YG Entertainment (122870 KQ) [Summary] Korea’S 2019 Media/Entertainment Competitiveness

Home , Cheetah (rapper), Chorokbaem Media, Eric Nam, IHQ (company), Jin Goo, JTBC

2019 Outlook

Media platform/Content Most favorable environment in history; focus on PR.I.C.E

Analyst Jay Park +822-3774-1652 [email protected] Contents

[Summary] 3

I. Outlook by segment 4

II. Medium-/long-term outlook 10

III. Key points to watch 12

IV. Global peer group (valuation) , Investment strategy 21

V. Top Picks 23 Studio Dragon (253450 KQ) YG Entertainment (122870 KQ) [Summary] Korea’s 2019 media/entertainment competitiveness

Shares to be driven by content sales

(p, US$m) (%) Media/content business model focused on direct sales 500 40 FTSE KOREA MEDIA indx (L) Key words: Global platforms, geopolitics, licensing fees, Domestic ad market growth (R, YoY) blockbusters, investments, leverage Broadcast content export growth (R, YoY)

400 30

Media/content business model focused on ads Key words: Domestic market, ad trends, seasonality, politics/sports 300 20

200 10

100 0

OTT export expansion in 2016-18 Chinese market lull 0 OTT export expansion in 2019F + Chinese market recovery -10 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20

Note: 2017 exports are based on KOCCA’s estimates; 2018 exports based on our estimates Source: Thomson Reuters, KOCCA, Cheil Worldwide, Mirae Asset Daewoo Research

3| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research I. Outlook by segment: Media ads

Ad market: Mobile and • We expect the domestic ad market to grow 3% YoY (similar to GDP growth) to W11.3tr, amid the absence of large- generalist/cable TV scale sporting events. • We forecast positive growth across all segments (except print ads), with mobile, generalist channels and cable TV channel ads are growing channels likely to drive growth. sharply • In 2017, Korea’s total ad spending as a percentage of GDP stood at 0.73% (+0.1%), which is more than 0.1%p lower than that of developed markets. • Key point in 2018: Major comprehensive channels and cable TV channels outperformed the overall broadcasting market, despite major sport events.

Digital ad market exceeded broadcasting ad market in 2016; Total ad spending as % of GDP in 2014-17 mobile ad market to approach broadcasting ad market in 2019 (Wtr) 4.5 TV terrestrial TV terrestrial + Pay-TV 4.0 Mobile Digital 3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F 2019F Source: KOBACO, KOA, CJ ENM, Cheil, Mirae Asset Daewoo Research Source: KOBACO, KOA, CJ ENM, Cheil, Mirae Asset Daewoo Research

4| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research I. Outlook by segment: Media ads

Ad market: Mobile and • Performance gaps between media formats: Digital ads (+8.5% in 2018F, +7.8% in 2019F) show stronger growth generalist/cable TV potential than broadcasting ads (+2.4% in 2018F, +0.4% in 2019F), backed by increasing time spent on digital channels (quantitative) and high cost efficiency, based on customer data analysis (qualitative). channel ads are growing • Digital ads: Mobile shows higher growth potential than PC; video ads are major growth driver; popular content sharply on NAVER TV and YouTube deserve attention • Broadcasting ads: Generalist/cable TV channels have higher growth potential than terrestrial TV channels; CJ ENM and JTBC have seen their viewership steadily rise, while other generalist channels are expanding investments. • In 2019, content competitiveness will likely be confirmed by ad revenue (CJ ENM’s TV ad revenue to grow 15% YoY in 2018), as in 2018.

Traffic by channel implies ample growth potential of digital ads NAVER TV’s Top 75 chart (3rd week of November)

(%) 12 38% No. of programs 15 2014-2017 CAGR 2017-2020F CAGR 10 10 5 0 8 -5 6 -10 -15 4

0 tvN JTBC Mnet MBC KBS SBS

(%, Wbn) Utilization Ad market by media platform * 0.023 (mn views) Third week of November viewership 100 35 80 30 25 60 20 40 15 10 20 5 0 0 TV PC Mobile Newspapers Magazines tvN JTBC Mnet MBC KBS SBS

Note: Penetration and ad market size by format/channel are recalculated based on figures for TV Source: NAVER TV, Mirae Asset Daewoo Research Source: KPT, Cheil Worldwide, Mirae Asset Daewoo Research

5| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research I. Outlook by segment: Broadcasting content

Acquiring time slots from • Acquiring time slots from broadcasters is essential to ensure content competitiveness ( ad revenue) and global  broadcasters is essential sales ( content licensing revenue). • As licensing sales are generated after programming, production companies affiliated with TV channels which for licensing sales have ample room for investments will likely continue to fare well. • TV channels that have enjoyed high viewership and buzz include tvN and JTBC. • Solid earnings at CJ ENM and JTBC ( ample room for investments) vs. terrestrial TV channels’ falling influence • Major productions firms in 2019: Studio Dragon (28 titles for domestic, 2 titles each for Netflix and China) and J Contentree (13 titles)

Annual average audience share in 2013-18: Marked rise for Popular broadcasting content in 2017-18 cable and generalist channels

(%) Goblin (Jan. 2017) Idol School (Jul. 2017) Misty (Feb. 2018) 16 Programming on tvN, CPI 315.1 Programming on Mnet, CPI 278.7 Programming on JTBC

While You Were Sleeping 12 (Sep. 2017) Produce 101 Seasons 2(Jun. 2017) Programming on SBS, Programming on Mnet, CPI 295.8 8 CPI 281.2

0 My Mister (Mar. 2018) CJ E&M JTBC KBS2 MBC SBS Programming on tvN, CPI 272.4 I Live Alone (Mar. 2018) (%) Programming on MBC, CPI 278.6 50 40 30 Mr. Sunshine (Jul. 2018) Are You Human? (Jun. 2018) Programming on tvN, CPI 293.4 Programming on KBS2, CPI 272.1 20 10 100 Days My Prince Something in the Rain (Apr. 18) 0 (Oct. 2018) Produce48 (Jul. 2018) Programming on Mnet, CPI 302.1 Programming on JTBC CATV Comprehensive channel TV terrestrial Programming on tvN, CPI 287.2

Source: AGB Nielsen, CJ ENM, Mirae Asset Daewoo Research Note: Based on the Weekly Content Power Index (CPI) Source: AGB Nielsen, CJ E&M, Mirae Asset Daewoo Research

6| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research I. Outlook by segment: Music

• Market growth forecast (CAGR) in 2017-21: +2.3% for Japanese concerts, -2.7% for domestic album sales, +7% for Solid domestic album digital music and Japanese concert • Negative growth of domestic album sales eased: 1.9mn copies for BTS (August), 1.2mn copies for EXO markets + market share (November) • Korean artists will likely grab an increasing share of the Japanese concert market through 2020: gains 1) Distribution of idol groups by generation; TVXQ’ concert attendees to exceed its previous high; expansion of concert venue size for EXO, SHINee, and NCT 2) BLACKPINK and TWICE to hold dome tours at end-2018 and in early 2019.

Korean artists’ increasing share of the Japanese concert Solid domestic album and Japanese concert markets market (%) (mn persons) Korean artists' concert attendance (L) (%) 25 Past four years CAGR Next four years CAGR (2017~2021) 8 Korean artists' share of the Japanese concert marke (R) 12 20 15 10 5 0 6 -5 -10 8 -15 Japan Concert Japan Digital Japan Album Japan Etc. 4 (%) 9 Domestic Album/Digital Japan Concert 4 6 2

0 0 0 2014 2015 2016 2017 2018F 2019F 2020F 2012 2014 2016 2017 2018F 2020F Source: PwC, Mirae Asset Daewoo Research Source: ACPC, company data, Mirae Asset Daewoo Research

7| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research I. Outlook by segment: Film

Domestic: High cost • 2018 outlook for domestic film market: +1.7% for box office; +5.2% for ATP (price hikes); -3.4% for attendance burden (weak content) • 2019F: +1.3% for box office, +2.4% for ATP (price hikes in 2Q19), -1% for attendance (weak content) • Cycle of sluggish box office  lower content investments  major domestic films’ sluggish performances  weak theater demand continues. • In 2019, labor/rental costs as a percentage of SG&A will likely rise to 57%, due to the minimum wage hike (+10.9%) and higher real estate prices. • Option: More frequent price hike or labor/marketing cost control

Box office growth to continue to slow, despite price hikes Need to hike ticket prices more frequently

