[Korea] Logistics October 16, 2020

Hyundai Glovis Buy (086280 KS ) (Maintain)

Poised for a re -rating TP: W215,000 ▲ Upside: 19.8%

Mirae Asset Daewoo Co., Ltd. Jay JH Ryu [email protected]

Raise TP Raise TP to W215,000 and maintain Buy ó We raise our target price on Hyundai Glovis to W215,000. ó We revised up our 2020 and 2021 operating profit estimates by 0.6% and 8.7%, respectively. ó ’s (HMG) market share is rebounding, and uncerta inties regarding the company’s ownership structure are likely to dissipate.

Re -rating catalyst 1 Focus on fundamentals : HMG ’s resurgence ó Historically, Hyundai Glovis’s value has moved in tandem with HMG’s market status. ó HMG looks well-positioned to expand its presence in the global auto market on the back of electric vehicles (EVs). ó Given HMG’s new release cycle, we believe Hyundai Glovis’s volume is highly likely to recover.

Re -rating catalyst 2 Both affiliate and non -affiliate volume to improve, supporting margin recovery ó The recovery in affiliate volume should lead to fleet expansion, which should , in turn, enhance the company’s ability to win over non-affiliate volume. ó Falling pure car carrier (PCC) charter rates and the current weakness of competitors also provide a good opportunity for the company to expand its fleet. ó The company should see new business opportunities through its affiliates (e.g., hydrogen distribution/transportation).

Re -rating catalyst 3 Expectations on ownership structure overhaul ó There are growing expectations on HMG’s ownership structure overhaul (to unwind circular shareholdings). ó We expect Hyundai Glovis’s value to rise in the process, as it did during the company’s previous attempt to merge with (012330 KS/Buy/TP: W250,000W/CP: W234,500). ó Regardless of the approach taken, we believe the overhaul will benefit Hyundai Glovis by accelerating its business revamp.

Key data

Current price (10/15/20, W) 179,500 Market cap (Wbn) 6,731 140 Hyundai Glovis KOSPI OP (20F, Wbn) 706 Shares outstanding (mn) 38 120 Consensus OP (20F, Wbn) 687 Free float (%) 48.6 100 EPS growth (20F, %) 18.3 Foreign ownership (%) 35.2 80 P/E (20F, x) 11.3 Beta (12M) 1.38 60

40 Market P/E (20F, x) 16.2 52-week low (W) 73,300 10.19 2.20 6.20 10.20 KOSPI 2,361.21 52-week high (W) 179,500

Share performance Earnings and valuation metrics (%) 1M 6M 12M (Dec.) 2017 2018 2019 2020F 2021F 2022F Absolute 23.8 75.1 19.7 Revenue (Wbn) 16,358 16,866 18,270 16,703 19,093 19,543 Relative 28.1 37.7 4.8 OP (Wbn) 727 710 877 706 928 937

OP margin (%) 4.4 4.2 4.8 4.2 4.9 4.8 NP (Wbn) 680 437 502 594 612 674 EPS (W) 18,147 11,663 13,395 15,851 16,307 17,968 ROE (%) 18.2 10.6 11.2 12.1 11.4 11.5 P/E (x) 7.5 11.1 10.7 11.3 11.0 10.0 P/B (x) 1.3 1.1 1.1 1.3 1.2 1.1 Dividend yield (%) 2.2 2.6 2.4 1.9 1.9 1.9 Notes: Under consolidated K-IFRS; NP is attributable to owners of the parent Source: Company data, Mirae Asset Daewoo Research estimat es Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including t he US. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES AND DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT. October 16, 2020 Hyundai Glovis

Raise TP to W215,000 and maintain Buy

We revise up our 2020 and 2021 net profit estimates for Hyundai Glovis and raise our target price to W215,000 (from W140,000). We maintain our Buy rating. We derived our target price using a residual income model (RIM) and reduced the risk-free rate to 1.6% (vs. 2.0% previously), considering the recent low interest rate trend. We also revised up our long-term net margin (3.4%) and growth estimates.

Although a near-term correction is possible following the stock’s strong rally (fueled by expectations on HMG’s likely ownership structure overhaul), we believe there is still ample room for further gains, given: 1) HMG’s recovering market share; and 2) the potential for a post-pandemic earnings rebound. Furthermore, expectations regarding the removal of ownership structure uncertainties should continue to serve as a catalyst for share prices.

