Rechargeable Batteries The beginning of EV mass adoption

2015 to mark the beginning of EV mass adoption Overweight (Maintain) We believe the (EV) market is entering a period of rapid growth. In 2015 Industry Report and 2016, the main driver of growth will be , where sales of EVs increased fourfold YoY in 2014 and threefold YoY during the first four months of 2015. Such remarkable May 27, 2015 growth has been fueled by government support to lower the total cost of ownership of EVs as part of efforts to tackle air pollution, as well as the development of new models

Daewoo Securities CCCo.,Co., Ltd. boasting improved performance. We forecast China’s EV sales to triple YoY to 200,000 units in 2015 and grow further to 350,000 units in 2016. [Rechargeable Batteries] Looking ahead to 2016 and 2017, a number of budget EVs in the US$30,000 range are Yeon-ju Park set to hit the market, including Tesla’s Model 3, ’s next-generation Leaf, and GM’s +822-768-3061 [email protected] Chevrolet Bolt. European automakers also plan to roll ou t a series of new models. The release of more affordable, more diverse models is expected to drive the EV market Young Ryu forward. +822-768-4138 [email protected] ESS presents another potential market

Young-jee Bae Samsung SDI and LG Chem are quickly expanding their presence in the energy storage +822-768-4123 system (ESS) market by leveraging their technological knowhow accumulated from years [email protected] of experience in IT batteries. In the West, a number of power companies are competing

Chul-joong Kim in the ESS market. In particular, household demand for ESS has been rising in in +822-768-4162 line with the increasing penetration of renewable energies. Although ESS is not yet a chul-joong.kim @dwsec.com profitable business, we believe domestic battery makers will stand out on the back of their solid track records and diverse customer bases once the market gains traction.

Korean battery suppliers are the largest beneficiaries Among major battery makers capable of mass production, Panasonic, AESC, and BYD have limited room to expand their customer base because of their specific ties to certain auto makers. Meanwhile, Korean battery suppliers are the only ones currently building production facilities in China. The market entry of Chinese firms is still years away, as they lag far behind in terms of technology and production capacity. In contrast to mobile batteries, producing EV batteries requires substantial capex because of their strict safety standards, longer testing times, and larger capacity per unit. And while mobile battery technology is becoming quickly commoditized, the cost of producing medium- and large-sized batter ies differs widely among industry players due to technological gaps and access to economies of scale, suggesting it will take some time for latecomers to catch up.

Our top picks are LG Chem and Samsung SDI We maintain Buy on LG Chem and raise our target price by 9% to W360,000 (from W330,000), as we revised up our valuation of the company’s EV battery business to W3.8tr (from W3.2tr). We reiterate Buy on Samsung SDI and lift our target price by 12.2% to W175,000 (from W156,000), estimating the value of the company’s medium/large-sized battery business at W2.1tr. Both companies are set to begin production in China at the end of this year and should see full-fledged growth in EV battery earnings from 2016, benefiting from the launch of new models in the US and Europe as well as the growth of the Chinese market.

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.

May 27, 2015 Rechargeable Batteries

C O N T E N T S

The beginning of EV mass adoption 3 1. China’s EV market at an inflection point 3 2. 2016-17: Prices around US$30,000, range of 300km 10 3. EVs gearing up for a new phase of rapid growth 11

ESS, another growth driver 12 1. Market trend and outlook 12 2. Issue: Will ESS become a game changer for Tesla? 15

Korean battery makers to be the biggest beneficiaries 17 1. Korean battery makers to benefit from EV market growth 17 2. LG Chem: Stronger fundamentals; Opportunities from market growth 19 3. Samsung SDI: Sales to take off in 2H 21

LG Chem (051910 KS) 25 Samsung SDI (006400 KS) 28

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The beginning of EV mass adoption

1. China’s EV market at an inflection point

1) Surging EV sales China’s EV sales have been rapidly increasing, quadrupling YoY to 75,000 units in 2014 (vs. 18,000 units in 2013) and tripling YoY to 34,000 units during the first four months of 2015.

According to K&C Consulting, China’s EV sales are expected to grow nearly threefold YoY to 200,000 units in 2015. The forecast looks reasonable given recent growth rates.

If China’s annual EV sales indeed reach 200,000 units, the country will become the world’s largest EV market, overtaking the US, where 120,000 units were sold in 2014. In this case, EVs would represent 1% of China’s overall annual auto sales (around 24mn units).

Figure 222.2. Sales volumvolumee in China increased threefold YoY during Figure 111.1. EV sales in China rose markedly starting in 2014 the first four months of 201520152015

('000units) (unit) 80 China 18,000 2014

15,000 2015 60 12,000

9,000 40 6,000

20 3,000

0 EV PHEV EV PHEV 0 11 12 13 14 1/15 - 4/15 Passenger Commercial vehicle

Source: China MIIT, KDB Daewoo Securities Research Source: China MIIT, KDB Daewoo Securities Research

Figure 333.3. The US was the world’s largest EV market in 201420142014…2014 ……… Figure 444.4. ………But…But China is expected tototo overtake the US in 2015

('000 units) Other 900 6% Other China Europe US China 25% 600 US 42%

300

Europe 27% 0 2014 2015F 2016F

Source: Industry data, KDB Daewoo Securities Research Source: Industry data, KDB Daewoo Securities Research

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2) Policy support and appealing new models

Stronger policy support since 2014 has made owning an EV more practical

One of the main drivers behind the rapid growth of EVs in China has been government support, which has lowered the total cost of ownership of EVs closer to that of combustion engine vehicles.

The Chinese government has handed out subsidies to EV buyers since 2011 and has waived purchase taxes and introduced registration benefits since mid-2014, lowering the total cost of ownership.

Although prices vary depending on battery capacity, plug-in hybrid EVs (PHEV) and pure EVs in China are sold at around RMB200,000 and RMB300,000, respectively—about three to four times that of a comparable gasoline vehicle (RMB70,000). However, the central government provides RMB35,000-65,000 in subsidies, while local authorities separately offer matching or slightly smaller subsidies. Further taking into account the exemption of a 10% purchase tax and fuel costs over a 10-year period, owning a PHEV does not cost much more than driving a conventional vehicle.

Another incentive is vehicle registration. China’s major cities have introduced license plate quotas to curb air pollution and ease traffic congestion. In Beijing, getting a license plate is costly and difficult, as only 150,000 license plates are issued every year, either by lottery or auction. However, government officials plan to raise the annual quota for environmentally friendly vehicles in Beijing from 20,000 in 2014 to 30,000 in 2015 and 60,000 in 2016. Other cities, including and , are following suit, providing a strong incentive for EV purchases.

Table 111.1. ChinaChina’’’’ssss EV subsidsubsidiesies (miles, ‘000 RMB) RangeRangeRange Subsidy 155 60 93 50 50 35 Source: KDB Daewoo Securities Research

Table 222.2. Price comparisoncomparison:::: Combustion engine vehicles vs. EV in China (RMB) Combustion engine EVEVEV PHEVPHEVPHEV Release price 70,000 300,000 200,000 Purchase tax 7,000 - - Consumption tax 3,500 - 10,000 Vehicle tax 5,000 - - Subsidy from central - 50,000 35,000 government Subsidy from local - 50,000 35,000 government Purchase price 85,500 200,000 130,000 Source: KDB Daewoo Securities Research

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China still lacks charging stations, but is rapidly building up infrastructure. In March 2015, China’s Ministry of Industry and Information Technology (MIIT) stated that the government will fully commit to developing charging infrastructure, which it sees as the biggest hurdle to the growth of the EV market.

This year, China plans to have 2,000 charging stations and 400,000 charging poles installed in major cities. (Currently, there are 723 charging stations and 28,000 poles in the country.) A total of 27 rapid- charging stations have been placed on the 1,260km expressway between Beijing and Shanghai, with one station every 50km. Each station has the capability to charge eight EVs to 80% within 30 minutes.

Looking forward, China’s policy is likely to remain focused on promoting the growth of the EV industry and bolstering the competitiveness of local companies. Promoting EVs is not only an effective way to address the country’s environmental problems, but also a way to help local auto makers expand their presence in the fast-growing global EV market. Just as China’s renewable energy firms advanced onto the global stage on the back of government support, we believe Chinese companies will likewise make strides in the global EV market. We could see some fine-tuning in subsidies and tax benefits depending on the pace of market growth, but overall, the policy environment should remain supportive. The Chinese government plans to put 500,000 EVs on the road by 2015 and 5mn EVs by 2020.

Table 333.3. Chinese government’s EV sales and charging statiostationn installation targets Existing before 201420142014 Installed in 2014 201520152015 target 2020 target Sales volume (‘000 units) 34 70 500 5,000 Charging stations (units) 37664 260 70 2,000 10,000 Source: Industry data, KDB Daewoo Securities Resear376 ch 260

Table 444.4. Charging station installation targettargetssss by city (units) Existing Additional target by endend----2015201520152015 CityCityCity Charging stationstationssss Charging poles Charging stationstationssss Charging poles Beijing 69 1,347 NA 1,000 Tianjin 7 1,347471 66 6,700 Shanghai 24 2,100471 50 5,000 Hangzhou 62 620 42 3,800 Shenzhen 81 300620 218 526 526 Chengdu 14 880300 16 3,000 Source: Press release, KDB Daewoo Securities Research 880

Table 555.5. SubsidSubsidiesiesiesies forforfor electric busbuseses measuring over 10m (‘000 RMB) YearYearYear Subsidy 2015 500 2016 500 2017 400 2018 400 Source: Press release, KDB Daewoo Securities Research

Table 666.6. Vehicle registration limitlimitssss by city (units) License Annual quota of Annual quota Method of ecoeco---- plate license plates Year of of license plates friendly vehicle NoteNoteNotesNote sss pppurchasepurchase (((eco(ecoecoeco----friendlyfriendly enforcement (((total(totaltotaltotal)))) registration method vehicle sss))) Issued Shanghai Auction 100,000 - Eco-friendly vehicles exempted from registration limit 1994 immediately Total quota: 240,000 units during 2011-2013 ‰ 150,000 units from 2014 Beijing Lottery 150,000 20,000-60,000 Lottery 2010 Eco-friendly vehicle quota: 20,000 units in 2014 ‰30,000 units in 2015 ‰ 60,000 units from 2016 2,000 license plates issued per month; Guiyang Lottery 24,000 - - 2011 Unlimited issue for eco -friendly vehicle s Lottery + Guangzhou 120,000 12,000 Lottery 2012 auction Lottery + Issued Tianjin 100,000 10,000 Eco-friendly vehicles exempted from registration limit 2013 auction Immediately Lottery + Issued Hangzhou 80,000 - Eco-friendly vehicles exempted from registration limit 2013 auction Immediately Lottery + Normal vehicles (80,000 units): Lottery for 40,000 Shenzhen 100,000 20,000 Lottery 2014 auction units and auction for 40,000 units Source: Press release, KDB Daewoo Securities Research

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Growing appeal of new models

Another major catalyst of China’s EV growth has been the release of more attractive new models. The poor sales of GM’s Volt, which was released in 2011, were mainly attributable to the vehicle’s high price tag, short driving range, and uninspiring design. However, the subsequent launch of Tesla’s EVs, which were more expensive but featured longer ranges and sleeker designs, was met with a positive response, proving that the success of an EV was more dependent on consumer appeal than on price or range alone.

Encouragingly, the EV models currently available in China are gaining wide appeal. One of the most popular models has been BYD’s Qin PHEV, which accounted for 26% of the country’s EV sales between January and April 2015. Since the hybrid car’s debut in late 2013, around 13,000 units have been sold in 2014 and 9,000 units during the first four months of 2015. BYD expects 2015 Qin sales to almost quadruple YoY to 50,000 units, a sizeable figure given that annual sales of existing models, such as GM’s Volt, are around 20,000-30,000 units.

BYD’s Qin, a PHEV equipped with a 13kWh battery, can travel up to 70km in pure electric mode. The model is priced at around RMB190,000, but the actual selling price adjusting for subsidies is around RMB120,000 (W21mn). In addition, purchase taxes and registration fees are exempted, and license plates are issued for free. The Qin has a top speed of 185 km/h and can accelerate to 100 km/h in 5.9 seconds.

