April 27, 2021 One-Asia Morning Focus

Today’s reports PI Advanced Materials (178920 KQ/Buy/TP: W73,000) Raise TP – Earnings growth + multiple expansion Industrial of Korea (024110 KS/Buy/TP: W11,500) – Quarterly earnings hit record high GS Retail (007070 KS/Buy/TP: W48,000) – 1Q21 review: A defensive retail play Biotech/Healthcare (Overweight) – Solution lies in the development of new drugs Global performance monitor: Two-day change (%) Asia xJPN World EM World DM Korea Taiwan HK Singapore Thailand Index 1.34 1.23 0.46 1.48 -0.29 2.32 3.81 1.15 0.97 0.07 0.97 -1.09 Growth 1.78 1.83 0.57 1.23 -0.72 3.09 4.46 1.89 1.29 0.50 0.71 -1.31 Value 0.54 0.85 0.03 1.73 0.12 1.52 2.94 0.37 0.69 -0.37 1.22 -0.86 Semicon. & equip. 2.17 2.19 0.53 -0.76 -0.50 0.93 5.03 -0.89 N/A N/A N/A N/A Tech hardware & equip. 0.43 0.43 0.77 1.52 0.61 -1.30 2.48 -0.33 1.66 N/A 1.99 N/A Comm. & prof. services -0.15 -0.15 1.75 0.87 0.02 -2.75 1.71 N/A 4.20 -2.17 N/A N/A Software & services -0.11 0.00 0.75 3.15 0.27 -1.79 2.56 -0.58 -0.60 N/A -1.75 N/A Media & entertainment 3.33 3.12 0.96 0.28 -1.28 1.07 2.00 1.69 0.18 N/A N/A N/A Consumer goods 1.14 1.20 0.91 3.69 -0.60 0.57 0.82 N/A 0.56 -0.47 N/A -2.15 Consumer services -0.53 -0.42 0.77 2.42 2.52 0.25 1.87 -0.46 3.39 3.10 -0.87 -2.76 F&B & tobacco 0.75 0.65 0.35 0.54 0.41 0.24 -0.01 1.98 -0.63 -0.57 1.11 -1.66 Food & staples retailing -1.84 -0.06 -0.56 -0.14 -0.43 -1.67 0.66 N/A 3.63 N/A 0.26 -2.59 Retailing 3.01 2.59 0.53 1.67 0.61 0.16 3.73 -1.56 4.30 N/A N/A -2.80 HH & personal products -0.66 -0.65 -1.00 3.29 -0.43 2.48 0.13 N/A -0.11 0.24 N/A N/A Pharma & life sciences 2.80 2.73 -0.12 0.48 -1.19 1.45 -1.18 N/A -1.17 -0.09 N/A N/A Autos & parts 0.29 0.28 0.14 -1.34 -0.69 -0.92 2.27 1.28 0.09 3.46 N/A N/A Transportation 0.98 1.05 0.96 3.68 4.23 1.98 4.72 0.38 0.39 N/A 1.84 -0.72 Capital goods 1.42 0.97 0.96 5.08 -1.24 -0.89 4.19 2.58 0.21 N/A 2.77 -1.72 Materials 0.23 0.53 0.38 1.88 -0.81 2.00 0.79 N/A 1.68 0.90 N/A 1.07 Real estate 0.07 -0.27 0.31 1.25 0.94 -2.69 4.87 0.55 0.21 N/A 1.01 -3.14 Energy 0.10 0.84 -0.34 4.59 -0.82 -0.77 2.15 N/A 1.73 1.33 0.26 -0.84 1.01 0.87 0.82 2.87 0.53 -0.37 1.57 0.08 2.52 -0.09 0.73 -3.42 Diversified financials 0.58 0.25 0.83 4.09 0.08 -1.87 2.35 1.13 1.33 N/A 0.73 -1.51 Telecom services -0.08 0.03 0.53 2.23 -0.46 N/A 0.34 -0.36 -0.82 -1.85 1.05 -0.98 Utilities -0.40 -0.23 0.13 0.75 0.38 -1.08 0.91 0.05 2.91 -0.99 N/A -1.41 Key thematic ETFs: Change (%) Market movers Mkt cap US dollar total returns (%) Name Ctry Sector (US$mn) 1D 1M 3M 6M 1Y 3Y Robotics & AI (Global X) Cloud Computing (Global X) Top seven performers Evergreen Marine TW Industrials 14,354 10.5 82.7 128.9 297.2 731.0 518.9 Lithium & Battery (Global X) China Development Fincl TW Financials 7,235 10.4 31.6 49.8 62.1 84.3 52.1 Internet of Things (Global X) United Microelectronics TW Information tech. 27,479 9.0 27.2 13.1 91.8 339.1 377.2 Digitalisation (iShares) LG Corp KR Industrials 19,514 8.7 41.0 18.0 80.5 128.4 62.7 FinTech (Global X) S-Oil KR Energy 8,703 8.5 5.2 18.5 47.0 33.1 -25.3 Genomics & Biotech (Global X) KSOE KR Industrials 9,568 7.2 15.7 41.1 83.5 118.6 22.8 Health & Wellness (Global X) ASE Technology TW Information tech. 18,497 6.9 12.9 20.3 82.2 107.0 55.5 Ageing Population (iShares) Bottom seven performers EM Consum Growth (iShares) Consumer PT Charoen Pokphand ID 8,321 -2.7 6.4 15.1 25.5 94.0 96.9 Clean Energy (iShares) staples Water Resources (Invesco) Consumer Dabur India IN 12,805 -2.9 -0.8 -0.8 4.5 11.8 39.7 Agribusiness (iShares) staples Global Infrastructure (iShares) Central Pattana TH Real estate 7,249 -3.0 -11.6 -6.1 37.3 12.9 -34.3 ESG US Leaders (iShares) Cipla IN Healthcare 9,717 -3.4 10.9 5.0 19.4 53.6 37.0 2D 10D Central Retail TH Consumer disc. 6,478 -3.7 -10.4 0.7 24.4 -3.9 NA (3) 0 3 6 9 JG Summit Holdings PH Industrials 8,011 -4.4 -13.5 -27.3 -18.6 16.6 -3.1