Table 1. Hyundai Glovis: RIM valuation (Wbn) 2019 2020F 2021F 2022F 2023F 2024F 2025F Revenue 18,270 16,703 19,093 19,543 20,004 20,475 20,885 (Growth) 8.3% -8.6% 14.3% 2.4% 2.4% 2.4% 2.0% NP (ex-minority interests) 502 594 612 674 692 717 710 (% of revenue) 2.7% 3.6% 3.2% 3.4% 3.5% 3.5% 3.4% Equity (ex-minority interests) 4,670 5,119 5,599 6,142 6,703 7,289 7,925 (Growth) 9.6% 9.6% 9.4% 9.7% 9.1% 8.7% 8.7% Forecast ROE 11.2% 12.1% 11.4% 11.5% 10.8% 10.2% 9.3% COE 5.6% 5.6% 5.6% 5.6% 5.6% 5.6% 5.6% Spread 5.7% 6.6% 5.9% 5.9% 5.2% 4.7% 3.8% Residual income 266 337 328 363 349 342 299 Terminal value 1,574 NPV of FCFF 2,128 Beta 0.7 PV of terminal value 916 Risk premium 6.0% Current book value 4,670 Risk-free rate 1.6% Equity value 8,054 COE 5.6% Shares outstanding (‘000) 37,500 Target P/B (12-month forward) 1.4x Target price (W) 215,000 Target P/E (12-month forward) 13.2x Current price (W) 179,500 Target PEG (12-month forward) 2.5x Source: Company data, Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 2 October 16, 2020 Hyundai Glovis

Figure 1. Hyundai Glovis: P/E band chart Figure 2. Hyundai Glovis: P/B band chart

(W) (W) 400,000 500,000 450,000 350,000 3.3x 400,000 300,000 350,000 2.6x 20.2x 250,000 300,000 16.8x 2.0x 200,000 250,000 13.5x 200,000 150,000 1.4x 10.1x 150,000 100,000 6.8x 100,000 0.7x 50,000 50,000 0 0 15 16 17 18 19 20 15 16 17 18 19 20

Source: WISEfn, Mirae Asset Daewoo Research Source: WISEfn, Mirae Asset Daewoo Research

Table 2. Peer valuation table: Global logistics players (Wbn, %, x) Revenue OP NP ROE P/E P/B EV/EBITDA Company Market cap 20F 21F 20F 21F 20F 21F 20F 21F 20F 21F 20F 21F 20F 21F Korea CJ Logistics 4,197 10,952 11,734 346 404 110 142 3.5 4.4 37.5 29.2 1.2 1.2 11.8 10.1 Hyundai Glovis 6,394 16,513 18,496 679 863 502 617 10.3 11.1 12.7 10.3 1.3 1.3 6.7 5.8 Transportation 564 2,146 2,246 111 128 14 192 1.5 16.6 44.1 3.5 0.6 0.5 10.7 10.2 Japan Yamato Holdings 11,915 18,029 18,464 738 844 394 456 6.8 8.0 29.1 24.9 1.9 1.8 7.8 7.0 Nippon Express 6,209 21,605 22,641 520 664 371 443 6.4 7.3 15.9 13.1 1.0 0.9 7.8 6.8 Mitsubishi Logistics 2,830 2,379 2,510 113 131 399 137 9.5 4.1 8.3 20.4 0.8 0.8 13.6 12.5 Kintetsu World Express 1,811 6,031 6,140 240 239 129 130 9.0 9.8 14.3 14.1 1.3 1.2 6.0 5.9 Sankyu 2,915 6,136 6,281 412 419 266 279 11.1 10.5 10.2 9.6 1.1 1.0 5.4 5.3 Kamigumi 2,757 3,003 3,145 264 274 196 205 5.2 5.3 13.0 12.3 0.7 0.6 5.9 5.7 Seino Holdings 3,157 6,419 6,812 188 277 124 189 2.7 4.1 23.8 15.2 0.6 0.6 5.5 4.4 Hitachi Transport System 4,096 7,124 7,429 355 387 249 245 8.6 9.2 15.7 16.0 1.5 1.4 8.2 8.0 Fukuyama Transporting 2,803 3,155 3,286 191 223 126 153 4.7 5.2 18.7 16.1 0.9 0.8 9.4 8.5 Xiamen Xiangyu 2,329 56,284 63,131 371 420 221 253 9.5 10.2 11.0 9.6 1.1 1.1 11.3 9.9 Sinotrans 4,344 13,449 13,940 376 435 347 391 7.2 7.9 6.6 5.9 0.5 0.4 10.7 10.0 Kerry Logistics 4,255 6,696 7,203 428 428 240 255 7.0 6.4 18.4 15.6 1.1 1.1 8.5 8.2 Singapore Post 1,300 1,129 1,172 101 114 74 85 6.1 6.8 18.5 16.3 1.0 1.0 10.2 9.4 Vietnam Gemadept 349 127 143 27 31 22 25 6.8 7.5 17.9 15.6 1.2 1.2 9.8 9.2 Malaysia Pos Malaysia 168 623 721 (12) 37 (18) 20 (4.4) 5.0 - 8.6 0.4 0.4 5.3 2.9 Tasco 101 219 226 17 17 8 9 5.2 5.7 23.3 19.8 6.1 6.1 8.4 8.2 India Container Corp. of India 3,474 950 1,141 176 240 135 183 8.4 10.5 24.1 18.9 2.1 2.0 15.2 11.7 Asia avg. 3,298 9,148 9,843 282 329 196 221 6.3 7.8 19.1 14.8 1.3 1.3 8.9 8.0 US UPS 172,428 92,934 97,469 8,619 9,844 7,103 7,989 113.8 79.6 24.5 21.7 21.9 15.1 16.7 15.1 FedEx 83,077 87,791 92,059 6,250 6,975 4,754 5,135 19.0 18.1 18.0 16.3 3.4 2.9 9.8 9.1 Germany Deutsche Post 69,936 87,474 91,517 5,777 6,941 3,712 4,285 18.2 19.7 19.0 16.3 3.4 3.1 8.3 7.5 Australia Qube Holdings 4,314 1,625 1,761 141 175 93 118 3.4 4.2 48.3 36.8 1.6 1.6 23.5 20.3 Global avg. 16,488 18,866 19,986 1,101 1,271 816 914 11.6 11.6 20.6 16.1 2.4 2.0 9.8 8.8 Source: Bloomberg