Figure 555.5. BYD’s PHEV Qin

Source: Press release

Table 777.7. Monthly EVEVEV sales in China (units, %) Manufacturer Model Jan.Jan.Jan. Feb.Feb.Feb. Mar.Mar.Mar. Apr.Apr.Apr. Cumulative Market share BYD Qin 1,911 1,932 2476 2625 8,944 26 Zotye E20 408 368 1151 1131 3,058 9 BYD e6 423 276 400 890 1,989 6 BAIC EV200/EV160 (E150 EV) 132 387 1431 847 2,797 8 QQ EV 552 375 502 667 2,096 6 JAC iEV - 350 152 584 1,086 3 Zotye Z100 EV (Cloud 100) 184 140 1202 447 1,973 6 Chery eQ 355 303 403 262 1,323 4 EV - 104 163 131 398 1 Kandi Panda EV - - 928 95 1,023 3 SAIC E50 4 3 5 58 70 0 Doongfeng-Nissan e30 172 - - 35 207 1 BAIC ES210 (Senova EV) - - - 8 8 0 SAIC Roewe 550 PHEV 348 355 739 479 1,921 6 BMW 530Le - 24 62 33 119 0 GAC GA5 REV 148 30 77 28 283 1 Total 6,395 6,064 14,122 8,320 34,901 100 Source: China Passenger Car Association (CPCA), China Auto Web

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We believe the main force behind the development of such attractive new models has been significant technological advances. In particular, the huge success of Tesla’s Model S, which uses cheaper cylindrical cells, has spurred many battery makers to ramp up their efforts to improve battery performance and lower production costs, which has led to more progress.

Tesla expects the price of batteries to fall from US$250/kWh to US$150/kWh by 2017, when its gigafactory is scheduled to come online, and to less than US$100/kWh by 2020.

In response, many polymer battery makers have also been quickly moving down the cost curve. The polymer battery featured in GM’s first-generation EV was priced at around US$500/kWh. However, the price of polymer batteries for the next-generation model (to be released in 2016- 17) has fallen 40% to US$300/kWh, a level which the International Energy Agency (IEA) originally expected to materialize in 2020. The price gap between polymer and cylindrical batteries has also significantly narrowed. According to market research firm B3, polymer battery prices are forecast to drop to 48% of current levels by 2020.

Table 888.8. Cost ccomparisonomparisonomparison:: Combustion engine vs. EVEVEV battery (US$/kWh, kWh, US$) Battery price (1) 500 300 200 150 Capacity (2) 25 25 25 25 Battery cost (3=1*2) 12,500 7,500 5,000 3,750 System cost (4) 2,500 1,500 1,000 750 Battery + system cost (5=3+4) 15,000 9,000 6,000 4,500 Combustion engine 1,300 1,300 1,300 1,300 production cost (6) EVEVEV battery vs. combustion 13,700 7,700 4,700 3,200 engine (7=5(7=5(7=5-(7=5 ---6)6)6)6) Source: Industry data, KDB Daewoo Securities Research

Table 999.9. Fuel cost comparison between combustion engine vehiclesvehicles and EV (assuming 10 years of operation) Oil price (US$/bbl) 100100100 808080 606060 404040 Gasoline price (US$/bbl) 115 95 75 55.0 Gasoline price (US$/gallon) 2.8 2.3 1.8 1.3 Annual mileage (miles) 15,000.00 15,000.00 15,000.00 15,000.00 Fuel efficiency (miles/gallon) 25 25 25 25.0 Gasoline usage (gallons) 600 600 600 25.0600 Gasoline cost (US$) 1,682.90 1,390.20 1,097.60 804.9 Electricity charge (US$/kWh) 0.12 0.12 0.12 0.12 Electricity consumption (kWh/mile) 0.34 0.34 0.34 0.340.12 Annual consumption (kWh) 5,100.00 5,100.00 5,100.00 5,100.000.34 Electricity cost (US$) 612 612 612 612 EV vs. combustion engine (US$) 1,070.90 778.2 485.6 192.9 EV vs. combustion engine (((after(afterafterafter 101010 years)years)years) (US$)(US$)(US$) 10,709.30 7,782.40 4,855.60 1,928.80 Source: Industry data, KDB Daewoo Securities Research

Figure 777.7. Payback period by battery price (assuming oil price at Figure 666.6. Cost of polymer battery vs. Tesla’s cylind rical battery US$80/bblUS$80/bbl))))

(US$/kWh) (years) 600 Cylinder (Tesla) 20 Polymer 500 15 400

300 10

200 5 100

0 0 2013 2015 2017F 2020F 500 300 200 150 (US$/kWh)

Source: KDB Daewoo Securities Research Source: KDB Daewoo Securities Research

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Technological innovation and strong EV sales are leading to a more diverse range of EV models.

Back in 2010, there were only around 10 EV models available in China, with many auto makers launching just one or two pilot models. Now, most auto makers have a number of different EV models lined up, with around 40 new models set to be released in 2015.

Emboldened by the success of Qin, BYD is planning to unveil four to five new models in 2H15 alone, aiming to more than triple its EV sales to 70,000 units for the full year.

BYD’s success and policy support have encouraged China’s major auto companies to accelerate their push into EVs, with Beijing Auto, Shanghai Automotive Industries, and Dongfeng Motor unveiling new models since late 2014. Shanghai Automotive Industries plans to debut 10 new energy vehicles by 2020, while is targeting sales of 650,000 new energy vehicles and 150,000 pure EVs by 2020.

Table 101010.10 . BYD’s major EV modelmodelssss YearYearYear SUV MPVMPVMPV 2013 Qin/Sirui 2014 New F3/G5 S7 2015 Speed EV S1/S3/Yuan/Song/Tang Shang 2016 New G3/Han S9 Source: BYD, KDB Daewoo Securities Research

Table 111111.11 . MMMajorMajorajorajor Chinese EV modelmodelssss YearYearYear Manufacturer Model PricePricePrice (((RMB(RMBRMBRMB ) Release date 2010 BYD e6 300,000 2010 BYD K9 2,000,000 (estimate) Oct.2010 Chery M1 149,800- 229,800 Nov.2010 Zotye 5008 (Nomad II) EV 210,000 2010 Zotye M300 EV 250,000 2010 2012 Changan E30 100,000 after rebates Feb. 2012 JAC iEV 169,800 Sep.2012 SAIC (Shanghai Auto) 234,900 Nov. 2012 Shanghai GM Springo EV (Chevy Sail EV) 258,000 Nov. 2012 2013 BAIC (Beijing Auto) E150 EV 249,800 2013 Venucia E30 Sep. 2013 SAIC (Shanghai Auto) Roewe 550 PHEV 248,800-259,800 Nov. 2013 BYD Qin 189,800-209,800 Dec. 2013 2014 BMW Brilliance 1E 400,000 Mar. 2014 BYD-Daimler DENZA EV 369,000/ 399,000 Apr. 2014 GAC (Guangzhou Auto) Trumpchi GA5 REV 199,300-219,300 Oct. 2014 Chery eQ EV 159,000- 164,900 End-2014 SAIC (Shanghai Auto) EV80 179,000- 499,000 Nov. 2014 BAIC (Beijing Auto) ES 210 346,900 Dec. 2014 BAIC (Beijing Auto) EV 200 210,000 Dec. 2014 Dongfeng E30L End-2014 Kandi EV K11 (Panda EV) 2014 Zotye Zotye Zhidou (ZD) 108,800 2014 2015 BMW Brilliance BMW 530Le 698,900 Jan. 2015 Volvo S60L PHEV 505,900-559,900 Apr. 2015 Changan Eado EV Approximately 200,000 1Q15 BYD Shang 139,800-169,800 (estimate) 2Q15 BYD Song 250,000 (estimate) 2Q15 BYD Tang 300,000 (estimate) 2Q15 BYD Yuan 200,000 (estimate) 2Q15 PHEV End-2015 2016 FAW Volkswagen Audi A6L e-tron 2016 Source: KDB Daewoo Securities Research

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Figure 888.8. Monthly sales of BYDBYD’’’’ssss QinQinQin Figure 999.9. Sales guidance by model

(units) (units) 3,000 Qin 60,000 2014 2015F guidance 2,500 50,000

2,000 40,000

1,500 30,000

1,000 20,000

500 10,000

0 0 1/14 4/14 7/14 10/14 1/15 4/15 Pure EV (E6) PHEV (Qin) Pure e-bus (K9)

Source: BYD, KDB Daewoo Securities Research Source: BYD, KDB Daewoo Securities Research

Figure 101010.10 . NNNumberNumber of EV modelmodelssss by Chinese autoautoautomakersauto makers Figure 111111.11 . EV market share in China

(models) 50 Non-Chinese BYD brands 24% 29% 40

30 GAC 0% 20 JAC Chery 3% 13% Roewe 10 4% BAIC 7% 0 Zotye 11% 2013 2015F 9%

Source: Press release, KDB Daewoo Securities Research Source: Industry data, KDB Daewoo Securities Research

Figure 121212.12 . BYDBYDBYD’BYD ’’’ss ss shares hare performance (((12(12121211111111 HK)HK)HK) Figure 131313.13 . BYDBYDBYD’BYD ’’’ss es earningse arnings forecast ((BloombergBloomberg consensus)

(-2Y=100) (Wbn) (%) 200 BYD 15,000 Revenue (L) 8 OP margin (R)

13,000 6 150

11,000 4

100 9,000 2

50 7,000 0 5/13 11/13 5/14 11/14 5/15 2014 2015F 2016F

Source: Datastream, KDB Daewoo Securities Research Source: Bloomberg, KDB Daewoo Securities Research

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2. 2016-17: Prices around US$30,000, range of 300km

We believe that 2015-16 will mark the beginning of EVs’ commoditization, with China as the main driver. In the following years, the market’s growth is likely to accelerate as second-generation EVs (priced at around US$30,000) are released and European automakers also begin to roll out EVs.

Tesla’s Model 3, Nissan’s next-generation Leaf, and GM’s Chevrolet Bolt are all anticipated to be released around 2016-17 at prices below US$40,000. Higher ranges, cheaper prices, and improved design should allow EVs to go increasingly mainstream.

Tesla’s gigafactory, expected to come online in 2017, will help lower the firm’s battery cost from US$250/kWh to US$150/kWh. Tesla’s Model 3 is expected to be about 20% smaller in battery capacity than the existing Model S, but should still achieve the same range. Powertrain costs are also anticipated to decline to the level of conventional by 2017. In an effort to scale up EV sales, the automaker plans to expand its battery production capacity to 5GWh by 2017 and to 50GWh by 2020.

Furthermore, European automakers—which have long remained lukewarm about EVs—are finally

expected to focus more on new energy vehicles. Pressured by the prospect of tighter CO 2 emissions regulations (from 2020) and a growing share of EVs in the automotive market, European auto giants are planning to release a wide array of EV models in 2016-17.

Figure 141414.14 . US EV market continuecontinuessss to grow Figure 151515.15 . 1Q15 EV sales increased 92% YoY in Europe

(units) 1Q15 10,000 Audi A3 e-Tron Fiat 500e 1Q14 BMW i3 Chevrolet Volt BMW i3 8,000 Nissan Leaf (EV) Tesla Model S VW e-Golf 6,000 Renault Zoe

4,000 Tesla Model S

Nissan Leaf 2,000

Mitsubishi Outlander PHEV 0 12 13 14 15 0 5,000 10,000

Source: Wards, KDB Daewoo Securities Research Source: EV Obsession, KDB Daewoo Securities Research

Figure 171717. 17 . EV ranges selected as “““acceptable “acceptableacceptable”””” by customers: Figure 161616.16 . Reasons customers hesitate to buy EVEVssss Satisfaction increases when EV range exceeds 300km

Safety (%) Reliability 1% 40 10%

Other Battery range 12% 33% 30

20

Charging 10 infrastructure 17%

Cost 0 27% 400 300 200 100 50 (km)

Source: Press release, KDB Daewoo Securities Research Source: Press release, KDB Daewoo Securities Research

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3. EVs gearing up for a new phase of rapid growth

We believe the EV market is finally entering a rapid expansion phase, aided by technology/product innovation and government support. The global EV market is projected to grow to 4.07mn units by 2020—up from 280,000 in 2014, 530,000 in 2015F, and 1.27mn in 2017F.