Nan Ya Printed Circuit TW Information tech. 7,066 -5.3 -6.8 28.7 162.9 390.8 1,177.4

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April 27, 2021 One-Asia Morning Focus

MSCI valuations (DM, EM, Asia ex-JP)

19 12M forward P/E (x) 23 2.6 12M trailing P/B (x) 3.4

2.4 3.2 21 17 3.0 2.2 19 2.8 15 2.0 2.6 17 1.8 2.4 13 1.6 15 2.2 1.4 11 2.0 13 1.2 1.8

9 11 1.0 1.6 04/20 07/20 10/20 01/21 04/20 07/20 10/20 01/21 MSCI Asia ex-JP (L) MSCI World EM (L) MSCI World DM (R) MSCI Asia ex-JP (L) MSCI World EM (L) MSCI World DM (R)

MSCI 12M forward P/E (x) Currencies (vs. USD) Value Change (%) Korea 17 1D 3M YTD KRW 1,113.2 -0.41 0.60 -3.74 15 19 CNY 6.5 -0.09 0.19 -6.86 13 16 JPY 108.1 0.00 4.28 -0.54 11 IDR 14,485.0 -0.28 2.99 4.34 13 9 HKD 7.8 -0.01 0.08 -0.42 TWD 27.9 -0.57 -0.28 -6.80 7 10 04/20 07/20 10/20 01/21 04/20 07/20 10/20 01/21 SGD 1.3 -0.21 0.08 -1.42 THB 31.4 0.09 4.75 4.90 Indonesia India 19 26 INR 74.7 -0.38 2.45 4.70 24 PHP 48.4 0.00 0.66 -4.44 17 22 MYR 4.1 -0.30 1.22 0.18 15 20 VND 23,042.5 -0.12 -0.12 -0.56 13 18 16 Commodities 11 14 Latest Change (%) 9 12 04/20 07/20 10/20 01/21 04/20 07/20 10/20 01/21 close 1D 3M YTD Crude oil (US$/bbl) 66.1 1.1 32.2 -2.4

Hong Kong China Thermal coal (US$/tonne) 94.9 0.0 47.4 41.7 19 20 Iron ore (US$/tonne) 177.0 0.3 16.4 93.3 18 17 Copper (US$/tonne) 9,545.5 0.7 23.3 55.1