Mirae Asset Daewoo Research 3 October 16, 2020 Hyundai Glovis

Re-rating catalyst 1: HMG’s resurgence

HMC’s improving market position driving earnings expectations

From a fundamental perspective, we expect HMG’s resurgence to serve as a key catalyst for Hyundai Glovis’s re-rating. Notably, after hitting 9.1% in Aug. 2014, HMG’s global market share declined over the next four years, reaching a low of 6.7% in Jan. 2018.

Hyundai Glovis also struggled during that period, with: 1) yearly operating profit remaining stuck at around W700bn; and 2) revenue growth falling steadily (from the 3-6% level). The dry bulk business (which the company had expanded in an effort to boost top-line growth) acted as a drag on earnings for years due to unfavorable market conditions and pressures from long-term charter agreements.

However, HMG’s market share turned a corner in 2019. In Feb. 2020 (right before the pandemic hit), the group’s market share returned to 9% for the first time in five years. More recently, Hyundai Motor’s (HMC; 005380 KS/Buy/TP: W230,000/CP: W176,000) global market share (ex-China) in the EV segment rose to 9.6%, fueled by strong sales of the Kona.

We believe HMG will continue to strengthen its market position going forward. Of note, HMC and (VOW GR/CP: EUR143.90) are the only traditional automakers set to release medium/large-sized EVs in the near future. HMC’s 5 should be particularly competitive (as it is believed to be ahead of competing models in terms of range and charging time). Motors (000270 KS/Buy/TP: W65,000/CP: W48,900) also looks likely to bolster its market position with the launch of a new EV model (code name “CV”).

Figure 3. Hyundai Glovis’s share price vs. HMG’s M/S

(%) (W'000) 11 Global M/S (L) Share price (R) 350

10 300

250 9 200 8 150 7 100

6 50

5 0 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20

Source: Company data, Mirae Asset Daewoo Research

Figure 4. HMC: Global EV M/S (ex-China)

(%) 10 9.6

8.8 9

8 7.7 7.7

6.9 7 6.6 6.6 6.3

6 5.7

5.1 4.9 5

4 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 7/20

Note: Passenger cars and pure EVs only Source : SNE Research, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 4 October 16, 2020 Hyundai Glovis

Re-rating catalyst 2: Tighter grip on the PCC market and expectations for new business opportunities

Tighter grip on the PCC market

We expect EV sales volume growth to lead to greater demand for PCC shipping in the long term. HMG, which currently produces around 120,000 EV units annually (based on the Ulsan and Hwaseong plants), is set to expand EV production full swing in 2021 through the establishment of production facilities for models based on its electric-global modular platform (E-GMP).