(%) (W) 25 ATP YoY 9,000 ATP Attendance YoY BO YoY 20 8,500 +7.5% in ATP +6.2% 15 8,000 1) Price discrimination for various seats and times 2) Increased portion of premium theaters 10 7,500

+17.5% increase in multiplex ATP 5 7,000 in 2009

0 6,500

-5 6,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F2019F 2004-2008 2009-2013 2014-2017 2018-2019F

Source: KOFIC, Mirae Asset Daewoo Research Source: KOFIC, Mirae Asset Daewoo Research

8| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research I. Outlook by segment: Film

A turnaround is also • In 2018, the emerging film markets were also sluggish, due to: 1) the end of price discounts and suspension of needed in overseas local film releases in China; 2) political uncertainties in Turkey; and 3) sporting events in Vietnam. • In 2019, local content and Hollywood film lineup are likely to improve in emerging markets markets • 2019F lineup: Captain Marvel (Mar.), Avengers: Infinity War–Part 2 (May), Toy Story 4 (Jul.), Frozen 2 (Nov.) • From 2020, new Avatar series are expected to be released.

Film market outlook by country: Recovery in China and Reliance on Hollywood is increasing Vietnam and normalization in Turkey Release Distributed Attendance Title Directed by Starring Genre (%) Year by (mn persons) Ha Jung-woo, 2010 The Yellow Sea 20CFox Na Hong-jin action thriler 2.17 60 China Turkey Vietnam Kim Yoon-seok Shin Ha-kyun, 2013 Running Man 20CFox Jo Dong-oh action thriler 1.42 Lee Min-ho 50 2014 Slow Video 20CFox Kim Young-tak Cha Tae-hyun comedy 1.17

Ryoo Seung-bum, 2015 Intimate Enemies 20CFox Im Sang-soo action comedy 0.13 Go Joon-hee 40 The Age of Gong Yoo, 2016 Warner Bros Kim Jee-woon action thriler 7.5 Shadows Song Kang-ho Kwak-Do-won, 30 2016 The Wailing 20CFox Na Hong-jin horror 6.88 Hwang Jung-min Lee Byung-hun, 2017 A Single Rider Warner Bros Lee Joo-young fantasy drama 0.35 Gong Hyo-jin 20 Jang Dong-gun, Action crime 2017 V.I.P Warner Bros Park Hoon-jung 1.37 Lee Jong-suk thriller Lee Yo-won, Comedy 2017 My Little Brother Disney Ma Dae-yun 0.05 10 Jung Man-sik drama 2017 Okja Netflix Bong Joon-ho Jake Gyllenhal Adventure 0.32 Warriors of the Lee Jung-jae, 2017 20CFox Jeong Yoon-cheol historical film 0.84 0 Dawn Yeo Jin-goo Illang: Gang Dong-won, Science fiction 2018 Warner Bros Kim Jee-woon 0.9 The Wolf Brigade Han Hyo-joo action film -10 2018 Champion Warner Bros Kim Yong-wan Ma Dong-seok Action comedy 1.1 The Witch: Part. Kim Da-mi, Mystery 2018 Warner Bros Park Hoon-jung 3.2 The Subversion Park Hee-soon action film -20 Lee Sun-kyun, Action crime 2019 Bad Police Warner Bros Lee Jeong-beom - 2013 2014 2015 2016 2017 2018F 2019F Lee Yoo-Young thriller

Source: KOFIC, CJ CGV, Mirae Asset Daewoo Research Source: Mirae Asset Daewoo Research

9| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research II. Medium-/long-term outlook: Netflix and YouTube replaces TV

TV  OTT • Code cutting, which began in the US a decade ago, is spreading across the world. • TV-replacing OTTs: Following Netflix, Amazon, and YouTube, Walt Disney and Time Warner are also likely to enter the OTT market. Albums  digital • Albums-replacing streaming services: Global music platforms, including Apple Music and Spotify, are enjoying streaming subscriber growth.