16 Nickel (US$/tonne) 16,150.0 0.9 -6.1 15.4 15 Tin (US$/tonne) 27,707.0 -2.4 41.7 64.4 14 Gold (US$/ozt) 1,777.0 -0.2 -3.4 16.9 13 12 Palm oil (INR/tonne) 1,075.0 0.0 11.0 23.5

11 10 Soybean oil (c/lb) 63.8 0.0 62.7 86.1 04/20 07/20 10/20 01/21 04/20 07/20 10/20 01/21 Corn (US$/bu) 6.8 1.4 56.4 69.4 Wheat (US$/bu) 7.1 0.0 16.8 27.1

Source: FactSet, Mirae Asset Securities Research (updated on 4/27/21 at 06:00 KST)

[Korea] Technology April 26, 2021

PI Advanced Materials Buy (178920 KQ) (Maintain)

Earnings growth + multiple expansion = Higher share TP: W73,000 ▲ prices Upside: 46.1%

Mirae Asset Securities Co., Ltd. Chuljoong Kim [email protected]

Lift TP to W73,000 Lift TP by 14%; earnings growth and multiple expansion to take place simultaneously  Our target price on PI Advanced Materials (PIAM) is based on a P/E of 30x (unchanged) our 12- month forward EPS.  We switched our valuation base from 2021F EPS to 12-month forward EPS.  The advanced materials (batteries, etc.) business is driving overall revenue growth, while existing businesses remain solid.  We believe expectations on new business growth together with an upcycle in existing businesses will fuel multiple expansion, similar to what happened in 2017-18.

Earnings growth: Entering earnings growth cycle on simultaneous rise in volume and pricing; 1Q21 revenue Volume and pricing and operating profit highest on record simultaneously rising  PIAM’s revenue and operating profit came in at W77.6bn (+26% YoY) and W20.7bn (+41% YoY), respectively.  Both revenue and operating profit hit record highs amid a simultaneous rise in volume and pricing.  Revenue from the advanced industries segment (batteries, etc.) meaningfully increased.  +9% YoY for mid/large-sized (EV) batteries and +113% YoY for small-sized batteries  +292% YoY for industrial processes (including MLCC) and +50% YoY for display

Multiple expansion: Entering multiple expansion cycle on diversification of applications (EVs) Revenue growth in EV-use PI  PIAM announced plans to invest in an electric vehicle (EV)-dedicated PI line, signaling the films gaining traction beginning of capex for EV-exclusive lines amid growing demand.  We expect the company to expand its customer base beyond existing domestic customers to companies like Panasonic (Tesla).  The company’s first EV-dedicated line should help improve unit productivity and thus allow it to lower pricing.  This should give the company an early lead over global rivals in securing EV-use PI film volume.  Areas like foldable-use cushion sheets, COF-use PI films, and 5G-use MPI, while not yet meaningful in terms of their revenue contribution, also appear to have strong medium/long- term growth potential.

Key data Current price (4/26/21, W) 49,950 Market cap (Wbn) 1,467 170 PI Advanced Materials KOSDAQ OP (21F, Wbn) 83 Shares outstanding (mn) 29 150

130 Consensus OP (21F, Wbn) 82 Free float (%) 45.5

110 EPS growth (21F, %) 54.4 Foreign ownership (%) 12.2

90 P/E (21F, x) 22.8 Beta (12M) 0.96

70 Market P/E (21F, x) 13.9 52-week low (W) 25,600 4.20 8.20 12.20 4.21 KOSDAQ 1,030.06 52-week high (W) 49,950

Share performance Earnings and valuation metrics (%) 1M 6M 12M (Dec.) 2017 2018 2019 2020 2021F 2022F Absolute 8.6 75.6 62.4 Revenue (Wbn) 216 245 224 262 314 358 Relative 0.9 32.6 -0.2 OP (Wbn) 53 61 34 60 83 95 OP margin (%) 24.5 24.9 15.2 22.9 26.4 26.5 NP (Wbn) 33 35 18 42 64 75 EPS (W) 1,116 1,191 603 1,421 2,194 2,537 ROE (%) 13.8 13.8 6.9 15.6 21.1 21.4 P/E (x) 42.3 27.9 58.0 26.0 22.8 19.7 P/B (x) 5.6 3.8 3.1 3.0 3.6 3.3 Div. yield (%) 1.7 2.5 0.9 1.9 2.2 2.5 Notes: Under consolidated K-IFRS; NP is attributable to owners of the parent Source: Company data, Mirae Asset Securities Research estimates

Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including the US. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES AND DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT. [Korea] Banks April 27, 2021

Industrial Bank of Korea Buy (024110 KS) (Maintain)

Quarterly earnings hit record high TP: W11,500 Upside: 22.5%

Mirae Asset Securities Co., Ltd. Heather Kang [email protected]

1Q21 review Net profit attributable to owners of the parent of W589.1bn (+18% YoY, +65% QoQ)  Industrial Bank of Korea’s (IBK) 1Q21 net profit beat consensus estimates by 23-26% and our expectation by 11%.  Major one-off items in the quarter included: 1) FX-translation losses on non-monetary foreign currency assets (W52bn); 2) employee welfare fund contributions (W30.8bn); and 3) dividend income from KT&G (W45.7bn). Robust core income indicators and record-low NPL ratio and credit cost ratio  Group net interest income rose to W1.44tr (+2.9% YoY, +2.2% QoQ), with net interest margin (NIM) gaining 1bp QoQ and loans growing 2.9% QoQ.  The NIM improvement was largely due to lower funding costs. Looking ahead, we forecast NIM to expand 2bps in 2Q21 and 1bp in 3Q21.  Cost-to-income ratio was 37.8% (-0.4%p YoY, -1.8%p QoQ), remaining one of the lowest levels in the industry.  The credit cost-to-total asset ratio remained very low, at 21bps (-17bps YoY, -23bps QoQ), aided by healthy asset quality, years of deposit portfolio improvements, and preemptive provisioning in 2020.  The share of high-quality corporate loans (rated A or higher) was 45.1% in 1Q21, up from 44.1% at end-2020 and 29.9% at end-2013.

Recommendation Maintain Buy and TP of W11,500  We revise up our 2021-23 net profit estimates by 6.7-10.5%, reflecting the stronger-than-expected 1Q21 results.  IBK announced a share issue to the government to help finance the industrial structure advancement and environmental/safety facility programs (which are implemented every year), as well as the bond market stabilization fund.  The bank will issue 5.6mn new shares (0.7% of total shares outstanding) to the government for W49bn at W8,706 per share (5.0% discount to base price).  Payment will be made on Apr. 30, and the new shares will be listed on May 17.  The share issue is negative to shareholder value and thus reduces the investment appeal of IBK relative to peers, despite its latest strong earnings.  That said, the stock offers attractive dividend yields.

Key data Current price (4/26/21, W) 9,390 Market cap (Wbn) 6,936 180 Industrial Bank of Korea KOSPI NP (21F, Wbn) 1,882 Shares outstanding (mn) 792 160

140 Consensus NP (21F, Wbn) 1,630 Free float (%) 36.4

120 EPS growth (21F, %) 10.3 Foreign ownership (%) 12.3

100 P/E (21F, x) 4.0 Beta (12M) 0.95

80 Market P/E (21F, x) 13.9 52-week low (W) 7,200 4.20 8.20 12.20 4.21 KOSPI 3,217.53 52-week high (W) 9,730

Share performance Earnings and valuation metrics (%) 1M 6M 12M (Dec.) 2018 2019 2020 2021F 2022F 2023F Absolute 4.0 10.2 30.4 Net interest income (Wbn) 5,632 5,752 5,615 6,164 6,588 6,870 Relative -1.7 -19.7 -23.4 Net non-interest income (Wbn) 626 561 615 555 477 503 OP (Wbn) 2,396 2,228 2,126 2,606 2,679 2,697 NP (Wbn) 1,754 1,619 1,536 1,882 1,924 1,937 EPS (W) 2,666 2,425 2,153 2,376 2,413 2,429 EPS growth (%) 16.8 -9.1 -11.2 10.3 1.5 0.7 P/E (x) 3.5 3.9 4.4 4.0 3.9 3.9 P/PPOP (x) 1.8 1.8 1.8 1.6 1.6 1.5 P/B (x) 0.29 0.28 0.30 0.28 0.26 0.24 ROE (%) 8.6 7.4 6.4 7.2 6.9 6.5 Div. yield (%) 7.3 7.1 5.0 6.4 6.7 7.0 Notes: Under consolidated K-IFRS; NP is attributable to owners of the parent Source: Company data, Mirae Asset Securities Research estimates Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including the US. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES AND DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT. [Korea] Retail April 27, 2021