In 2015-16, China should be at the forefront of this robust expansion. Sales are forecast to increase nearly threefold YoY in 2015 (from 70,000 units to 200,000), and reach 570,000 units in 2017. The Chinese government has set a sales target of 5mn by 2020. In other major markets, such as the US and Europe, sales are likely to accelerate starting in 2017, boosted by the launch of cheaper models (second-generation EVs) and new vehicles manufactured by European automakers.

Of course, the pace of market expansion will depend on various factors, including government policies, technological progress, and consumers’ reception. But given the faster-than-anticipated pace of technological innovation, we believe market growth will accelerate. The market for solar power—another innovative technology—also went through several boom and bust cycles before growth stabilized, with governments providing support during the initial stage and aggressive technological advances leading to steeper-than-expected cost reductions.

Table 121212.12 . EV market forecast by region (‘000 units, %) 201420142014 2015F2015F2015F 2016F2016F2016F 2017F2017F2017F 2020F2020F2020F 2025F2025F2025F Auto sales US 16,124 16,446 16,775 17,111 18,158 20,048 Europe 14,194 14,478 14,767 15,063 15,985 17,648 China 23,442 25,083 26,839 28,717 35,180 49,342 Other 32,236 33,203 34,199 35,225 38,491 44,622 Total 85,996 89,210 92,581 96,116 107,815 131,661 EV market share USA 0.7% 1.0% 1.3% 2.0% 5.0% 10.0% Europe 0.6% 0.7% 1.0% 1.2% 4.0% 8.0% China 0.3% 0.8% 1.3% 2.0% 5.0% 10.0% Other 0.0% 0.2% 0.3% 0.5% 2.0% 8.0% Total 0.3% 0.6% 0.9% 1.3% 3.8% 9.1% EV sales US 120 164 218 342 908 2,005 Europe 90 101 148 181 639 1,412 China 70 201 349 574 1,759 4,934 Other 3 66 103 176 770 3,570 Total 283 533 817 1,273 4,076 11,921 Source: KDB Daewoo Securities Research

Figure 181818.18 . Polysilicon price and solar energy market forecasforecastt Figure 191919.19 . Guidance of Tesla’s battery price

(GW) (US$/kg) 80 Demand (L) 250 Polysilicon price (R)

200 60

150 40 100

20 50

0 0 07 08 09 10 11 12 13 14 15F 16F 17F

Source: PV Insights, KDB Daewoo Securities Research Source: Tesla Battery Report, Nov. 2014

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ESS, another growth driver

1. Market trend and outlook

Tesla Powerwall is drawing attention to the fledging ESS market. Developed economies are the main drivers of the market’s expansion, but growth has not been as strong as many had expected.

Government support is essential to the ESS market’s initial growth for several reasons. 1) First, given its close link to the power generation industry, public interest is at the heart of the ESS industry, and the payback period is relatively long. 2) Moreover, due to the long product life (over 20 years) and the importance of stability in power generation equipment, the industry is relatively insensitive to new technologies. Thus, market growth is projected to be led first by the government, then by the private sector, and later by individuals.

Globally, countries with large electricity consumption are moving ahead, a trend that will likely continue. The US is leading the pack, with a more-than 20% share in global ESS projects, followed by China. Going forward, the ESS market is expected to expand along with new and renewable energy sources, given the importance of ESS in boosting power stability and quality (challenges facing alternative energy technologies). By segment, LIB is projected to show the strongest growth in the ESS industry, as it has high energy density, high efficiency, and a long life cycle. Although LIB prices are still high, prices are likely to fall gradually as applications increase.

Figure 202020.20 . ESS market forecast Figure 212121.21 . EEElectrochemicalElectrochemical ESS projects by region

(Wtr) (MW) (no.) 70 ESS market 700 Rated power output (L) 350 58.6 Number of projects (R) 60 600 300

50 500 250 42.5 40 400 200

28.1 30 300 150

20 16 200 100 10.6 10 100 50

0 0 0 11 13 15F 17F 20F US Japan China Korea Germany

Source: Navigant Research, KDB Daewoo Securities Research Source: DOE (2015)

Figure 222222.22 . ESSESSESS-ESS ---useuse LIBLIBLIB market forecast Figure 232323.23 . Trend of ESS projectprojectssss in the US

(MWh/year) (MW) 1,000 944 40 LIB Lead-acid 35 Sodium sulphur 778 800 Flow battery 30 Other

25 600 448 20

400 15 275 209 10 200 5 28 0 0 10 11 12 13 14 15F 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14

Source: B3, KDB Daewoo Securities Research Source: GTM Research

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1) Government policies As explained above, government support is critical for the ESS market’s initial growth. Market development has varied across countries depending on the necessity of ESS, electricity tariffs, and market environments.

The Korean government has been striving to secure power grid stability and plans to increase ESS use in public facilities. According to action plans released on May 20 th , the government will first install 200MW of ESS for frequency regulation in 2015, and then expand installation to schools (primary and secondary) in 2016. After that, it will conduct pilot projects to build ESS in emergency power plants. Beginning in 2017, the government will initiate the ESS lease business in partnership with financial institutions, and gradually allow private businesses to join the market.

The US, which is focused on new and renewable energy sources to replace its aging power systems and ease environmental problems, has emerged as the leader of the global ESS market thanks to supportive government policies (mandates, tax breaks, etc.). The state of California requires that at least 2.25% (5% from 2020) of power be supplied using ESS (applicable law enacted in September 2010, and enforced as of 2014). The state provides US$2,000/kW in subsidies per ESS.

Since the 2011 Fukushima Daiichi nuclear disaster, Japan has focused on boosting its emergency power supply capacity and increasing its reliance on new and renewable energies. From March 1, 2012 to end-2014, the government provided JPY21bn in subsidies for SII-certified ESS (subsidy payments were resumed in April 2015).

Europe is also making efforts to increase its reliance on new and renewable energy sources. Germany and France plan to introduce ESS-based PV systems. The Sol-ion project (5-15KW), led by Conergy, Saft, and E-ON, aims to develop energy self-sufficient houses that use LIB-powered PV power generation systems. The ESS market is anticipated to expand along with the alternative energy industry, which is expected to account for 20% of the European energy market by 2020.

Table 131313.13 . ESS. ESS-ESS ---relatedrelated government policies Country PolicyPolicyPolicy NotesNotesNotes - Self-Generation Incentive Program ‰ US$0.5-2/Wh for ESS–based PV Led by state of California US - Mandatory installation ‰ 2.25% of power supply from 2014; 5% from 2020 - Testing and supply handled by the Department of Energy Led by federal government - Subsidize one-third of ESS installation cost Led by Ministry of Economy, ‰ Up to JPY1mn for households (JPY100mn for corporations) Trade and Industry Japan - (Tokyo) Subsidize two-thirds of ESS installation cost (up to JPY20mn) ‰ For SMEs headquartered or operating in Tokyo Led by municipalities - (Saitama ) JPY50,000/kWh ESS (households) Target: 390GW ESS by 2020 Germany - Subsidize 30% of ESS-based PV systems in Europe - Department of Energy & Climate Change allocates GBP17mn for Target: 390GW ESS by 2020 UK dissemination of energy storage system s in Europe - Terna’s grid development plan and grid defense plan ‰ Up to 75MW in total Target: 390GW ESS by 2020 Italy ‰ Contracts with total capacity of 45MW (US$336mn) as of May 2014 in Europe (2MW by Samsung SDI, valued at US$5.2mn) - Subsidize ESS installations at public institutions (budget: W2.7bn) ‰ Public institutions with power contracts greater than 1,000kW From 2014 install 100kW or greater ESS Korea - Mandatory installation under review (newly built buildings with power From 2015 consumption of 1000kWh or higher) - ESS master plan Led by KEPCO ‰ KEPCO to invest W650bn in ESS (for frequency regulation) China State-led projects; LIB’s weight on a gradual rise Source: Korea Energy Economics Institute, Korea Electrotechnology Research Institute

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2) Domestic battery makers’ orders Samsung SDI and LG Chem are quickly expanding their presence in the ESS market by leveraging their technological knowhow accumulated from years of experience in IT batteries. In the West, a number of power companies are competing in the ESS market. Europe, in particular, has seen rising household demand for ESS in line with the increasing penetration of renewable energies.

Samsung SDI is expanding steadily into overseas markets by signing supply contracts with power generation companies and household-use ESS makers. And it is optimizing its services by region: power generation and household use in the eurozone, household use in Japan, and commercial use in the US. LG Chem advanced into the US market in 2010, when the company supplied household-use ESS batteries to Southern California Edison, the largest electricity supply company in California. Since then, the company has signed a series of ESS battery supply contracts with power companies and renewable energy firms in the eurozone and Japan.

Although ESS is not yet a profitable business, we believe domestic battery makers will stand out on the back of their solid track record and diverse customer base once the market gains traction.

Table 141414.14 . Samsung SDISDI’’’’ss major ESS businesses DateDateDate Capacity Details Sep. 2010 20MWh Signed an ESS supply contract with AES Oct. 2011 - Signed a household-use ESS supply contract with Japan-based Nichicon Jun. 2012 - Signed an MOU on ESS supply and R&D cooperation with Germany-based KACO Apr. 2013 1MWh Signed an ESS supply contract with ENEL, the largest power company in Italy Apr. 2013 10MWh Signed an ESS supply contract with Germany-based WEMAG Jul. 2013 10MWh Signed a power grid-use ESS supply contract with UK-based S&C Nov. 2013 110MWh Signed an ESS supply contract with ACME, an Indian telecom equipment maker May 2014 300,000 units Signed a household-use ESS supply contract worth W1tr with Japan-based Nichicon Selected as the supplier of frequency-regulation-use ESS batteries by a California-based May 2014 6MWh power company Oct. 2014 25MWh Signed a commercial-use ESS supply contract with US-based GCN Oct. 2014 11MWh Selected as the supplier of frequency-regulation-use ESS batteries by KEPCO Jan. 2015 - Supplied ESS for Sharp ’s UK -household -use renewable energy solutions Mar. 2015 - Signed an MOU on the joint development/sale of microgrid-use ESS solutions with ABB Table 151515.15 . LG ChemChem’’’’ss major ESS businesses DateDateDate Capacity Details Oct. 2010 10kWh/unit Signed a household-use ESS supply contract with US-based SCE Nov. 2011 - Signed an ESS supply contract with ABB Jun. 2012 5kWh/unit Signed an MOU on household-use solar PV ESS with IBC Solar May 2013 32MWh Signed a W30bn renewable energy ESS supply contract with US-based SCE Jul. 2013 2KWh/unit Signed a household-use ESS supply contract with SMA Marc. 2014 - Selected as a preferred supplier by AES, the largest power company in the US Sep. 2014 10.8MWh Supplied ESS batteries to Energiequelle, a Germany-based renewable energy firm Oct. 2014 20MWh Signed an ESS supply contract with a Europe-based renewable energy firm Oct. 2014 39.8MWh Selected as the supplier of frequency-regulation-use ESS batteries by KEPCO Nov. 2014 - Signed an MOU on ESS business cooperation with Feb. 2015 31MWh Supplied ESS batteries for GPD’s solar PV power station in Hokkaido Mar. 2015 - Signed an MOU with Ideal Power, a US power conversion system maker Arp. 2015 - Signed an MOU with Iguana, a US power conversion system maker Signed MOUs with three US companies including Gexpro, the largest power distributor May 2015 - in the US Table 161616.16 . SK InnovationInnovation’’’’ss major ESS businesses DateDateDate Capacity Details Jul. 2011 - Signed an MOU with Taiwan-based Formosa Dec. 2013 - Signed an MOU with Maxwell Tech, a US super-capacitor maker Jun. 2014 1MWh Selected to perform a ESS project in Magdeburg, Germany Sep. 2014 5MWh Supplied ESS to a substation in Schwerin, Germany Oct. 2014 7MWh Selected as the supplier of frequency-regulation-use ESS batteries by KEPCO Source: Media reports

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2. Issue: Will ESS become a game changer for Tesla?

1) Tesla Energy On April 30 th , Tesla held a press conference at which CEO Elon Musk presented two ESS batteries—household-use Powerwall and industrial-use Powerpack—based on lithium-ion rechargeable batteries. Powerwall has attracted particularly keen attention.

Powerwall, which comes in 7kWh daily cycle and 10kWh cycle models, stores electricity generated from renewable energy sources, such as solar PV, and supplies it to houses. The 7kWh model is for everyday use, while the 10kWh model is optimized to serve as backup in the event of a power outage. The battery packs are 130 x 86 x 18cm in size and weigh 100kg. The prices are U$3,000 for the 7kWh pack and US$3,500 for the 10kWh pack (excluding the costs of inverters and installation and not accounting for government subsidies). Powerwall can be inter-connected, thus increasing capacity.