The PCC business is likely to see improvements in non-affiliate volume, as well. The recovery in affiliate volume should lead to fleet expansion, thus enhancing Hyundai Glovis’s capacity to handle non-affiliate volume on backhaul legs (Europe/Americas to Asia). Higher backhaul demand should enable the company to cover outbound costs related to affiliate volume, while improvements in price competitiveness should help it secure non-affiliate contracts on inbound routes. Thus, affiliate volume expansion should drive an increase in overall fleet utilization and margins. Of note, at end-2019 (before the pandemic hit), the shipping business saw its margin improve to 7% on the back of the full-fledged growth of non-affiliate volume.

Falling PCC charter rates and the current weakness of competitors also provide a good opportunity for the company to expand its fleet. PCC charter rates have declined 35.3% since early 2020, as weak earnings at major global PCC players have weighed on their PCC operating capacity. The fall in PCC charter rates is dragging down second-hand vessel/newbuilding prices, allowing Hyundai Glovis to expand its fleet size at a lower cost.

Figure 5. HMG: EV revenue and sales mix Figure 6. PCC charter rates

(Wbn) (%) (US$/day) 25,000 11 EV revenue (L) 30,000 PCTC 6,500 CEU PCTC 5,000 CEU EV sales contribution (R) 20,000 9 25,000

20,000 15,000 7

15,000 10,000 5 10,000

5,000 3 5,000

0 1 0 19 20F 21F 22F 23F 24F 25F 10 11 12 13 14 15 16 17 18 19 20

Source: HMG, Mirae Asset Daewoo Research Source: Clarksons, Mirae Asset Daewoo Research

Figure 7. OP margins of major global PCC companies

(%) 15 Hyundai Glovis NYK Line Mitsui OSK Lines K Line Wallenius Wilhelmsen 10

5

0

-5

-10

-15 2Q17 4Q17 2Q18 4Q18 2Q19 4Q19 2Q20

Source : Bloomberg, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 5 October 16, 2020 Hyundai Glovis

Hydrogen transportation: Nascent but growing opportunities

We expect Hyundai Glovis to align itself with HMG’s vision for a hydrogen economy. Indeed, hydrogen transportation is drawing increasing attention. According to news reports, Hydrogen Energy Network (HyNet), a domestic hydrogen station operator (key shareholders: KOGAS [036460 KS/Hold/TP: W28,000/CP: W27,000], HMG, etc.), will operate a hydrogen supply center using by-product gas from (004020 KS/Buy/TP: W31,000/CP: W29,700). Recently, Hyundai Glovis entered an MOU with HyNet and Hyundai Steel to promote the development of the hydrogen distribution industry for hydrogen vehicles.

HyNet (expected production capacity of 37,000 tonnes) is likely to use tube trailers to supply hydrogen to the capital area and Chungcheong province. If Hyundai Glovis wins the transportation contract for this, we estimate related revenue would only be W20-30bn. Nevertheless, assuming that annual hydrogen demand increases to 3-5mn tonnes over the long term, we believe that this would mark a meaningful first step in a promising market.

From a longer-term perspective, HMG’s hydrogen import project deserves attention, as it should create an opportunity for Hyundai Glovis to enter the hydrogen (or ammonia) shipping business. In August, HMG announced that it signed an MOU with Australia’s Commonwealth Scientific and Industrial Research Organization (CSIRO) and Fortescue Metals Group (FMG AU/CP: AU$16.62); world's fourth-largest iron ore producer) to accelerate the development of renewable hydrogen technology.

HMG plans to import green hydrogen produced with Australia’s renewable energy resources in the form of ammonia. We see strong potential for hydrogen import logistics, given that: 1) Australia is fostering hydrogen exports as a future growth engine; and 2) conditions in Korea are not yet ripe for green hydrogen production.