GS Retail Buy (007070 KS) (Maintain)

1Q21 review: A defensive retail play TP: W48,000 Upside: 30.8%

Mirae Asset Securities Co., Ltd. Myoungjoo Kim [email protected] Minjeong Kyeong [email protected]

1Q21 review Revenue of W2.1tr (-1.9% YoY), OP of W37.5bn (-57.7% YoY)  GS Retail’s 1Q21 operating profit came in slightly below the consensus and our estimate due to weakness in convenience stores stemming from the ongoing pandemic.  Convenience store same-store sales (SSS) fell 1% (-2% for general items). On a positive note, SSS growth turned positive in March (including for general items).  The supermarket division fared well, despite a tough comparison. That said, we expect full-year operating profit to be dragged down by: 1) an unfavorable comparison; and 2) continued revenue contraction resulting from store efficiency-enhancing initiatives.

Tailwinds outweigh headwinds Additional headwinds are limited; keep eye on merger strategy  Aside from the pandemic, we do not see any additional headwinds in the convenience store sector.  Although there are concerns about the merger with GS Home Shopping (e.g., limited post- merger synergies), we believe related uncertainties are priced in.  The merger will take effect on Jul. 1. More details on the merger/synergy strategy are likely to emerge.  We expect the company to focus on: 1) achieving logistics efficiency and integration through the use of its convenience stores; and 2) strengthening buying power across channels through SKU expansion.  GS Retail has integrated its buying operations across its convenience store and supermarket channels over the past couple of years.

Valuation and recommendation Maintain Buy and TP of W48,000  We believe the stock’s current valuation (2022F P/E of 11.7x) is inexpensive, reflecting: 1) the weakness in non-convenience store businesses; and 2) uncertainty related to the GS Home Shopping merger.  The GS Home Shopping merger is a valuation discount factor that has already been priced in. As such, we think share prices have limited downside.  If the company comes up with a realistic merger strategy, this could trigger upside to share prices.  We view GS Retail as a defensive retail play with strong downside support and tailwind potential.

Key data Current price (4/26/21, W) 36,700 Market cap (Wbn) 2,826 180 GS Retail KOSPI OP (21F, Wbn) 271 Shares outstanding (mn) 105 160

140 Consensus OP (21F, Wbn) 277 Free float (%) 34.1

120 EPS growth (21F, %) 17.6 Foreign ownership (%) 14.7

100 P/E (21F, x) 14.3 Beta (12M) 0.38

80 Market P/E (21F, x) 13.9 52-week low (W) 31,300 4.20 8.20 12.20 4.21 KOSPI 3,217.53 52-week high (W) 43,850

Share performance Earnings and valuation metrics (%) 1M 6M 12M (Dec.) 2017 2018 2019 2020 2021F 2022F Absolute -5.0 6.8 17.3 Revenue (Wbn) 8,267 8,692 9,007 8,862 9,200 9,635 Relative -10.3 -22.2 -31.2 OP (Wbn) 166 180 239 253 271 346 OP margin (%) 2.0 2.1 2.7 2.9 2.9 3.6 NP (Wbn) 118 121 133 168 198 245 EPS (W) 1,535 1,566 1,729 2,187 2,572 3,180 ROE (%) 5.9 5.9 6.2 7.5 8.4 9.7 P/E (x) 26.3 25.9 22.7 15.7 14.3 11.5 P/B (x) 1.5 1.5 1.4 1.2 1.2 1.1 Div. yield (%) 1.5 1.6 1.9 2.6 2.5 2.5 Notes: Under consolidated K-IFRS; NP is attributable to owners of the parent Source: Company data, Mirae Asset Securities Research estimates Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including the US. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES AND DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT. [Korea] April 27, 2021

Biotech/Healthcare (Overweight/Maintain) Solution lies in the development of new drugs

Mirae Asset Securities Co., Ltd. Taehee Kim [email protected]

Lessons from Japan’s experience Japanese pharmas find way out of crisis  Many Japanese pharmas that had once been considered industry leaders have failed to respond to changes and lost their competitive edge.  Share prices in Japan’s pharma industry stagnated for years, affected by an absence of new drugs, low growth, and margin erosion.  To find a breakthrough, Daiichi Sankyo turned to antibody-drug conjugates (ADCs), while Takeda Pharmaceutical (Takeda) looked to chimeric antigen receptor T-cell (CAR-T) and CAR natural killer (CAR-NK) therapies.  Daiichi Sankyo’s efforts have already delivered results, leading to a valuation re-rating.