Powerpack comes in 100kWh battery blocks that can be grouped and scaled from 500kWh to 10MWh. Tesla is planning to start producing these products full-swing late this summer. The company is expected to steadily expand production once it completes its gigafactory.

Figure 242424.24 . TeslaTesla’’’’ssss Powerwall Figure 252525.25 . Operating structure of Tesla’s home battery

Source: Tesla Source: Washington Post

2) Powerwall advance orders reached 38,000 in just one week After these products’ unveiling, experts generally agreed that while the industrial-use battery would be competitive, the household-use product had much room for improvement in terms of economic viability and efficiency. Experts felt that the 10kWh battery—despite being affordable at US$350/kWh compared to existing batteries, even considering inverter and installation expenses—had weak overall cost competitiveness due to the installation/rental expenses of a solar PV system, as generators are available at lower prices.

Consumers responded differently, however. One week after the press conference, Musk said that advance orders for Powerwall had reached as many as 38,000 units. And he said that if the trend continued, quarterly battery revenue would even be as high as EV revenue. Although that remains to be seen, the initial response to the battery product is positive.

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Figure 262626.26 . 11kWh selfself----generatorgenerator

Source: Home Depot

3) Focus on environmental issues rather than economic gains Notably, Musk started his presentation on ESS by discussing environmental issues, instead of highlighting the economic gains that ESS could bring. He devoted more than one-third of his presentation to the benefits of solar PV power generation and the importance of batteries for such systems. Tesla’s batteries attracted keen attention thanks to heightened awareness of environmental issues, the products’ lower-than-expected prices, and their attractive design.

Figure 272727. 27 . Tesla CEO Elon Musk made environmental issueissueissue s a Figure 282828. 28 . Solar PV power generation has the potential to focus of the company’s press conference resolve environmental problemproblemssss

Source: Tesla Source: Tesla

4) Will Tesla’s battery business negatively affect domestic battery makers? Some market watchers might be concerned about Tesla’s battery business denting domestic battery makers, as the company can offer battery products at attractive prices. However, we see the launch of Powerwall as a catalyst for the battery market’s expansion.

Eurozone countries have long sought to spread the use of renewable energy. Germany and France are seeking to introduce renewable energy-linked LIB, and Conergy, Saft, and E-ON are pursuing a Sol-ion (LIB-powered PV power generation) project. In the Eurozone, the household-use ESS market is already greater than the power-use ESS market. Although the US ESS market remains small, it could expand faster than expected if Tesla sees the same kind of phenomenal success the company achieved in the EV market.

Although competition is likely to mount, Korean ESS makers will likely benefit from market expansion, given their superior technology and accumulated experience.

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Korean battery makers to be the biggest beneficiaries

1. Korean battery makers to benefit from EV market growth

1) Among battery makers, only those in Korea lack ties to specific automakers

In 2014, Panasonic, AESC, and BYD sold the most EV batteries in the world. However, Panasonic supplies cylinder-type batteries only to Tesla, and AESC (which posted the second-highest sales thanks to robust sales of Nissan’s Leaf) has difficulty supplying batteries to automakers other than Nissan, its parent company. The same is true for BYD, which produces both batteries and cars.

For that reason, Chinese, and European, and US EV makers are placing battery orders to Korean battery makers. LG Chem has expanded its customer base from GM, Ford, Renault, and Hyundai Motor Company (HMC)/Kia Motors (Kia) to also include 13 top-tier global automakers (e.g., Volkswagen, Audi, Daimler, Volvo, SAIC Motor, CCAG, , and ). Samsung SDI has made supply deals with about eight automakers, including BMW, Chrysler Group, Mahindra, and Delphi Automotive, while SK Innovation has signed contracts with about five automakers, including HMC/Kia, Mitsubishi Motors, and Beijing Automotive.

Furthermore, only Korean battery producers—LG Chem, Samsung SDI, and SK Innovation—are building EV battery factories in China. LG Chem and Samsung SDI are constructing factories with annual capacities of 100,000 and 40,000 units, respectively, and aim to commence operations by end-2015. Having signed contracts with four of China’s five top-tier automakers, LG Chem has already taken orders worth 200,000 units. We expect Korean producers to enjoy the benefits of Chinese EV market growth starting in 2016.

TTTaTaaableble 171717.17 . Korean battery producersproducers’’’’ expansion into China CCCuCuuurrentrrent situation LG Chem Slated to complete a battery factory in Nanjing with a capacity of 100,000 units by end-2015 Integrated production (from cells to modules and packs) Ownership structure: 50% stake owned by LG Chem, the remaining 50% by the Nanjing government and Nanjing New Industrial

Investment Group Signed contracts with SAIC Motor, DFM, Qoros, CCAG, Great Wall Motors, Chery International, Chinese Audi subsidiary, etc. Took orders for 100,000 units in June 2014; Cumulative orders of 200,000 units as of May 2015 Samsung SDI Slated to complete a battery factory in Xi'an with a capacity of 40,000 units by end-2015 Ownership structure: 50% stake owned by Anqing Ring New Group and real estate investor Xian, the remaining 50% by Samsung

SDI SK Innovation Ownership structure: 40% stake owned by SK Innovation, 41% by Beijing Electric Industries, 19% by Beijing Automotive Built a battery factory with an annual capacity of 10,000 units in 2014; Plan to expand capacity by 10,000 units by 2017 Source: Media reports, KDB Daewoo Securities Research

Table 181818.18 . Korean battery makers’ supply contracts with major Chinese autoautomakersmakers RankRankRank Chinese autoautomakersmakers EV business plan Korean battery makers’ supply plan 10 eco-friendly vehicle models to be released by 2020 1 SAIC LG Chem signed a battery supply contract in 2H14 (through Shanghai GM) 2 DFM - LG Chem signed a battery supply contract in 2H14 16 eco-friendly, mass-producible vehicle models to be 3 FAW LG Chem signed a battery supply contract in 2H14 released by 2020 650,000 eco-friendly vehicles and 150,000 BEVs to be 4 CCAG LG Chem signed a battery supply contract in 2H14 sold by 2020 5 BAIC 2015F EV sales expected to increase +200% YoY Founded battery JV with SK Innovation 6 GAIG - - 7 Brilliance Auto - - 8 Great Wall Motor PHEV SUV to be released in 2017 LG Chem signed a battery supply contract in 1H15 9 Chery International - LG Chem signed a battery supply contract in 2H14 10 Geely Automobile - - Notes: Ranking based on sales volume in China Source: Press release, KDB Daewoo Securities Research

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2) For Chinese companies, expanding into the EV battery market will take time Several Chinese battery makers, including ATL, have already expanded into the mobile battery market. However, we believe it will take some time for Chinese firms to enter the EV battery market, in light of the following factors.

First, producing EV batteries requires substantial capex because of their strict safety standards and the long time it takes to test them.

Second, achieving economies of scale is important. In contrast to mobile batteries, producing even one medium- to large-sized battery requires a large-scale facility. For that reason, cost savings through economies of scale is crucial, a fact which favors producers that acquire multiple customers.

Third, the technological gap is significant. Second-generation EV batteries, scheduled to be supplied in 2016-17, are upgraded versions of first-generation batteries, and are likely to save costs for producers through 2020. Thus, Korean firms are likely to enjoy strong cost- competitiveness arising from their R&D efforts.

Figure 292929.29 . Mobile battery market share (2014) Figure 303030.30 . EV battery market share (2014)

Other Samsung Other 7% 5% 3% Coslight Samsung SDI 9% 17% LG Chem 13% Lishen 8% Panasonic 41% Mitsubishi/ GS Yuasa LG Chem 7 18%

ATL BYD 22% 7% Panasonic 2% Sony AESC 17% 24%

Source: Industry data, KDB Daewoo Securities Research Source: Industry data, KDB Daewoo Securities Research

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2. LG Chem: Stronger fundamentals; Opportunities from market growth

LG Chem entered the EV battery market in 2009 by supplying batteries for GM’s Chevrolet Volt. However, due to the Volt’s sluggish sales, battery capacity utilization was low, causing the battery unit to suffer losses.

The unit is forecast to stay tepid through 2015 due to still-sluggish sales of Volt and growing R&D expenses for new models (slated to roll out after 2015). Indeed, from January to April 2015, Volt sales shrank approximately 46% YoY, from 5,154 to 2,779 units. As such, despite growing supply to other customers (Ford, Renault, and HMC/Kia), the company’s EV battery revenue remains weak.

Starting in 2016, however, we expect the unit to turn around thanks to full-swing revenue growth. Furthermore, we expect the stock to receive a re-rating on expectations of EV battery growth in 2017 and beyond.

1) Chinese sales to expand full swing We estimate the Chinese EV market to almost triple in 2015 to 200,000 units and further grow in 2016 to 350,000 units. As of now, LG Chem secured cumulative orders worth 200,000 units from four of China’s five top-tier automakers. Assuming the company’s China market share at 30%, we estimate that LG Chem’s Chinese battery factory will generate revenue of W523.4bn in 2016 and W2.1tr in 2020. The value of its stake in the factory is estimated to reach W1tr in 2020.

We also expect the growth of the commercial EV market to boost LG Chem’s earnings. From January to April 2015, commercial EV sales in China tripled YoY to 9,716 units, as the government provided subsidies of RMB500,000 per vehicle (out of an average retail price of RMB2mn), and commercial EVs are relatively free from restrictions in terms of size and charging stations. We expect sales of E9 (BYD’s electric bus) to more than double YoY from 2,600 units to 6,000 units in 2015.

Given the success of BYD, other makers are rushing to enter the market, making supply deals with Korean battery firms. Korean battery makers should benefit from the market’s growth, given that 1) batteries for use in commercial vehicles are 100 times larger than those for passenger cars, and 2) they do not need to spend money on R&D.

Table 191919.19 . Estimated value of LG Chem’s Chinese battery factfactoryory 201420142014 2015F2015F2015F 2016F2016F2016F 2017F2017F2017F 2020F2020F2020F EV sales US 120 164 218 342 908 (‘000 units) Europe 90 101 148 181 639 China 70 201 349 574 1,759 Other 3 66 103 176 770 Total 283 533 817 1,273 4,076 Growth (%) 88 53 56 42 China Market volume (kWh) 6,978.1 11,487.0 35,180.1 LG Chem’s M/S (%) 25.0 30.0 30.0 LG Chem’s 1,744.5 3,446.1 10,554.0 sales volume (kWh ) Battery price (US$/kWh) 300.0 300.0 200.0 Revenue (US$mn) 523.4 1,033.8 2,110.8 Operating profit (US$mn) 0.0 51.7 211.1 OP margin (%) 0.0 5.0 10.0 Depreciation (US$mn) 30.0 40.0 50.0 EBITDA (US$mn) 30.0 91.7 261.1 EV/EBITDA (x) 7.0 Operating value (US$mn) 1,827.6 Equity value (50%) (Wbn) 1,005.2 Source: KDB Daewoo Securities Research

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2) Customer base to expand further

Despite the sluggish sales of the Volt, overall EV sales volume has been growing in the US, driven by the Tesla Model S, BMW i3, and Fiat 500e. The uptrend continued even after oil prices plunged in 4Q14. In Europe, EV sales volume jumped 92% YoY to 36,000 in 1Q15. As the overall EV market is expanding, LG Chem needs to further widen its customer base.

LG Chem mainly supplies batteries for GM’s Volt. But with the company expected to introduce batteries for over 40 EV models in 2H15, its customer base is anticipated to expand sharply to encompass major European and US automakers, as well as Chinese companies.

LG Chem has already secured battery orders from 13 of the top 20 global carmakers. The company’s pouch-type batteries are cheaper and lighter than cylinder-type batteries thanks to their higher energy capacity. Hideo Takeshita, CEO of battery research firm B3, forecasts pouch- type batteries to outpace other types in the mid- to large-size battery market.

Assuming LG Chem expands its market shares to 15% in the US, 30% in Europe, and 25% in other markets over the medium term, its battery sales in the global market (excluding China) are anticipated to reach W2tr by 2020, with the value of the battery business rising to W2.2tr.

