmi Pharm 13.53 Amore Pacific 10.09 Kangwon Land 4.86 KB Financial Group 4.63 Hanmi Science 9.90 Hyundai Motor 9.59 GKL 4.82 S-Oil 4.57 Hyundai Heavy Industries 8.80 POSCO 9.53 OCI 4.72 Hanssem 4.57 Hyundai Motor 8.17 SEMCO 8.16 SK Telecom 4.65 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 ViroMed 3.26 HLB 2.05 Celltrion 3.40 Daum Communications 6.73 Celltrion 3.23 Paradise 1.41 YG Entertainment 2.37 OCI Materials 4.43 Komipharm 2.82 Kolon Life Science 1.40 Korea Information Service 2.07 KCP 3.25 OCI Materials 2.82 YG Entertainment 1.32 Partrion 1.70 Com2us 2.48 Medy-tox 2.37 DoubleUGames 1.32 Huons 1.44 Medy-tox 2.22 Toptec 1.70 GS Home Shopping 1.31 Paradise 1.21 LOEN 1.67 CJ E&M 1.68 Daum Communications 1.28 Medipost 1.06 ISC 1.26 Media Flex 1.60 Nowcom 1.26 P&T 0.75 Posco Chemtech 1.23 CrucialTec 1.60 Caregen 1.21 GS Home Shopping 0.68 Viatron 1.02 Interpark 1.58 Pharmswell Bio 1.20 WIMCO 0.65 Bio Space 0.96 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 1,299,000 17,000 191,342 Celltrion 90,400 -300 10,127 Hyundai Motor 155,000 -2,000 34,143 Daum Communications 112,800 -1,300 6,771 KEPCO 49,600 -500 31,841 Dongsuh 35,850 0 3,574 SAMSUNG C&T 152,000 500 28,833 CJ E&M 80,700 700 3,126 Samsung Electronics (P) 1,137,000 4,000 25,962 Medy-tox 482,000 -5,500 2,726 Amore Pacific 415,500 6,000 24,290 ViroMed 181,800 -900 2,581 Hyundai Mobis 247,000 -500 24,044 Komipharm 45,450 -4,850 2,424 Kia Motors 55,400 400 22,457 LOEN 76,900 -900 1,945 LG Chem 334,000 12,000 22,135 Paradise 20,450 200 1,860 Hynix 30,200 -450 21,986 Kolon Life Science 236,000 -9,400 1,579 Source: Korea Exchange