ADCs and CAR-T/CAR-NK: The ADCs and CAR-T/CAR-NK to lead oncology market with high efficacy weapons of choice  Daiichi Sankyo is focusing on a “three and alpha” strategy, referring to its three main ADCs. Two of its ADCs have already yielded licensing contracts worth trillions of won. - Three ADCs: Enhertu (breast cancer treatment), DS-1062 (lung cancer treatment), and U3-1402 (targets EGFR-mutated non-small-cell lung cancer [NSCLC])  Takeda has chosen CAR-T and CAR-NK therapies as its next growth engines in oncology. - These include an off-the-shelf CAR-NK therapy and a next-generation CAR-T therapy.

Future value of pipeline is key For pharma/biotech companies, future value matters more than current earnings  We believe many top-tier domestic pharmas have also done a poor job in responding to the changing environment.  Biotech companies like Celltrion and Biologics have emerged as the highest valued stocks in the sector.  Investors want to see aggressive new drug development, even if it comes at the expense of near-term earnings. As such, traditional domestic pharmas need to take a bolder approach to R&D spending and open innovation.  We recommend and Celltrion as our top picks. We also believe LegoChem Biosciences and NKMax warrant attention.

Major Japanese pharmas’ share performances: Daiichi Sankyo has rallied on R&D progress

Source: Mirae Asset Securities Research

Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including the US. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES AND DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT. [Korea] Healthcare April 27, 2021

Yuhan Buy (000100 KS) (Maintain)

Milestones expected as clinical trials progress TP: W85,000 Upside: 26.5%

Mirae Asset Securities Co., Ltd. Taehee Kim [email protected]

Investment point 1: Increasing likelihood of success for NSCLC treatment lazertinib Leclaza to go on sale  Korea’s Health Insurance Review & Assessment Service recently greenlighted National Health domestically in 2H21 Insurance Service (NHIS) reimbursement of Yuhan’s NSCLC treatment lazertinib (domestic brand name Leclaza).  After price negotiations with the NHIS are concluded, the drug is expected to be released domestically in 2H21.  A global phase 3 trial for Janssen’s bispecific antibody amivantamab in combination with lazertinib is currently ongoing.  We believe the combination therapy has strong marketability, given promising data from a study involving Tagrisso-resistant patients.  We think the combination therapy has the potential to rival Tagrisso, which is forecast to surpass US$7bn in revenue in 2024.

Investment point 2: Milestone receipts expected as NASH treatment clinical trials progress Two investigational drugs to  In 2019, Yuhan signed an US$870mn deal with Boehringer Ingelheim for its nonalcoholic treat NASH steatohepatitis (NASH) treatment candidate YH25724 and a US$785mn deal with Gilead for another NASH treatment candidate (YHC1102).  We expect YH25724 to enter a phase 1 trial in Europe sometime in 2Q-3Q21.  We forecast YHC1102 to enter preclinical trials this year.

Valuation and recommendation Raise TP to W85,000  We slightly raise our target price on Yuhan to W85,000 (from W77,000), mainly due to a change in our valuation base (12-month forward EPS).  We expect Yuhan’s open innovation with a number of biotech firms (including ImmuneOncia and GI Innovation) to bear fruit.  In our view, Yuhan has the most compelling investment case among traditional pharmas, given the global phase 3 trial of lazertinib and milestone receipts for NASH treatment candidates.

Key data Current price (4/23/21, W) 67,200 Market cap (Wbn) 4,702 200 Yuhan KOSPI 180 OP (21F, Wbn) 88 Shares outstanding (mn) 71 160 Consensus OP (21F, Wbn) 81 Free float (%) 74.8 140 EPS growth (21F, %) -35.4 Foreign ownership (%) 19.1 120 P/E (21F, x) 38.4 Beta (12M) 0.56 100 80 Market P/E (21F, x) 13.9 52-week low (W) 44,353 4.20 8.20 12.20 4.21 KOSPI 3,186.10 52-week high (W) 79,200