Table 202020.20 . EV sales and estimated operating value by regionregion 201420142014 2015F2015F2015F 2016F2016F2016F 2017F2017F2017F 2020F2020F2020F EV sales (‘000 units) US 120 164 218 342 908 Europe 90 101 148 181 639 China 70 201 349 574 1,759 Other 3 66 103 176 770 Total 283 533 817 1,273 4,076 US/Europe/other Revenue (US$mn) 516.0 481.1 616.0 897.5 2,081.8 Operating profit (US$mn) -103.2 -83.1 0.0 44.9 208.2 Depreciation (US$mn) 100.0 110.0 120.0 130.0 160.0 EBITDA (US$mn) -3.2 26.9 120.0 174.9 368.2 EV/EBITDA (x) 7.0 Operating value (Wbn) 2,835.0 Source: KDB Daewoo Securities Research

Figure 313131. 31 . US EV sales: Overall market growing despite Figure 323232. 32 . NNNumber Number of EV modelmodels sss ppprojected projected to adopt LG sluggish Volt salessalessales Chem’s battery

(units) (units) (no.) 15,000 Total (L) 4,000 60 GM's Volt (R) 50 12,000 3,000 40 9,000 2,000 30 6,000 20 1,000 3,000 10

0 0 0 1/12 1/13 1/14 1/15 2012 2015F 2017F

Source: Ward, KDB Daewoo Securities Research Source: Press release, KDB Daewoo Securities Research

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3. Samsung SDI: Sales to take off in 2H

Samsung SDI’s large-size battery (xEV/ESS) business is still in the red, weighed down by high fixed costs despite weak sales. The business’s 1Q15 results came in below expectations due to higher R&D costs and lower capacity utilization resulting from the Japanese government’s discontinuation of home ESS subsidies.

However, we believe the large-size battery market has very high medium- to long-term potential. In light of recent moves by the Chinese government, the EV market might take off earlier than expected. Accordingly, Samsung SDI plans to steadily expand its production capacity, commencing operation of new production lines in Korea and China this year. Thus, battery earnings are anticipated to improve going forward.

1) Steady increase in customers Samsung SDI still lags slightly behind LG Chem in the EV battery market, but has been displaying steady growth through capacity ramp-ups and customer diversification. Of note, the company has been supplying its products to BMW since 2009. BMW sold 16,000 i3 models in 2014, following the model’s launch at end-2013. Earlier this year, BMW introduced a new PHEV model, i8. Samsung SDI and BMW signed an MOU for the delivery of further battery cells in July 2014.

Samsung SDI has also added major global automakers, including Volkswagen, Chrysler, and Mahindra, as well as several Chinese players, to its list of customers. In an effort to strengthen competitiveness and step up its expansion into the European market, the company recently acquired the battery pack unit of Magna, an -based auto parts supplier. The acquisition allows Samsung SDI to complete vertical integration of battery production (it manufactured only cells and modules—not packs—before the acquisition) as well as secure a stepping stone for its expansion in Europe.

While EV OEMs generally produce battery packs in-house, only a small number of Chinese OEMs appear to manufacture battery packs on their own. Accordingly, Samsung SDI should find significant opportunities in China. Furthermore, the company should also benefit from Magna’s wide-ranging customer base around the globe.

Table 212121.21 . History of Samsung SDISDI’’’’ss EV business Details

Sep. 2009 Launched SB LiMotive, a 50:50 between Bosch and Samsung SDI SB LiMotive announced it would exclusively supply EV batteries to BMW over the next Aug. 2009 10 years Dec. 2010 BMW unveiled concept car model Active E (equipped with SB LiMotive’s battery) Nov. 2010 Began to supply battery packs for the Chrysler F500 Jan. 2013 Samsung SDI acquired SB LiMotive 2013 Began to supply batteries for Ferrari’s PHEV LaFerrari Jun. 2014 Signed an MOU with Ford for the development of ultra-lightweight LIB Signed an MOU with BMW for increased supply and joint development of battery cells Jul. 2014 over the medium - to long -term Aug. 2014 Broke ground for the Xian plant (in which it will invest US$600mn through 2020) Dec. 2014 Samsung Venture Investment invested US$17mn in Seeo, an EV battery producer Jan. 2015 Began to supply batteries for Audi’s diesel PHEV Q7 e-tron quattro Feb. 2015 Acquired Magna’s EV battery pack unit Mar. 2015 Began to supply batteries for the BMW X5 PHEV Mar. 2015 Believed to have begun supplying batteries for the Porsche Panamera and Cayenne May 2015 Began to supply batteries to Jaguar Note: Details of supplies to Volkswagen, Mahindra, and Delphi have not been disclosed Source: Media reports, each company’s data, KDB Daewoo Securities Research

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Table 222222.22 . BMW. BMW’BMW ’’’ss EV lineup Model NoteNoteNote PhotoPhotoPhoto

- Launched in Europe end-2013 and in China in 2014 - Peak performance: 125kW (170hp); full torque 25.5kg.m (250Nm) - 18.8kWh LIB BMW i3 - Range: 132km - Fuel efficiency: 5.9km/kWh - Maximum speed: 150km/h

- Three-cylinder 1.5 gasoline turbo engine + - Peak performance: 362hp; full torque 58.2kg.m - 7.1kWh LIB - All electric range of 35km BMW i8 -Battery can be fully charged in less than three hours with an built-in 220V charger - Maximum speed: 250km/h - Fuel efficiency: 47.6km/L (based on European standards)

- First unveiled at the Shanghai Motor Show in 2015 (to be launched in 3Q) - 230 kW electric motor + 2.0L four-cylinder gasoline engine - 9.0 kWh LIB - Recharging takes three and a half hours at a home electrical outlet and two hours and 35 minutes via a BMW i Wallbox charger BMW X5 xDrive40e - Peak performance: 313hp; full torque: 35.7kg.m for engine and 25.5kg.m for motor - Maximum speed of 120km/h and range of 30km in the all-electric drive mode - Fuel efficiency: 30.3km/L (based on European standards); CO 2 emission: 77g/km

- To be launched in 2016 - 183kW electric motor + 245hp gasoline engine BMW 333-3---seriesseries - Peak performance: 245hp; full torque: 40.8 ㎏·m PHEVPHEVPHEV - Fuel efficiency: 50km/L (based on European standards) - Maximum speed of 120km/h and range of 35km in the all-electric drive mode

- To be launched in 2017 - Family car for five passengers - BMW to extend maximum range to 322km BMW i5 - Carbon fiber - Three-cylinder 1.5L gasoline engine - Price: US$50,000-60,000

Source: KDB Daewoo Securities Research

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2) Tesla’s growth potential and Chinese EV market Panasonic is the exclusive battery supplier for Tesla Motors. Tesla is expected to introduce its ESS Powerwall and Powerpack this summer, and it announced it would launch the Model X around end-3Q. CEO Elon Musk projected that the company would comfortably meet its EV sales volume target of 55,000 this year in light of an expected capacity ramp-up for the Model X in 4Q and healthy pre-order numbers. Based on the Model S quarterly sales volume of 10,000-11,000 units, we think the company will aim to sell 10,000 units of the Model X in 2H15. However, many investors remain suspicious about the company’s plan, as the launch of the Model X has already been delayed several times.

Last year, Panasonic supplied more than 300mn battery cells to Tesla. Tesla’s sales volume is anticipated to grow by over 70% this year. We project that Tesla will need more than 500mn cells in 2015, light of the scheduled launch of ESS and the potential emergence of battery replacement demand. Panasonic is now expanding its capacity to meet the likely increase in demand. However, Tesla will likely need to secure an additional source of cell supplies before the completion of its gigafactory, for which ground was broken in June of last year. Considering the capacity of major battery suppliers, Samsung SDI is the most promising candidate, in our view.

Meanwhile, Samsung SDI’s sales in China should take off after the Xian plant (with an annual capacity of 40,000 EV batteries) comes online at the end of this year.

Table 232323.23 . Tesla ffforecastforecast (units, ‘000 cells) 121212 131313 141414 15F15F15F 16F16F16F 17F17F17F 18F18F18F Total shipment s (units) 2,650 22,477 31,655 55,000 78,582 128,074 157,881 Model S 2,650 22,477 31,655 44,317 46,533 40,000 30,000 Model X 10,683 32,049 48,074 52,881 Model E (Gen 3) 40,000 75,000 Total cells (‘000 cells) 19,875 168,578 237,413 417,842 605,388 924,588 1,098,047 Model S 19,875 168,578 237,413 332,378 348,996 300,000 225,000 Model X 85,464 256,392 384,588 423,047 Model E (Gen 3) 240,000 450,000 Other 70,000 70,000 70,000 70,000 70,000 Replacement (‘000 cells) 9,938 84,289 118,706 208,921 Model S 9,938 84,289 118,706 166,189 Model X 0 42,732 Model E (Gen 3) Total 19,875 168,578 307,413 497,779 759,677 1,113,294 1,376,968 ASP (US$/cell) 3.5 3.3 3 2.9 2.8 2.5 2.4 LIB supplier (‘000 cells) 19,875 168,578 307,413 497,779 759,677 1,113,294 1,376,968 Panasonic 19,875 168,578 307,413 447,035 599,427 882,982 983,655 Second supplier 50,744 160,250 230,313 393,313 Source: KDB Daewoo Securities Research

Figure 333333.33 . LIB capacity of LG Chem and Samsung SDI Figure 343434.34 . Model S sales volume

(mncells) (units) 180 Polymer 12,000 Model S sales volume Prismatic Cylinder 40 9,000 120 29 44 46 31 46 6,000 30 60 30

69 56 3,000 41 47 0 4Q14 4Q15 4Q14 4Q15 0 Samsung SDI LG Chem 1Q13 3Q13 1Q14 3Q14 1Q15

Source: B3 Source: Tesla

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Table 242424.24 . Earnings forecastforecastssss of global peerpeerssss (Wbn) Revenue Operating profit Net profit 201420142014 201520152015 201620162016 201420142014 201520152015 201620162016 201420142014 201520152015 201620162016 EV 1211 HK Equity BYD 9,467 11,912 13,935 313 706 887 74 357 451 TSLA US Equity Tesla 3,369 6,251 9,769 -197 34 681 -310 34 574 Battery 051910 KS Equity LG Chem 22,578 21,170 22,997 1,311 1,726 2,039 868 1,296 1,543 006400 KS Equity Samsung SDI 5,474 8,176 9,009 71 173 330 -84 348 463 6752 JT Equity Panasonic 74,678 72,438 74,813 3,697 3,869 4,227 1,737 1,914 2,315 Source: Bloomberg, KDB Daewoo Securities Research

Table 252525.25 . Valuation of global peerpeerssss (x, %) EV/EBITDA P/EP/EP/E P/BP/BP/B ROEROEROE 201420142014 201520152015 201620162016 201420142014 201520152015 201620162016 201420142014 201520152015 201620162016 201420142014 201520152015 201620162016 EV 1211 HK Equity BYD 14.6 22.0 19.7 222.7 51.5 40.8 3.9 3.4 3.1 1.8 8.2 7.8 TSLA US Equity Tesla 1,268.5 90.8 29.6 - - 73.4 35.1 33.5 23.4 -42.8 -8.2 31.3 Battery 051910 KS Equity LG Chem 6.3 6.3 5.6 22.3 14.0 11.7 1.4 1.4 1.3 6.5 10.2 11.2 Samsung 006400 KS Equity 14.2 10.0 8.6 68.7 24.6 18.7 0.7 0.7 0.7 -0.7 2.9 3.8 SDI 6752 JT Equity Panasonic 5.2 5.7 5.3 22.6 19.3 16.0 2.2 2.0 1.8 10.6 10.7 12.0 Source: Bloomberg, KDB Daewoo Securities Research

Figure 353535.35 . Share performanceperformancessss of Tesla and BYD Figure 363636.36 . TeslaTesla’’’’ssss earnings forecast (Bloomberg consensus)

(-2Y=100) (Wbn) (%) 350 Tesla (L) 180 10,000 Revenue (L) 8 BYD (R) OP margin (R) 300 150 8,000 4 250 120 6,000 200 0 90 4,000 150 -4 60 2,000 100

50 30 0 -8 5/13 11/13 5/14 11/14 5/15 2014 2015F 2016F

Source: Bloomberg, KDB Daewoo Securities Research Source: Bloomberg, KDB Daewoo Securities Research

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May 27, 2015 Rechargeable Batteries

LG Chem (051910 KS) EV battery premium to expand

Chemicals One of the largest beneficiaries of EV mass adoption

China’s EV market at an inflection point: We believe the EV market is entering a period (Maintain) Buy of rapid growth. In 2015 and 2016, the main driver of growth will be China, where sales of EVs increased fourfold YoY in 2014 and threefold YoY during the first four months of Target Price (12M, W) 360,000 2015. Such remarkable growth has been fueled by government support to lower the total cost of ownership of EVs as part of efforts to tackle air pollution, as well as the Share Price (05/26/15, W) 269,500 development of new models boasting improved performance. We forecast China’s EV sales to triple YoY to 200,000 units in 2015 and grow further to 350,000 units in 2016.