Music platforms improve accessibility to global music market OTTs improve accessibility to global video ad market

(US$bn) (US$bn) 25 Music 15 Video ads 46.7x

20.8 X Korean market 12 20 18.8 X Korean market

15 9

10 6 17.5x 6.3 X Korean market

5 3

1Wtr 2.9x W300bn

0 0 Korea Japan North America Europe Korea Japan North America Europe

Source: Bloomberg, Netflix, Loup Ventures, media outlets, Mirae Asset Daewoo Research Source: Media outlets, Mirae Asset Daewoo Research

10| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research II. Medium-/long-term outlook: Global platforms’ increasing influence  content opportunities

TV/albums are being replaced by global platforms: Content market growth

Source: Mirae Asset Daewoo Research

11| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research III. Key area of focus: Profit sharing

Global platforms: • A shift in key beneficiaries of the ongoing media market changes: Platforms  content providers External variable 1) Greater content investments by Netflix  increase in titles licensed to Netflix  higher content prices 2) Increased content offerings to YouTube  higher ad revenue  increase in profit allocated to YouTube content creators • Competition over content sourcing by global platforms is likely to continue in 2019 and beyond. • Going forward, content producers will enhance their bargaining power against global platforms, leading to: 1) Content price increases amid intensifying content-sourcing competition between platforms; and 2) greater profits allocated to content producers.

Virtuous cycle for Netflix: Revenue/profit growth  greater YouTube-bound net revenue: Room for increases in profit content investments  subscriber count growth allocated to content providers in 2019 (US$bn) (US$bn) (US$) 4 Netflix operating profit (L) 16 35 CPM Netflix EBITDA (L) Netflix content investment (R) 28 3 12 CPM increased 21

2 8 14 Expected growth

1 4 7

0 Before VEVO After VEVO Current After MCPA 0 0 2011 2012 2013 2014 2015 2016 2017 2018F 2019F Global top-3 music labels Korean top-7 entertainment companies Source: Bloomberg, Netflix, Loup Ventures, press materials, Mirae Asset Daewoo Research Source: Press materials, Mirae Asset Daewoo Research

12| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research III. Key points to watch: Profit sharing

Outsourced production a • Recently, content production has been further segmented into actual production and production planning. key margin variable for  While large producers are carrying out both production and production planning, small/mid-sized producers are focusing more on production. content producers • Large content producers (with captive channels) are increasingly developing into production platforms, ensuring high GP margins even for outsourced production.

Content production further segmented into actual production and production planning

Source: Mirae Asset Daewoo Research

13| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research III. Key points to watch: Profit sharing

Artists: Key profitability • Key GP margin variables for entertainment firms: 1) Artist activities; 2) profit sharing ratios with artists; and 3) variable for content distribution to global platforms. 1) Artist activities: TVXQ’s comeback in 2H17; Big Bang’s comeback slated for 2H19; growth of new artists (filling entertainment firms the void resulting from the aforementioned artists’ military service) 2) Profit allocation: Increased activities by younger lineups of artists 3) Global platforms: Sharp increase in net revenues from three major global platforms for all of Korea’s top-three entertainment firms (GP margin estimated at 80%) • Possibility of new business investments is low; sector-wide GP margin is likely to trend upwards (31.6% in 2016  38.1% in 2019F Global platforms-bound revenue and greater artist activities It now takes less time for Korean artists to land dome tours to boost sector GP margin (%) (%) 50 SM 25 Dome/stadium Arena/hall YG 20 JYP 15 45 SM/YG/JYP total 10 5 40 0 Initial contract term Post-contract renewel 35 (Months) Time from Korean debut to first dome concert 100 Time from Japanese debut to first dome concert 80 30 60 40 20 25 0

20 2014 2015 2016 2017 2018F 2019F Note: Parent-based figures are sued for SM Entertainment. Source: Mirae Asset Daewoo Research Source: Mirae Asset Daewoo Research

14| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research III. Key points to watch: International opportunities

Intensifying content- • Netflix and Amazon: Concentrating on market expansion; cord-cutting is losing steam in the US (decline in cable TV subscribers and growth in OTT subscribers are both slowing down) sourcing competition • YouTube: Increased production of original premium content; showing greater interest in K-POP content (e.g., BTS documentary) between platforms to • OTT platform launch by traditional media giants expected in 2H19: Disney’s “Disney+” AT&T’s Warner Brothers Digital Networks benefit content (WBDN) • Intensifying content-sourcing competition among platforms will likely drive up the value of both content and content producers. producers • Platform competition is highly likely to persist: Traditional media players have ample room for content investments, supported by stable cash flows, and strong content-production capabilities.