Share performance Earnings and valuation metrics (%) 1M 6M 12M (Dec.) 2018 2019 2020 2021F 2022F 2023F Absolute 10.2 16.3 47.5 Revenue (Wbn) 1,519 1,480 1,620 1,699 1,804 1,991 Relative 3.9 -13.8 -11.3 OP (Wbn) 50 13 84 88 110 157 OP margin (%) 3.3 0.9 5.2 5.2 6.1 7.9 NP (Wbn) 57 40 193 125 143 179 EPS (W) 808 562 2,709 1,750 2,014 2,511 ROE (%) 3.5 2.4 11.1 6.6 7.2 8.4 P/E (x) 46.4 80.5 27.7 38.4 33.4 26.8 P/B (x) 1.5 1.8 2.6 2.3 2.1 2.0 Div. yield (%) 0.9 0.8 0.5 0.6 0.6 0.6 Notes: Under consolidated K-IFRS; NP is attributable to owners of the parent Source: Company data, Mirae Asset Securities Research estimates Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including the US. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES AND DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT. [Korea] Healthcare April 27, 2021

Celltrion Buy (068270 KS) (Maintain)

Watch for positive developments in Remsima SC and TP: W400,000 Yuflyma Upside: 38.9%

Mirae Asset Securities Co., Ltd. Taehee Kim [email protected]

New product effects expected Watch for Remsima SC and high-concentration Humira biosimilar  Although marketing for Remsima SC (released last year) has been a challenge due to the pandemic, we note that the biosimilar is available in an expanding list of countries, having gained approval in Australia in Nov. 2020 and in Canada in Feb. 2021.  Yuflyma, a high-concentration Humira biosimilar, was recently approved in Europe. Yuflyma is the only high-concentration formulation among biosimilars of Humira (the world’s best-selling drug), and it is easier to administer because it does not contain citrate, which can cause pain.

Well-prepared for the future Margin improvements and extensive pipeline  Celltrion is currently taking steps to improve the yields of its existing products. Once complete, such efforts should lead to margin improvements.  The company is also preparing for the future by developing biosimilar versions of a number of originals facing patent expiry, including Xolair (asthma), Stelara (psoriasis), Prolia (osteoporosis), and Eylea (wet age-related macular degeneration). These biosimilar candidates are already in global phase 3 trials.

Valuation and recommendation Key investment points: Margin improvements and new product effects  We reiterate our Buy rating and target price of W400,000 on Celltrion.  We expect the company to continue to deliver strong revenue growth of over 20% and OP margin of above 40% this year.  Investment points: ① Yields on Truxima and Herzuma set to improve ② Remsima SC and high-concentration Humira biosimilar (Europe) to make strides ③ Potential supply deals for COVID-19 treatment Regkirona

Key data Current price (4/23/21, W) 288,000 Market cap (Wbn) 39,659 200 Celltrion KOSPI 180 OP (21F, Wbn) 941 Shares outstanding (mn) 138 160 Consensus OP (21F, Wbn) 1,011 Free float (%) 75.8 140 EPS growth (21F, %) 42.2 Foreign ownership (%) 21.2 120 P/E (21F, x) 54.5 Beta (12M) 0.96 100 80 Market P/E (21F, x) 13.9 52-week low (W) 199,839 4.20 8.20 12.20 4.21 KOSPI 3,186.10 52-week high (W) 396,240

Share performance Earnings and valuation metrics (%) 1M 6M 12M (Dec.) 2018 2019 2020 2021F 2022F 2023F Absolute -1.5 23.2 37.0 Revenue (Wbn) 982 1,128 1,849 2,278 2,707 3,640 Relative -7.1 -8.7 -17.6 OP (Wbn) 339 378 712 941 1,107 1,549 OP margin (%) 34.5 33.5 38.5 41.3 40.9 42.6 NP (Wbn) 262 298 511 728 861 1,214 EPS (W) 1,914 2,168 3,717 5,284 6,133 8,478 ROE (%) 10.8 11.2 16.7 19.7 19.2 21.9 P/E (x) 109.0 82.0 96.6 54.5 47.0 34.0 P/B (x) 10.8 8.2 14.0 9.3 8.1 6.6 Div. yield (%) 0.0 0.0 0.0 0.0 0.0 0.0 Notes: Under consolidated K-IFRS; NP is attributable to owners of the parent Source: Company data, Mirae Asset Securities Research estimates Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including the US. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES AND DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.