Expected Return 34% Next-generation EVs to arrive in 2016-17: A number of budget EVs in the US$30,000 range are set to hit the market in 2016 and 2017, including Tesla’s Model 3, Nissan’s OP (15F, Wbn) 1,828 next-generation Leaf, and GM’s Chevrolet Bolt. European automakers also plan to roll Consensus OP (15F, Wbn) 1,722 out a series of new models. The release of more affordable, more diverse models is EPS Growth (15F, %) 53.9 expected to drive the EV market forward. Market EPS Growth (15F, %) 38.6 Largest beneficiary: We believe Korean battery makers—LG Chem in particular—stand P/E (15F, x) 14.9 to benefit the most from the expansion of the EV market. Among major battery makers Market P/E (15F, x) 11.0 capable of mass production, Panasonic, AESC, and BYD have limited room to expand KOSPI 2,143.50 their customer base because of their specific ties to certain auto makers. Meanwhile, Market Cap (Wbn) 17,860 Korean battery suppliers are the only ones currently building production facilities in Shares Outstanding (mn) 74 China. The market entry of Chinese firms is still years away, as they lag far behind in Free Float (%) 65.9 terms of technology and production capacity. LG Chem enjoys a significant lead in the Foreign Ownership (%) 38.9 next-generation EV space, winning orders from 13 out of the top 20 global auto brands. Beta (12M) 1.82 52-Week Low 164,500 Raise TP to W360,000; Battery premium to expand 52-Week High 297,000 Raise TP and recommend as our top pick: We lift our target price on LG Chem by 9% to (%)(%)(%) 1M1M1M 6M6M6M 12M12M12M W360,000 (from W330,000) and recommend the stock as one of our top picks. We Absolute -3.4 25.9 1.5 expect the company’s battery business to re-rate higher. We revised up our valuation of Relative -2.7 16.4 -4.8 the company’s EV battery business to W3.8tr (from W3.2tr), which reflects the sum of China and non-China operations based on 2020F earnings. 130 LG Chem KOSPI

110 Battery premium to expand: After entering the EV battery market in 2009, LG Chem has struggled with slower-than-anticipated market growth and sluggish EV sales of key 90 customers. However, EV battery earnings should begin to gain momentum from 2016 70 on the back of increasing sales in China and the launch of new models in the US and

50 Europe. Once earnings start to pick up, the market should begin to price in the strong 5.14 9.14 1.15 5.15 growth potential of the EV battery business.

FY (Dec.) 12/12 12/13 12/14 12/15F 12/16F 12/17F Revenue (Wbn) 23,263 23,144 22,578 21,796 25,133 27,439 OP (Wbn) 1,910 1,743 1,311 1,828 2,309 2,892 OP margin (%) 8.2 7.5 5.8 8.4 9.2 10.5 NP (Wbn) 1,494 1,266 868 1,336 1,730 2,179 EPS (W) 20,223 17,131 11,745 18,076 23,412 29,484 ROE (%) 14.8 11.4 7.3 10.6 12.4 14.0 P/E (x) 16.3 17.5 15.4 14.9 11.5 9.1 P/B (x) 2.3 1.9 1.1 1.5 1.4 1.2 Notes: 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

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May 27, 2015 Rechargeable Batteries

TableTableTable 262626.26 . Quarterly and annual earnings (Wbn, %, %p, US$/bbl, US$/W) 201420142014 201520152015 201420142014 2015F2015F2015F 2016F2016F2016F 1Q1Q1Q 2Q2Q2Q 3Q3Q3Q 4Q4Q4Q 1Q1Q1Q 2QF2QF2QF 3QF3QF3QF 4QF4QF4QF Revenue Total 5,673 5,869 5,664 5,372 4,915 5,352 5,804 5,725 22,578 21,796 25,133 Petrochemical 4,415 4,375 4,352 3,982 3,608 3,832 4,120 4,158 17,123 15,718 17,052

I&E 670 716 711 713 676 772 812 742 2,810 3,003 4,331

Battery/other 681 724 694 753 707 748 872 824 2,853 3,151 3,751

Operating Total 362 360 358 232 362 463 556 447 1,311 1,828 2,309 profit Petrochemical 308 291 307 212 321 402 472 406 1,117 1,601 1,815

I&E 37 44 27 27 37 47 57 40 134 181 347

Battery/other 17 25 29 -6 4 14 26 1 65 45 146

OP Total 6.4 6.1 6.3 4.3 7.4 8.6 9.6 7.8 5.8 8.4 9.2 margin Petrochemical 7.0 6.6 7.0 5.3 8.9 10.5 11.5 9.8 6.5 10.2 10.6

I&E 5.5 6.2 3.7 3.7 5.4 6.1 7.0 5.4 4.8 6.0 8.0

Battery/other 2.6 3.5 4.1 -0.8 0.6 1.9 3.0 0.1 2.3 1.4 3.9

Net profit 288 227 242 110 243 345 415 333 868 1,336 1,730

Dubai oil 104 106 102 75 52 60 65 70 97 62 70 US$/W rate 1,069 1,042 1,026 1,085 1,100 1,100 1,100 1,100 1,056 1,100 1,100 Source: KDB Daewoo Securities Research

TableTableTable 272727.27 ... Valuation (2016F) (Wbn, mn shares, W, %) 16F EBITDA Target EV/EBITDA (x)(x)(x) FVFVFV Method

Value of operations Chemicals 2,335.1 7.0 16,345.8 - Industry average I&E 556.6 7.0 3,896.2 - Industry average

Small batteries 399.1 7.0 2,793.5 - Industry average

Medium/large batteries 3,840.0 - DCF

Total 26,875.5

Net borrowings 1,164.0 - As of end-4Q14

Market cap of preferred shares 1,308.0

Target market cap 24,403.5

Shares outstanding 66.3

Target price 368,077.5

Source: KDB Daewoo Securities Research

TableTableTable 282828.28 . EV battery unit longlong----termterm earnings and business value forecasts 201420142014 2015F2015F2015F 2016F2016F2016F 2017F2017F2017F 2020F2020F2020F EV sales (‘000 units) US 120 164 218 342 908 Europe 90 101 148 181 639 China 70 201 349 574 1,759 Other 3 66 103 176 770 Total 283 533 817 1,273 4,076 China Market size (kWh) 4,013.3 6,978.1 11,487.0 35,180.1 LG Chem’s M/S (%) 10.0 25.0 30.0 30.0 Sales (kWh) 401.3 1,744.5 3,446.1 10,554.0 Battery cost (US$/kWh) 400.0 300.0 300.0 200.0 Revenue (US$mn) 160.5 523.4 1,033.8 2,110.8 Operating profit (US$mn) 0.0 0.0 51.7 211.1 OP margin (%) 0.0 0.0 5.0 10.0 Depreciation (US$mn) 20.0 30.0 40.0 50.0 EBITDA (US$mn) 20.0 30.0 91.7 261.1 EV/EBITDA (x) 7.0 Business value (US$mn) 1,827.6 Equity value (50%) (Wbn) 1,005.2 US/Europe/other Revenue (US$mn) 516.0 481.1 616.0 897.5 2,081.8 Operating profit (US$mn) -103.2 -120.3 0.0 44.9 208.2 Depreciation (US$mn) 100.0 110.0 120.0 130.0 160.0 EBITDA (US$mn) -3.2 -10.3 120.0 174.9 368.2 EV/EBITDA (x) 7.0 Business value (Wbn) 2,835.0 EV Battery value 3,840.2 Source: KDB Daewoo Securities Research

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May 27, 2015 Rechargeable Batteries

LG Chem (051910 KS/Buy/TP: W360,000)

Comprehensive Income Statement (Summarized) Statement of Financial Condition (Summarized) (Wbn) 12/14 12/15F 12/16F 12/17F (Wbn) 12/14 12/15F 12/16F 12/17F Revenue 22,578 21,796 25,133 27,439 Current Assets 8,1478,1478,147 8,5908,5908,590 9,7399,7399,739 11,527 Cost of Sales 19,574 18,275 21,131 22,853 Cash and Cash Equivalents 988 2,050 2,478 3,892 Gross Profit 3,0043,0043,004 3,5213,5213,521 4,0024,0024,002 4,5864,5864,586 AR & Other Receivables 3,351 3,583 3,978 4,183 SG&A Expenses 1,6931,6931,693 1,6931,6931,693 1,6931,6931,693 1,6931,6931,693 Inventories 2,711 2,957 3,283 3,453 Operating Profit (Adj) 1,3111,3111,311 1,8281,8281,828 2,3092,3092,309 2,8922,8922,892 Other Current Assets 1,097 0 0 -1 Operating Profit 1,3111,3111,311 1,8281,8281,828 2,3092,3092,309 2,8922,8922,892 NonNonNon-Non ---CurrentCurrent Assets 9,9819,9819,981 10,369 10,730 11,018 NonNonNon-Non ---OperatingOperating Profit ---151 -151151151 ---47-474747 ---3-333 131313 Investments in Associates 489 522 579 609 Net Financial Income -34 -13 -3 12 Property, Plant and Equipment 8,700 9,091 9,425 9,710 Net Gain from Inv in Associates 20 0 0 0 Intangible Assets 525 487 453 424 Pretax Profit 1,160 1,781 2,306 2,905 Total Assets 18,128 18,958 20,469 22,545 Income Tax 306 427 554 697 Current Liabilities 4,8094,8094,809 4,7594,7594,759 4,9744,9744,974 5,1175,1175,117 Profit from Continuing Operations 854 1,353 1,753 2,208 AP & Other Payables 1,460 1,335 1,416 1,489 Profit from Discontinued Operations 0 0 0 0 Short-Term Financial Liabilities 2,206 2,206 2,206 2,206 Net Profit 854854854 1,3531,3531,353 1,7531,7531,753 2,2082,2082,208 Other Current Liabilities 1,143 1,218 1,352 1,422 Controlling Interests 868 1,336 1,730 2,179 NonNonNon-Non ---CurrentCurrent Liabilities 1,0531,0531,053 874874874 712712712 732732732 Non-Controlling Interests -14 18 23 29 Long-Term Financial Liabilities 728 528 328 328 Total Comprehensive Profit 825825825 1,3531,3531,353 1,7531,7531,753 2,2082,2082,208 Other Non-Current Liabilities 325 346 384 404 Controlling Interests 838 1,323 1,713 2,157 Total Liabilities 5,8625,8625,862 5,6335,6335,633 5,6865,6865,686 5,8495,8495,849 Non-Controlling Interests -13 31 40 50 Controlling Interests 12,140 13,181 14,617 16,501 EBITDA 2,461 3,074 3,609 4,237 Capital Stock 370 370 370 370 FCF (Free Cash Flow) 583 809 984 1,740 Capital Surplus 1,158 1,158 1,158 1,158 EBITDA Margin (%) 10.9 14.1 14.4 15.4 Retained Earnings 10,691 11,732 13,168 15,052 Operating Profit Margin (%) 5.8 8.4 9.2 10.5 NonNonNon-Non ---ControllingControlling Interests 126126126 144144144 166166166 195195195 Net Profit Margin (%) 3.8 6.1 6.9 7.9 Stockholders' Equity 12,266 13,325 14,783 16,696