Figure 8. HyNet’s hydrogen shipping center Figure 9. HMG has signed an MOU with CSIRO and FMG

Source: Press reports, Mirae Asset Daewoo Research Source: HMG, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 6 October 16, 2020 Hyundai Glovis

Re-rating catalyst 3: Expectations on ownership structure overhaul

Expectations on the removal of corporate governance-related uncertainties should also continue to serve as a catalyst for share prices. The key to the ownership structure overhaul is the unwinding of circular shareholdings. Back in 2018, HMG sought to achieve this through a restructuring plan in which Hyundai Mobis would have spun off its domestic module and after-service (A/S) businesses and merged them with Hyundai Glovis.

However, the spin-off/merger plan was called off after backlash from Hyundai Mobis shareholders, as there was controversy over the fairness of the spin-off/merger ratio (which was deemed overly favorable to Hyundai Glovis shareholders). Indeed, given that HMG Chairman Chung Eui-sun has a 23.3% stake in Hyundai Glovis, it is generally believed that the group will seek an ownership structure that maximizes the value of Hyundai Glovis.

From a long-term perspective, we recommend focusing on Hyundai Glovis’s concrete business strategies, which should become more visible once the governance structure is streamlined. We maintain our view that Hyundai Glovis stands to benefit from a more simplified governance structure across the group.

With well-established businesses across both trading and logistics, Hyundai Glovis is well positioned to generate synergies with HMG in new markets, such as shared mobility and hydrogen transportation. But in order for the company to put these strategies into action, a new governance structure is required. In this sense, we believe the overhaul itself will be sufficient to generate re-rating momentum.

Figure 10. HMG: Ownership structure (present)

Source: DART, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 7 October 16, 2020 Hyundai Glovis

Earnings likely to normalize from 4Q20

3Q20 preview: In-line OP of W169.9bn

For 3Q20, we forecast Hyundai Glovis to post revenue of W3.7tr (-20.6% YoY) and operating profit of W169.9bn (-34.8% YoY). Operating profit is likely to come in line with the market consensus (W166.3bn). By business, we estimate CKD revenue at W1.3tr (-24.9% YoY), showing improvement after a weak 2Q20, and shipping margin at 17.6% (up from 16.1% in 2Q20, when exports were weak).

We look for a more robust recovery in 4Q20, given the time needed for HMG’s recent sales volume improvement to translate into earnings for Hyundai Glovis. Meanwhile, the won’s recent strength may cause the pace of earnings improvement to slow in the short term.

We forecast full-year earnings to return to normal levels in 2021, supported by: 1) steady improvements in HMG’s sales volume; 2) inbound shipping demand from non-affiliate customers (e.g., Volkswagen); and 3) earnings improvements at overseas subsidiaries. We believe the bulk shipping business, which has been a drag on overall earnings, is poised for margin improvement in 2021 on a pickup in market conditions and a continued reduction in the long-term chartered fleet.

Table 3. Hyundai Glovis: 3Q20 preview (Wbn, %) 3Q20F Growth 3Q19 2Q20 Mirae Asset Consensus YoY QoQ Daewoo Revenue 4,751 3,270 3,771 3,983 -20.6 15.3 OP 261 131 170 166.3 -34.8 30.1 OP margin (%) 5.5 4.0 4.5 4.2 -17.9 12.8 Pretax profit 113 140 177 162 56.6 26.5 NP 45 115 129 128 183.5 11.8 Note: Under consolidated K-IFRS; net profit is attributable to owners of the parent Source: Company data, WISEfn, Mirae Asset Daewoo Research