Video platform market competition to intensify further in 2019 Content price uptrend to continue

(US$bn) (Wbn) (%) 14 2017 35 Estimated price (L) 75 2018F % of production costs (R) 30 70 12

25 65 10

20 60 8

15 55 6 10 50

4 5 45

2 0 40 Stranger Man to Man A Korean Singing in Live (3/18-) Mr. Memories 0 (4/17-) (4/17-) Odyssey the Rain Sunshine of the Netflix Amazon Hulu Apple HBO (12/17-) (3/18-) (7/18-) Alhambra Source: Mirae Asset Daewoo Research Source: Press materials, Mirae Asset Daewoo Research

15| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research III. Key points to watch: International opportunities

Platform expansion • 93 of the world’s most-viewed YouTube videos of all time are music videos. offers new opportunities • The combined YouTube-bound net revenue of Korea’s top-three entertainment firms has been on a rapid rise, (W6bn in 2016  W11bn in 2017  W17bn in 2018F). to entertainment • We estimate SM Entertainment’s net revenue from three major global platforms (YouTube, Apple Music, and agencies Spotify) at W10bn for 2016, W14bn for 2017, and W21bn for 2018.

YouTube-bound net revenue projections for 10 most-viewed YouTube videos of all time top-three entertainment firms

View View (Wbn) # Title Artists count Uploaded # Title Artists count Uploaded (bn) (bn) 14 2016 2017 1H18 2018F 2019F 2020F

Enrique Luis Fonsi featuring Iglesias featuring 1 Despacito 5.72 17.1 11 Bailando 2.64 14.4 Daddy Yankee Descemer Bueno and 12 Gente De Zona 1H18 revenue is 53% of 2017 Thinking 2 Shape of You Ed Sheeran 3.91 17.1 12 Ed Sheeran 2.54 14.10 Out Loud 1H18 revenue is revenue 10 Wiz Khalifa featuring 88% of 2017 1H18 revenue is 3 See You Again 3.87 15.4 13 Counting Stars OneRepublic 2.53 13.5 Charlie Puth revenue 112% of 2017 revenue Mark Ronson Katy 4 Uptown Funk 3.34 14.11 14 Dark Horse 2.46 14.2 8 featuring Bruno Mars Perry featuring Juicy J

Masha and the Bear Major Lazer and DJ 5 Get Movies 3.31 12.1 15 Lean On 2.45 15.3 : Recipe for Snake featuring MØ 6 Disaster

6 Gangnam Style Psy 3.24 12.7 16 Hello Adele 2.43 15.10 4 7 Sorry Justin Bieber 3.03 15.10 17 Blank Space Taylor Swift 2.37 14.11

Shakira featuring 8 Sugar Maroon 5 2.81 15.1 18 Chantaje 2.28 16.11 Maluma 2

All About 9 Shake It Off Taylor Swift 2.68 14.8 19 Meghan Trainor 2.24 14.6 That Bass 0 Closer The Chainsmokers 10 Roar Katy Perry 2.66 13.9 20 2.2 16.7 (Lyric video) featuring Halsey SM YG JYP

Source: YouTube, Mirae Asset Daewoo Research Source: Mirae Asset Daewoo Research

16| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research III. Key points to watch: International opportunities

Platform expansion • YouTube is rapidly eating into the market shares of traditional media in the global ad market. offers new opportunities • Upside to cost per thousand impressions (CPM) for domestic entertainment firms is 2.5 times greater than that of global peers. to entertainment • Streaming services like Apple Music and Spotify are also exhibiting strong top-line growth (thanks to market agencies expansion), offsetting sluggish album sales.

Q: YouTube view count is on a secular uptrend, but K-Pop P: Increased possibility of CPM growth content boasts steeper view count growth (W) (mn views) 6 Net revenue per view 1,500 SM (SMTOWN) 5 JYP (JYP Entertainment + TWICE) 4 YG (YG ENTERTAINMENT + BLACK PINK + iKON + WINNER) Big Hit (ibighit + BangtanTV) 3 1,200 2 1 0 900 PewDiePie SM,YG,JYP total

2017 views (L) 2017 net sales (R) (mn views) (Wbn) 600 5,500 15

4,400 12

3,300 9 300 2,200 6 View count forecast

1,100 3 0 0 0 4Q15 2Q16 4Q16 2Q17 4Q17 2Q18 4Q18F 2Q19F 4Q19F 2Q20F 4Q20F PewDiePie SM,YG,JYP total