Cash Flows (Summarized) Forecasts/Valuations (Summarized) (Wbn) 12/1412/1412/14 12/15F 12/16F 12/17F 12/1412/1412/14 12/15F 12/16F 12/17F Cash Flows from Op Activities 1,994 2,409 2,584 3,340 P/E (x) 15.4 14.9 11.5 9.1 Net Profit 854 1,353 1,753 2,208 P/CF (x) 5.8 6.6 5.5 4.7 Non-Cash Income and Expense 1,437 1,687 1,856 2,029 P/B (x) 1.1 1.5 1.4 1.2 Depreciation 1,118 1,208 1,266 1,315 EV/EBITDA (x) 5.8 6.5 5.4 4.3 Amortization 33 38 34 29 EPS (W) 11,745 18,076 23,412 29,484 Others 286 441 556 685 CFPS (W) 31,006 41,141 48,830 57,334 Chg in Working Capital -167 -191 -468 -212 BPS (W) 164,485 178,576 198,002 223,500 Chg in AR & Other Receivables 7 -228 -382 -199 DPS (W) 4,000 4,000 4,000 4,000 Chg in Inventories -146 -246 -326 -169 Payout ratio (%) 30.9 19.5 15.0 11.9 Chg in AP & Other Payables 56 -133 66 66 Dividend Yield (%) 2.2 1.5 1.5 1.5 Income Tax Paid ---415 -415415415 ---427-427427427 ---554-554554554 ---697-697697697 Revenue Growth (%) -2.4 -3.5 15.3 9.2 Cash Flows from Inv Activities -1,991 -821 -1,604 -1,602 EBITDA Growth (%) -11.7 24.9 17.4 17.4 Chg in PP&E -1,401 -1,600 -1,600 -1,600 Operating Profit Growth (%) -24.8 39.4 26.3 25.2 Chg in Intangible Assets -50 0 0 0 EPS Growth (%) -31.4 53.9 29.5 25.9 Chg in Financial Assets -280 779 -4 -2 Accounts Receivable Turnover (x) 7.0 6.5 6.9 6.9 Others ---260 -260260260 000 000 000 Inventory Turnover (x) 8.6 7.7 8.1 8.1 Cash Flows from Fin Activities -438 -495 -495 -295 Accounts Payable Turnover (x) 15.0 14.4 17.1 17.5 Chg in Financial Liabilities -77 -200 -200 0 ROA (%) 4.8 7.3 8.9 10.3 Chg in Equity 0 0 0 0 ROE (%) 7.3 10.6 12.4 14.0 Dividends Paid -300 -295 -295 -295 ROIC (%) 7.5 10.3 12.4 14.9 Others ---61 -616161 000 000 000 Liability to Equity Ratio (%) 47.8 42.3 38.5 35.0 Increase (Decrease) in Cash -411 1,062 428 1,414 Current Ratio (%) 169.4 180.5 195.8 225.3 Beginning Balance 1,399 988 2,050 2,478 Net Debt to Equity Ratio (%) 9.5 5.1 0.4 -8.1 Ending Balance 988988988 2,0502,0502,050 2,4782,4782,478 3,8923,8923,892 Interest Coverage Ratio (x) 16.6 27.8 37.8 48.7 Source: Company data, KDB Daewoo Securities Research estimates

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May 27, 2015 Rechargeable Batteries

Samsung SDI (006400 KS) Focus on the big picture

Technology Take a long-term view Sizeable battery losses in 1Q: Samsung SDI’s battery division recorded an operating loss (Maintain) Buy of nearly W80bn in 1Q, dragged down by 1) costs related to a major customer’s switch to polymer batteries in the small-sized segment, and 2) heavy R&D spending and deferred ESS purchases by Japanese households (in anticipation of government Target Price (12M, W) 175,000 subsidies) in the large-sized segment. In the near term, revenue is unlikely to grow strongly enough to offset fixed costs. However, we expect a gradual earnings pickup in Share Price (05/26/15, W) 126,000 2H, aided by an increase in ESS orders and better yields in small-sized batteries. In May, KEPCO announced plans for its new ESS project, which is almost four times larger than Expected Return 39% last year’s. While the project’s ESS contracts will go to multiple suppliers, we believe Samsung SDI’s orders will more than double YoY based on the company’s previous OP (15F, Wbn) 138 records. This, combined with the stabilization of small-sized battery yields in 3Q and the Consensus OP (15F, Wbn) 157 operation of the new Chinese plant in 4Q, should help overall battery earnings to improve. EPS Growth (15F, %) - Market EPS Growth (15F, %) 38.6 Poised to benefit from EV market growth P/E (15F, x) 24.5 EV market gaining traction: In 2015 and 2016, we believe the growth of the EV market Market P/E (15F, x) 11.0 will be driven by China, where sales of EVs increased fourfold YoY in 2014 and threefold KOSPI 2,143.50 YoY during the first four months of 2015. Such remarkable growth has been fueled by Market Cap (Wbn) 8,664 government support to lower the total cost of ownership of EVs as part of efforts to Shares Outstanding (mn) 70 tackle air pollution, as well as the development of new models boasting improved Free Float (%) 79.4 performance. In our view, Korean battery makers are the largest beneficiaries of the expansion of the EV market. Among major battery makers capable of mass production, Foreign Ownership (%) 28.9 Panasonic, AESC, and BYD have limited room to expand their customer bases because of Beta (12M) 2.14 their specific ties to certain auto makers. Meanwhile, Korean battery suppliers are the 52-Week Low 103,500 only ones currently building production facilities in China. Although Samsung SDI slightly 52-Week High 173,000 lags behind LG Chem in the EV battery space, we believe the company will follow in LG (%)(%)(%) 1M1M1M 6M6M6M 12M12M12M Chem’s footsteps. Absolute -3.4 -6.7 -17.4 Raise TP to W175,000 to reflect value of EV battery business Relative -2.7 -13.7 -22.5 We revise up our target price on Samsung SDI by 12.2% to W175,000 (from W156,000), 120 Samsung SDI KOSPI 110 estimating the value of the company’s medium/large-sized battery business at W2.1tr. 100 While the recent rise in fixed costs poses a burden, we believe EV battery earnings will 90 improve meaningfully from 2016, supported by the operation of the Chinese plant later 80 this year, the release of new models in the US and Europe, and the growth of the 70 Chinese market. Admittedly, Samsung SDI has been one step behind LG Chem in 60 entering the EV battery business. Nevertheless, we believe Samsung SDI will go on to 5.14 9.14 1.15 5.15 fully benefit from the medium- and long-term growth of the EV market on the back of its extensive experience and robust competitiveness in the IT and ESS segments.

FY (Dec.) 12/12 12/13 12/14 12/15F 12/16F 12/17F Revenue (Wbn) 5,771 3,428 5,474 8,231 8,968 9,417 OP (Wbn) 187 -11 71 138 281 295 OP margin (%) 3.2 -0.3 1.3 1.7 3.1 3.1 NP (Wbn) 1,472 131 -84 361 417 438 EPS (W) 31,192 2,768 -1,426 5,134 5,919 6,217 ROE (%) 21.8 1.8 -0.9 3.1 3.5 3.5 P/E (x) 4.8 58.5 - 24.5 21.3 20.3 P/B (x) 0.9 1.0 0.7 0.8 0.7 0.7 Notes: 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

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May 27, 2015 Rechargeable Batteries

Table 292929.29 . Samsung SDI ’’’s earnings and forecast (Wbn, %) 1Q141Q141Q14 2Q142Q142Q14 3Q143Q143Q14 4Q144Q144Q14 1Q151Q151Q15 2Q15F 3Q15F 4Q15F 201420142014 2015F2015F2015F Revenue 2,184 2,109 1,892 1,910 1,866 2,009 2,164 2,192 8,122 8,231 LIB 837 833 794 859 795 884 1,013 1,071 3,324 3,764 Small-sized (IT) 773 743 721 750 707 779 855 841 2,987 3,183 Mid- to large-sized 64 90 73 109 88 105 158 230 337 581 (EV, ESS) Materials 1,347 1,276 1,098 1,051 1,071 1,125 1,151 1,121 4,799 4,467 Chemicals 684 695 702 645 666 700 702 683 2,752 2,752 EM 365 366 394 405 404 424 448 437 1,530 1,712 Other (PDP, solar etc.) 299 216 2 1 0 0 0 0 517 3 Operating profit -14 30 33 37 7 33 51 47 86 138 LIB -5 20 -5 -5 -78 -51 -24 -21 6 -174 Small-sized (IT) 55 60 46 45 12 23 38 34 207 107 Mid- to large-sized -60 -40 -51 -50 -90 -74 -63 -55 -201 -282 (EV, ESS) Materials -9 10 38 42 84 84 76 69 81 312 Chemicals 6 12 7 3 34 31 20 16 29 101 EM 18 17 29 40 50 53 55 53 104 211 Other (PDP, solar, etc.) -34 -19 2 -1 0 0 0 0 -52 0 OP margin -0.6 1.4 1.7 1.9 0.4 1.6 2.4 2.2 1.1 1.7 LIB -0.5 2.4 -0.6 -0.6 -9.8 -5.8 -2.4 -2.0 0.2 -4.6 Materials -0.7 0.8 3.5 4.0 7.9 7.4 6.6 6.1 1.7 7.0 Note: 1Q-2Q14 figures include Cheil Industries’ earnings. Source: Company data, KDB Daewoo Securities Research

Table 303030.30 . Valuation ttableable (Wbn, W, x) EBITDA Applied EV/EBITDA EVEVEV NotesNotesNotes IT LIB 393 6.5 2,552 Avg. of LG Chem, Sony, GS Yuasa, Panasonic Avg. of domestic chemicals companies (LG Chem, Chemicals 175 7.0 1,227 Kumho Petrochemical, Lotte Chemical, etc.) EV/ESS LIB 2,169 DCF Avg. of global electronic materials companies (Sumitomo, Electronic materials 336 7.0 2,352 Dow, JSR, etc.) Total operating value (A) 8,301 Investment asset value (listed) 3,495 30% discount to market value Investment asset value (unlisted) 348 30% discount to book value Total investment asset value (B) 3,843 Net borrowings (C) 77 Based on 1Q15 data EV (A)+(B)-(C) 12,066 Number of outstanding shares 68,765 Value per share 175,476 Source: KDB Daewoo Securities Research estimates

Table 313131.31 . Earnings forecast of Samsung SDI’s EV business (Wbn, x) 201420142014 2015F2015F2015F 2016F2016F2016F 2018F2018F2018F 2020F2020F2020F Revenue 244.5 426.0 644.1 1,864.6 2,682.0 OP -162.5 -239.3 -133.7 0.8 129.7 Depreciation 100.0 130.0 150.0 190.0 210.0 EBITDA -62.5 -99.2 6.3 142.3 301.0 EV/EBITDA (x) 7 Operating value (Wbn) 2,107 Source: KDB Daewoo Securities Research estimates

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May 27, 2015 Rechargeable Batteries

Samsung SDI (006400 KS/Buy/TP: W175,000)

Comprehensive Income Statement (Summarized) Statement of Financial Condition (Summarized) (Wbn) 12/14 12/15F 12/16F 12/17F (Wbn) 12/14 12/15F 12/16F 12/17F Revenue 5,4745,4745,474 8,2318,2318,231 8,9688,9688,968 9,4179,4179,417 Current Assets 3,5363,5363,536 4,3344,3344,334 5,0505,0505,050 5,7695,7695,769 Cost of Sales 4,5454,5454,545 6,6936,6936,693 7,3317,3317,331 7,6977,6977,697 Cash and Cash Equivalents 628 2,021 2,649 3,248 Gross Profit 929929929 1,5381,5381,538 1,6371,6371,637 1,7201,7201,720 AR & Other Receivables 893 1,025 1,064 1,117 SG&A Expenses 858858858 1,4001,4001,400 1,3561,3561,356 1,4241,4241,424 Inventories 769 882 916 961 Operating Profit (Adj) 717171 138138138 281281281 295295295 Other Current Assets 1,246 406 421 443 Operating Profit 717171 138138138 281281281 295295295 NonNonNon-Non ---CurrentCurrent Assets 12,433 12,362 12,130 11,956 NonNonNon-Non ---OperatingOperating Profit 128128128 367367367 305305305 321321321 Investments in Associates 4,979 5,046 5,046 5,046 Net Financial Income -16 -2 9 25 Property, Plant and Equipment 3,325 3,298 3,059 2,819 Net Gain from Inv in Associates 190 298 298 298 Intangible Assets 1,279 1,146 1,054 984 Pretax Profit 199 505 586 616 Total Assets 15,969 16,696 17,180 17,725 Income Tax 47 114 135 142 Current Liabilities 2,2542,2542,254 2,5472,5472,547 2,6032,6032,603 2,6792,6792,679 Profit from Continuing Operations 152 391 451 474 AP & Other Payables 565 649 674 707 Profit from Discontinued Operations -232 0 0 0 Short-Term Financial Liabilities 975 1,079 1,079 1,079 Net Profit ---80 -808080 391391391 451451451 474474474 Other Current Liabilities 714 819 850 893 Controlling Interests -84 361 417 438 NonNonNon-Non ---CurrentCurrent Liabilities 1,8871,8871,887 2,0512,0512,051 2,0982,0982,098 2,1632,1632,163 Non-Controlling Interests 4 30 35 36 Long-Term Financial Liabilities 803 806 806 806 Total Comprehensive Profit 244244244 386386386 451451451 474474474 Other Non-Current Liabilities 1,084 1,245 1,292 1,357 Controlling Interests 237 360 422 443 Total Liabilities 4,1424,1424,142 4,5974,5974,597 4,7014,7014,701 4,8424,8424,842 Non-Controlling Interests 6 25 30 31 Controlling Interests 11,587 11,803 12,148 12,516 EBITDA 604 870 1,012 1,005 Capital Stock 357 357 357 357 FCF (Free Cash Flow) -166 179 507 517 Capital Surplus 5,033 5,033 5,033 5,033 EBITDA Margin (%) 11.0 10.6 11.3 10.7 Retained Earnings 4,862 5,083 5,429 5,797 Operating Profit Margin (%) 1.3 1.7 3.1 3.1 NonNonNon-Non ---ControllingControlling Interests 240240240 296296296 331331331 367367367 Net Profit Margin (%) -1.5 4.4 4.6 4.7 Stockholders' Equity 11,827 12,099 12,479 12,883