Table 4. Quarterly and annual earnings (Wbn, %) 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20F 4Q20F 2019 2020F 2021F Revenue 4,221 4,496 4,751 4,802 4,703 3,270 3,771 4,959 18,270 16,703 19,093 Logistics 1,289 1,385 1,412 1,506 1,400 1,115 1,284 1,594 5,592 5,393 5,904 Domestic logistics 356 379 352 380 354 360 402 425 1,466 1,541 1,513 Overseas logistics 933 1,007 1,060 1,126 1,047 754 883 1,168 4,126 3,852 4,390 Shipping 805 797 829 788 712 527 664 771 3,220 2,674 3,109 PCC 448 506 554 543 507 351 471 563 2,051 1,892 2,086 Bulk 357 291 275 246 205 176 193 208 1,169 782 1,024 Trading 2,051 2,205 2,425 2,508 2,591 1,628 1,822 2,595 9,189 8,636 10,080 CKD 1,554 1,604 1,786 1,903 2,023 1,189 1,341 2,089 6,846 6,641 7,996 Used car logistics 112 133 126 133 119 118 144 152 504 533 609 Other 385 468 513 473 448 321 337 354 1,838 1,461 1,476 OP 185 202 261 228 195 131 170 211 877 706 928 Logistics 69 93 90 76 63 52 64 78 327 257 329 Shipping 28 18 60 50 28 15 46 48 156 136 147 Trading 88 92 111 103 105 64 60 85 394 314 453 Pretax profit 162 187 113 265 222 140 177 262 727 802 843 NP 106 122 45 229 160 115 129 190 502 594 612 OP margin (%) 4.4 4.5 5.5 4.8 4.1 4.0 4.5 4.3 4.8 4.2 4.9 Pretax margin (%) 3.8 4.2 2.4 5.5 4.7 4.3 4.7 5.3 4.0 4.8 4.4 Net margin (%) 2.5 2.7 1.0 4.8 3.4 3.5 3.4 3.8 2.7 3.6 3.2 Note: Based on consolidated K-IFRS; net profit is attributable to controlling interests Source: Company data, Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 8 October 16, 2020 Hyundai Glovis

Figure 11. Hyundai Glovis: Revenue trend Figure 12. Hyundai Glovis: OP trend

(Wbn) (%) (Wbn) (%) 25,000 Revenue (L) Growth (R) 35 1,000 OP (L) Growth (R) 70 30 900 60 20,000 25 800 50 20 700 40 15,000 15 600 30 10 500 20 10,000 5 400 10 0 300 0 5,000 -5 200 -10 -10 100 -20 0 -15 0 -30 11 12 13 14 15 16 17 18 19 20 21 10 11 12 13 14 15 16 17 18 19 20 21

Source: Company data, Mirae Asset Daewoo Research Source: Company data, Mirae Asset Daewoo Research

Figure 13. Hyundai Glovis: OP margin by division

(% ) 8 Logistics Trading Shipping

7

6

5

4

3

2

1 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20F 4Q20F

Source: Company data , Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 9 October 16, 2020 Hyundai Glovis

Hyundai Glovis (086280 KS)

Income statement (summarized) Balance sheet (summarized) (Wbn) 2019 2020F 2021F 2022F (Wbn) 2019 2020F 2021F 2022F Revenue 18,270 16,703 19,093 19,543 Current assets 5,054 5,599 6,419 7,092 Cost of revenue 16,904 15,507 17,614 18,046 Cash & equivalents 690 1,092 1,608 2,169 Gross profit 1,366 1,196 1,479 1,497 AR & other receivables 2,323 2,398 2,560 2,620 SG&A expenses 490 489 551 560 Inventory 1,033 1,067 1,139 1,165 OP (adj.) 877 706 928 937 Other current assets 1,008 1,042 1,112 1,138 OP 877 706 928 937 Non-current assets 5,075 4,936 4,823 4,778 Non-operating profit -150 96 -85 -8 Investments in associates 496 512 547 559 Net financial income -70 -51 -37 -28 PP&E 3,825 3,750 3,614 3,566 Net income from associates 42 30 20 20 Intangible assets 114 100 88 77 Pretax profit 727 802 843 929 Total assets 10,130 10,534 11,243 11,869 Income tax 225 208 232 256 Current liabilities 3,413 2,911 3,041 3,088 Profit from continuing operations 502 594 612 674 AP & other payables 1,528 1,578 1,684 1,723 Profit from discontinued operations 0 0 0 0 Short-term financial liabilities 1,557 994 995 995 NP 502 594 612 674 Other current liabilities 328 339 362 370 Attributable to owners 502 594 612 674 Non-current liabilities 2,046 2,503 2,602 2,638 Attributable to minority interests 0 0 0 0 Long-term financial liabilities 634 1,045 1,045 1,045 Total comprehensive income 534 548 612 674 Other non-current liabilities 1,412 1,458 1,557 1,593 Attributable to owners 534 548 612 674 Total liabilities 5,459 5,414 5,643 5,726 Attributable to minority interests 0 0 0 0 Equity attributable to owners 4,670 5,119 5,599 6,142 EBITDA 1,208 1,065 1,276 1,276 Capital stock 19 19 19 19 FCF 544 757 791 707 Capital surplus 154 154 154 154 EBITDA margin (%) 6.6 6.4 6.7 6.5 Retained earnings 4,493 4,956 5,436 5,979 OP margin (%) 4.8 4.2 4.9 4.8 Minority interests 0 1 1 1 Net margin (%) 2.7 3.6 3.2 3.4 Shareholders' equity 4,670 5,120 5,600 6,143