Note: PewDiePie is the world’s most famous “personal” YouTuber (in terms of 107 revenue) Source: Mirae Asset Daewoo Research Source: YouTube, Mirae Asset Daewoo Research

17| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research III. Key points to watch: International opportunities

Non-English-language • Luis Fonsi’s Despacito video has established a new record, with the clip reaching 5.7bn views on YouTube, followed by Shape of You (3.9bn views), and See You Again (3.9bn). content makes a smash • The Despacito video initially gained great popularity in Latin America, with Justin Bieber’s remix version also proving popular in hit on YouTube other regions (e.g., US) three months later. • The recent BTS-triggered popularity of K-pop has led to an increase in collaborations between global and Korean artists • YG Entertainment’s BLACKPINK signed a partnership deal with Universal Music Group on October 2018. • BLACKPINK has already gained worldwide recognition with its smash hit song DDU-DU DDU-DU (500mn YouTube views) and its Dua Lipa collaboration, “Kiss and Make Up” (15mn subscribers). Virtuous cycle for Netflix: Revenue/profit growth  greater YouTube-bound net revenue: Room for changes to profit content investments  subscriber count growth sharing ratio Chart Title

(%) Cumulative K-Pop YouTube Date Global artists Title 25 Distribution by genre Artist view count (‘mn) Wendy 2018-10-19 John Legend Written in the Stars 7.5 (Red Velvet) 20 2018-10-18 BLACKPINK Dua Lipa Kiss and Make Up 52.8

2018-09-06 BTS Nicki Minaj IDOL 265.7 15 If You're Over Me 2018-07-05 Key (Shinee) Years & Years 15.4 (Remix ft. Key)

2017-11-24 BTS Steve Aoki MIC Drop 381.1 10

2017-01-27 Tablo, Eric Nam Gallant Cave Me In 7.9

Far East Movement, 2016-10-14 Chanyeol (EXO) Freal Luv 31.3 5 Marshmello

2016-04-29 DEAN Eric Bellinger I'm Not Sorry 7.7

0 Bruno Mars 2016-02-22 Taemin (Shinee) Press Your Number 10.3 Hip-Hop Rock Pop R&B Latin Country EDM World Others

Source: Statista, Abacaba YouTube Channel, Mirae Asset Daewoo Research Source: Mirae Asset Daewoo Research

18| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research III. Key points to watch: China-bound sales showing signs of recovery • Drama: Opportunities for drama licensing to both Netflix and China, plus the production of original content for both Netflix and China, have become much bigger; for Chinese platforms, Korean dramas are attractive for their Exports to China are greater cost effectiveness. • Signals for resuming sales to China: Following the licensing sale of Misty in July, Something in the Rain and likely to resume growth Memories of the Alhambra were licensed to China in September and November, respectively. • Once the ban on Korean content is completely lifted, simultaneous broadcast rights for new content (which is expected to be priced similarly to licensing sales to Netflix) and licenses for old content could be sold in bundles. • Studio Dragon: Margins from tentpole content is expected to rise to up to 90% from the current levels of 40%-or- below, in line with increasing content distribution in China. • J Contentree: Expectations for revenue from tentpole content, which is scheduled to be aired in 2H19, are growing; the combined value of old content licensing sale exceeds W10bn.

Tencent Video and Baidu’s iQiyi in fierce competition for Chinese OTTs’ licensing of Korean dramas securing content Price per Selling price/ (%) Title episode Broadcast Producer Production cost 16 Weekly avg. app utilization (L) 120 (Wmn) Weekly avg. app launches (R) Descendants of the Sun 250 20% Feb. 2016 NEW 14 100 Moon Lovers : Scarlet 400 60% Aug. 2016 BaramiBunda 12 Heart Ryeo Samhwa Networks, 80 Uncontrollably Fond 300 50% Sep. 2016 10 Tencent Video and Baidu’s iQiyi IHQ

are neck-and-neck Legend of the Blue Sea 500 50% Nov. 2016 Studio Dragon 8 60

Goblin 600 60% Dec. 2016 Studio Dragon 6 40 Saimdang, Memoir of 270 30% Jan. 2017 Group Eight 4 Colors While You Were 20 250 45% Sep. 2017 IHQ 2 Sleeping Feb. 2018 J Contentree, Misty 30%~40% 0 0 (Jul. 2018) JTBC CH Apr. 2018 J Contentree, Something in the Rain 30%~40% (Sep. 2018) SNP Media