Cash Flows (Summarized) Forecasts/Valuations (Summarized) (Wbn) 12/1412/1412/14 12/15F 12/16F 12/17F 12/1412/1412/14 12/15F 12/16F 12/17F Cash Flows from Op Activities 311 768 907 917 P/E (x) - 24.5 21.3 20.3 Net Profit -80 391 451 474 P/CF (x) 19.0 10.1 8.8 8.8 Non-Cash Income and Expense 440 485 558 528 P/B (x) 0.7 0.8 0.7 0.7 Depreciation 444 613 639 639 EV/EBITDA (x) 13.9 10.0 8.0 7.5 Amortization 89 119 91 70 EPS (W) -1,426 5,134 5,919 6,217 Others -93 -247 -172 -181 CFPS (W) 6,118 12,448 14,339 14,240 Chg in Working Capital 10 8 24 32 BPS (W) 164,775 167,846 172,766 177,984 Chg in AR & Other Receivables 267 -7 -37 -50 DPS (W) 1,000 1,000 1,000 1,000 Chg in Inventories 140 -116 -34 -46 Payout ratio (%) -85.6 17.6 15.2 14.5 Chg in AP & Other Payables -213 -45 17 23 Dividend Yield (%) 0.9 0.8 0.8 0.8 Income Tax Paid ---50 -505050 ---112-112112112 ---135-135135135 ---142-142142142 Revenue Growth (%) 59.7 50.4 9.0 5.0 Cash Flows from Inv Activities -328 250 -507 -546 EBITDA Growth (%) 44.2 44.0 16.3 -0.7 Chg in PP&E -434 -586 -400 -400 Operating Profit Growth (%) - 94.4 103.6 5.0 Chg in Intangible Assets -3 -1 0 0 EPS Growth (%) - - 15.3 5.0 Chg in Financial Assets -1,896 824 -107 -146 Accounts Receivable Turnover (x) 7.6 9.1 9.1 9.2 Others 2,0052,0052,005 131313 000 000 Inventory Turnover (x) 8.5 10.0 10.0 10.0 Cash Flows from Fin Activities -84 62 -70 -70 Accounts Payable Turnover (x) 13.3 16.2 16.3 16.4 Chg in Financial Liabilities 594 107 0 0 ROA (%) -0.6 2.4 2.7 2.7 Chg in Equity 3,886 0 0 0 ROE (%) -0.9 3.1 3.5 3.5 Dividends Paid -83 -70 -70 -70 ROIC (%) 1.4 2.1 4.3 4.8 Others ---4,481 -4,4814,4814,481 252525 000 000 Liability to Equity Ratio (%) 35.0 38.0 37.7 37.6 Increase (Decrease) in Cash -103 1,394 627 599 Current Ratio (%) 156.8 170.2 194.0 215.3 Beginning Balance 730 628 2,021 2,649 Net Debt to Equity Ratio (%) 0.6 -2.9 -7.9 -12.4 Ending Balance 628628628 2,0212,0212,021 2,6492,6492,649 3,2483,2483,248 Interest Coverage Ratio (x) 1.7 2.8 5.6 5.8 Source: Company data, KDB Daewoo Securities Research estimates

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APPENDIX 1

Important Disclosures & Disclaimers 222-2---YearYear Rating and Target Price History

Company (Code) DateDateDate RatingRatingRating Target Price Company (Code) DateDateDate RatingRatingRating Target Price LG Chem(051910) 05/26/2015 Buy 360,000 Samsung SDI(006400) 05/26/2015 Buy 175,000 04/19/2015 Buy 330,000 04/28/2015 Buy 156,000 04/01/2015 Buy 300,000 02/02/2015 Buy 163,000 01/26/2015 Buy 270,000 01/23/2015 Buy 150,000 10/20/2014 Buy 300,000 No Coverage 10/05/2014 Buy 330,000 10/31/2014 Buy 180,000 07/20/2014 Buy 350,000 10/01/2014 Buy 190,000 03/24/2014 Buy 330,000 01/26/2014 Buy 200,000 01/27/2014 Buy 350,000 10/21/2013 Buy 240,000 09/04/2013 Buy 380,000 07/28/2013 Buy 220,000 05/21/2013 Buy 320,000 05/06/2013 Buy 180,000

(W) LG Chem (W) Samsung SDI 400,000 300,000

250,000 300,000 200,000

200,000 150,000

100,000 100,000 50,000

0 0 May 13 May 14 May 15 May 13 May 14 May 15

Stock Ratings Industry Ratings Buy : Relative performance of 20% or greater Overweight : Fundamentals are favorable or improving Trading Buy : Relative performance of 10% or greater, but with volatility Neutral : Fundamentals are steady without any material changes Hold : Relative performance of -10% and 10% Underweight : Fundamentals are unfavorable or worsening Sell : Relative performance of -10% Ratings and Target Price History (Share price ( ─), Target price ( ▬), Not covered ( ■), Buy ( ▲), Trading Buy ( ■), Hold ( ●), Sell ( ◆)) * Our investment rating is a guide to the relative return of the stock versus the market over the next 12 months. * Although it is not part of the official ratings at Daewoo Securities, we may call a trading opportunity in case there is a technical or short-term material development. * The target price was determined by the research analyst through valuation methods discussed in this report, in part based on the analyst’s estimate of future earnings. * The achievement of the target price may be impeded by risks related to the subject securities and companies, as well as general market and economic conditions.

Disclosures As of the publication date, Daewoo Securities Co., Ltd and/or its affiliates do not have any special interest with the subjec t company and do not own 1% or more of the subject company's shares outstanding. 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 and regulations thereof. Opinions expressed in this publication about the subject securities and companies accurately reflect the personal views of the Analysts primarily responsible for this report. Daewoo Securities Co., Ltd. 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. No part of the compensation of the Analysts was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report but, like all employees of Daewoo Securities, the Analysts receive compensation that is impacted by overall firm profitability, which includes revenues from, among other business units, the institutional equities, investment banking, proprietary trading and private client division. 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 Daewoo Securities Co., Ltd. except as otherwise stated herein.

Disclaimers This report is published by Daewoo Securities Co., Ltd. (“Daewoo”), a broker-dealer registered in the Republic of Korea and a member of the Korea Exchange. Information and opinions contained herein have been compiled from sources believed to be reliable and in good faith, but such information has not been independently verified and 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. If this report is 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. Daewoo, its affiliates and their directors, officers, employees and agents do not accept any liability for any loss arising from the use hereof. This report is for general information purposes only and it is not and should not be construed as an offer or a solicitation of an offer to effect transactions in any securities or other financial instruments. 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 and regulations or subject Daewoo and its affiliates to registration or licensing requirements in any jurisdiction should receive or make any use hereof.

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Information and opinions contained herein are subject to change without notice and 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 Daewoo. 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. 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. The price and value of the investments referred to in this report and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur.

Distribution : This report is being distributed by Daewoo Securities (Europe) Ltd. in the United Kingdom only to (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), and (ii) high net worth companies and other persons to whom it may lawfully be communicated, falling within Article 49(2)(A) to (E) of the Order (all such persons together being referred to as “Relevant Persons”). This report is directed only at Relevant Persons. Any person who is not a Relevant Person should not act or rely on this report or any of its contents. United States: This report is distributed in the U.S. by Daewoo Securities (America) Inc., a member of FINRA/SIPC, and is only intended for major institutional investors as defined in Rule 15a-6(b)(4) under the U.S. Securities Exchange Act of 1934. All U.S. persons that receive this document by their acceptance thereof represent and warrant that they are a major institutional investor and have not received this report under any express or implied understanding that they will direct commission income to Daewoo or its affiliates. Any U.S. recipient of this document wishing to effect a transaction in any securities discussed herein should contact and place orders with Daewoo Securities (America) Inc., which accepts responsibility for the contents of this report in the U.S. The securities described in this report may not have been registered under the U.S. Securities Act of 1933, as amended, and, in such case, may not be offered or sold in the U.S. or to U.S. persons absent registration or an applicable exemption from the registration requirements. Hong Kong: This document has been approved for distribution in Hong Kong by Daewoo Securities (Hong Kong) Ltd., which is regulated by the Hong Kong Securities and Futures Commission. The contents of this report have not been reviewed by any regulatory authority in Hong Kong. This report is for distribution only to professional investors within the meaning of Part I of Schedule 1 to the Securities and Futures Ordinance of Hong Kong (Cap. 571, Laws of Hong Kong) and any rules made thereunder and may not be redistributed in whole or in part in Hong Kong to any person. All Other Jurisdictions: Customers in all other countries who wish to effect a transaction in any securities referenced in this report should contact Daewoo or its affiliates only if distribution to or use by such customer of this report would not violate applicable laws and regulations and not subject Daewoo and its affiliates to any registration or licensing requirement within such jurisdiction.

KDB Daewoo Securities International Network

Daewoo Securities Co. Ltd. (Seoul) Daewoo Securities (Hong Kong) Ltd. Daewoo Securities (America) Inc. Head Office Two International Finance Centre 320 Park Avenue 34-3 Yeouido-dong, Yeongdeungpo-gu Suites 2005-2012 31st Floor

Seoul 150-716 8 Finance Street, Central New York, NY 10022 Korea Hong Kong, China United States Tel: 82-2-768-3026 Tel: 85-2-2845-6332 Tel: 1-212-407-1000

Daewoo Securities (Europe) Ltd. Daewoo Securities (Singapore) Pte. Ltd. Tokyo Branch 41st Floor, Tower 42 Six Battery Road #11-01 7th Floor, Yusen Building 25 Old Broad St. Singapore, 049909 2-3-2 Marunouchi, Chiyoda-ku London EC2N 1HQ Tokyo 100-0005 United Kingdom Japan Tel: 44-20-7982-8000 Tel: 65-6671-9845 Tel: 81-3- 3211-5511 Beijing Representative Office Shanghai Representative Office Ho Chi Minh Representative Office 2401A, 24th Floor, East Tower, Twin Towers Room 38T31, 38F SWFC Suite 2103, Saigon Trade Center B-12 Jianguomenwai Avenue 100 Century Avenue 37 Ton Duc Thang St,

Chaoyang District, Beijing 100022 Pudong New Area, Shanghai 200120 Dist. 1, Ho Chi Minh City, China China Tel: 86-10-6567-9299 Tel: 86-21-5013-6392 Tel: 84-8-3910-6000 Daewoo Investment Advisory (Beijing) Co., Ltd. Daewoo Securities (Mongolia) LLC PT. Daewoo Securities 2401B, 24th Floor, East Tower, Twin Towers #406, Blue Sky Tower, Peace Avenue 17 Equity Tower Building Lt.50 B-12 Jianguomenwai Avenue, 1 Khoroo, Sukhbaatar District Sudirman Central Business District Jl.

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