Cash flow statement (summarized) Key valuation metrics/ratios (Wbn) 2019 2020F 2021F 2022F 2019 2020F 2021F 2022F Operating cash flow 741 960 991 987 P/E (x) 10.7 11.3 11.0 10.0 NP 502 594 612 674 P/CF (x) 4.5 5.7 5.3 5.3 Non-cash income/expenses 688 590 664 602 P/B (x) 1.1 1.3 1.2 1.1 Depreciation 316 344 335 328 EV/EBITDA (x) 5.0 6.4 4.9 4.4 Amortization 15 14 12 11 EPS (W) 13,395 15,851 16,307 17,968 Other 357 232 317 263 CFPS (W) 31,753 31,577 34,009 34,020 Chg. in working capital -218 65 -16 -6 BPS (W) 124,541 136,507 149,314 163,783 Chg. in AR & other receivables -186 -76 -154 -56 DPS (W) 3,500 3,500 3,500 3,500 Chg. in inventory -119 -33 -72 -26 Dividend payout ratio (%) 26.1 22.1 21.5 19.5 Chg. in AP & other payables 35 42 94 34 Dividend yield (%) 2.4 1.9 1.9 1.9 Income tax -178 -252 -232 -256 Revenue growth (%) 8.3 -8.6 14.3 2.4 Cash flow from investing activities -343 -166 -329 -302 EBITDA growth (%) 35.4 -11.8 19.8 0.0 Chg. in PP&E -182 -202 -200 -280 OP growth (%) 23.5 -19.5 31.4 1.0 Chg. in intangible assets 0 1 0 0 EPS growth (%) 14.9 18.3 2.9 10.2 Chg. in financial assets -187 -29 -61 -22 AR turnover (x) 8.7 7.5 8.1 8.0 Other 26 64 -68 0 Inventory turnover (x) 18.8 15.9 17.3 17.0 Cash flow from financing activities -364 -423 -131 -131 AP turnover (x) 12.8 11.3 12.2 12.0 Chg. in financial liabilities 338 -152 0 0 ROA (%) 5.3 5.8 5.6 5.8 Chg. in equity 0 0 0 0 ROE (%) 11.2 12.1 11.4 11.5 Dividends -124 -131 -131 -131 ROIC (%) 11.0 8.8 11.5 11.6 Other -578 -140 0 0 Debt-to-equity ratio (%) 116.9 105.7 100.8 93.2 Chg. in cash 48 402 517 560 Current ratio (%) 148.1 192.3 211.1 229.6 Beginning balance 641 690 1,092 1,608 Net debt-to-equity ratio (%) 13.6 1.0 -9.4 -18.0 Ending balance 690 1,092 1,608 2,169 Interest coverage ratio (x) 8.5 8.6 13.8 13.9 Source: Company data, Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 10 October 16, 2020 Hyundai Glovis

Appendix 1

Important disclosures and disclaimers Two-year rating and TP history

Company Date Rating TP (W) (W) Hyundai Glovis Hyundai Glovis (086280) 10/16/20 Buy 215,000 250,000 07/27/20 Buy 140,000 200,000 04/08/20 Buy 130,000 07/02/19 Buy 200,000 150,000 06/25/19 One year 190,000 100,000 06/25/18 Buy 190,000 50,000

0 Oct 18 Oct 19 Oct 20

Stock ratings Sector ratings Buy Expected 12-month performance: +20% or greater Overweight Expected to outperform the market over 12 months Trading Buy Expected 12-month performance: +10% to +20% Neutral Expected to perform in line with the market over 12 months Hold Expected 12-month performance: -10% to +10% Underweight Expected to underperform the market over 12 months Sell Expected 12-month performance: -10% or worse

Rating and TP history: Share price (─), TP (▬), Not Rated ( ■), Buy (▲), Trading Buy (■), Hold (●), Sell ( ◆) * Our investment rating is a guide to the expected return of the stock over the next 12 months. * Outside of the official ratings of Mirae Asset Daewoo Co., Ltd., analysts may call trading opportunities should technical or short-term material developments arise. * The TP was determined by the research analyst through valuation methods discussed in this report, in part based on estimates of future earnings. * TP achievement may be impeded by risks related to the subject securities and companies, as well as general market and economic conditions.

Ratings distribution and investment banking services Buy Trading Buy Hold Sell Ratings distribution 73.62% 14.11% 11.04% 1.23% Investment banking services 72.22% 11.11% 16.67% 0.00% * Based on recommendations in the last 12 months (as of September 30, 2020)

Disclosures As of the publication date, Mirae Asset Daewoo Co., Ltd. has acted as a liquidity provider for equity-linked warrants backed by shares of Hyundai Glovis as an underlying asset; other than this, Mirae Asset Daewoo has no other special interests in the covered companies.

Analyst certification The research analysts who prepared this report (the “Analysts”) are registered with the Korea Financial Investment Association and are subject to Korean securities regulations. They are neither registered as research analysts in any other jurisdiction nor subject to the laws or regulations thereof. Each Analyst responsible for the preparation of this report certifies that (i) all views expressed in this report accurately reflect the personal views of the Analyst about any and all of the issuers and securities named in this report and (ii) no part of the compensation of the Analyst was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report. Mirae Asset Daewoo Co., Ltd. (“Mirae Asset Daewoo”) policy prohibits its Analysts and members of their households from owning securities of any company in the Analyst’s area of coverage, and the Analysts do not serve as an officer, director, or advisory board member of the subject companies. Except as otherwise specified herein, the Analysts have not received any compensation or any other benefits from the subject companies in the past 12 months and have not been promised the same in connection with this report. Like all employees of Mirae Asset Daewoo, the Analysts receive compensation that is determined by overall firm profitability, which includes revenues from, among other business units, the institutional equities, investment banking, proprietary trading, and private client divisions. At the time of publication of this report, the Analysts do not know or have reason to know of any actual, material conflict of interest of the Analyst or Mirae Asset Daewoo except as otherwise stated herein.

Disclaimers This report was prepared by Mirae Asset Daewoo, a broker-dealer registered in the Republic of Korea and a member of the . Information and opinions contained herein have been compiled in good faith and from sources believed to be reliable, but such information has not been independently verified and Mirae Asset Daewoo makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein or of any translation into English from the Korean language. In case of an English translation of a report prepared in the Korean language, the original Korean language report may have been made available to investors in advance of this report. The intended recipients of this report are sophisticated institutional investors who have substantial knowledge of the local business environment, its common practices, laws, and accounting principles, and no person whose receipt or use of this report would violate any laws or regulations or subject Mirae Asset Daewoo or any of its affiliates to registration or licensing requirements in any jurisdiction shall receive or make any use hereof. This report is for general information purposes only and is not and shall not be construed as an offer or a solicitation of an offer to effect transactions in any securities or other financial instruments. The report does not constitute investment advice to any person, and such person shall not be treated as a client of Mirae Asset Daewoo by virtue of receiving this report. This report does not take into account the particular investment objectives, financial situations, or needs of individual clients. The report is not to be relied upon in substitution for the exercise of independent judgment. Information and opinions contained herein are as of the date hereof and are subject to change without notice. The price and value of the investments referred to in this report and the income from them may depreciate or appreciate, and investors may incur losses on investments. Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur. Mirae Asset Daewoo, its affiliates, and their directors, officers, employees, and agents

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do not accept any liability for any loss arising out of the use hereof. Mirae Asset Daewoo may have issued other reports that are inconsistent with, and reach different conclusions from, the opinions presented in this report. The reports may reflect different assumptions, views, and analytical methods of the analysts who prepared them. Mirae Asset Daewoo may make investment decisions that are inconsistent with the opinions and views expressed in this research report. Mirae Asset Daewoo, its affiliates, and their directors, officers, employees, and agents may have long or short positions in any of the subject securities at any time and may make a purchase or sale, or offer to make a purchase or sale, of any such securities or other financial instruments from time to time in the open market or otherwise, in each case either as principals or agents. Mirae Asset Daewoo and its affiliates may have had, or may be expecting to enter into, business relationships with the subject companies to provide investment banking, market-making, or other financial services as are permitted under applicable laws and regulations. No part of this document may be copied or reproduced in any manner or form or redistributed or published, in whole or in part, without the prior written consent of Mirae Asset Daewoo. For further information regarding company-specific information as it pertains to the representations and disclosures in this Appendix 1, please contact [email protected] or +1 (212) 407-1000.

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