Memories of the Studio Dragon, ? Dec. 2018 (?) Alhambra Chorokbaem Media

Note: Weekly average app utilization is based on the number of active users on Android; Weekly Note: Legend of the Blue Sea and Goblin have not been sold. average app launches are based on the weekly number of active users in China Source: Media reports, Mirae Asset Daewoo Research Source: Cheetah Mobile, Mirae Asset Daewoo Research

19| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research III. Key points to watch: China-bound sales showing signs of recovery

• Drama: China-bound licensing sale and original drama production targeted at the Chinese market are expected Growing expectations for to boost drama producers’ margins to above 15%. • Studio Dragon scheduled to produce two original dramas for Chinese OTTs in 2019  Orders expected to original drama increase further production and concert • Music: Long-term growth potential of the digital music market + short-term earnings from concerts + TV appearances tours • A top-tier artist is expected to generate over W30bn in revenue from TV programs and ads annually; revenue from concerts is estimated at W1bn per show; K-pop bands that will be immediately available for concerts include Big Bang (after November 2019), EXO, and iKON

Studio Dragon: China-bound licensing sale and original drama Major entertainment agencies’ 2019F OP and GP per Production to boost earnings artist/group (Wbn) (Wbn) 90 Revenue from China-bound original production 120 2019F operating profit forecast Revenue from China-bound licensing sale 100 80 80 70 60 30 60 40 50 20 40 0

30 47 20

10 2.5 0 0 2017 2018F 2019F

Source: Mirae Asset Daewoo Research Note: Based on estimates for top-tier actors/singers; assuming15 ads and 20 concerts Source: Mirae Asset Daewoo Research

20| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research IV. Global peer group (valuation)

Global peer valuation

Market Revenue Operating profit Net profit ROE P/E P/B EV/EBITDA cap. 18F 19F 18F 19F 18F 19F 18F 19F 18F 19F 18F 19F 18F 19F

CJ ENM 4,813 3,803 4,533 299 387 224 303 12.5 14.8 16.9 14.2 1.9 1.7 10.1 9.7 CJ CGV 852 1,823 2,000 84 111 2 49 1.4 13.8 NA 17.4 2.6 2.3 8.6 7.7 SBS 381 851 765 1 35 5 33 0.9 5.5 76.1 11.7 0.7 0.6 10.8 4.5 Studio Dragon 3,017 386 511 58 102 48 82 12.3 17.7 62.0 36.5 7.2 6.1 24.8 16.9 J Contentree 710 511 596 44 63 23 33 11.7 12.8 28.6 22.4 2.8 2.5 10.1 8.2 SM Entertainment 1,243 582 706 51 64 37 48 9.6 10.6 32.7 25.7 2.9 2.6 15.7 13.5 YG Entertainment 737 283 330 11 25 8 21 2.4 5.9 92.2 35.4 2.3 2.1 33.7 22.0 JYP Entertainment 1,212 127 159 31 47 24 39 24.7 29.5 48.8 30.5 10.3 7.7 34.2 23.8 Walt Disney 193,673 70,200 72,258 16,726 17,162 12,133 13,072 20.5 18.6 16.1 15.5 3.1 2.7 11.1 10.6 Comcast 195,977 102,984 112,154 21,937 23,727 13,741 14,349 16.5 15.9 14.9 13.7 2.4 2.1 8.0 7.5 21C Fox 102,058 35,407 37,489 7,462 8,113 4,311 4,635 17.5 15.6 24.5 21.8 3.2 2.9 14.3 13.4 Netflix 133,139 17,851 22,403 1,875 2,957 1,336 2,117 25.7 28.0 90.9 60.1 23.6 16.6 61.7 40.9 Zhejiang Huace Film & TV 2,970 1,053 1,267 144 183 125 160 10.5 12.2 23.5 18.4 2.4 2.1 19.5 15.4 Fuji Media Holdings 4,072 6,298 6,320 266 279 240 251 3.4 3.3 16.1 15.6 0.6 0.5 10.4 9.9 AMC Ent. 1,575 6,132 6,332 304 373 -41 37 -1.0 2.3 NA 42.4 1.0 0.9 7.2 6.9 CINEMARK 4,897 3,536 3,675 488 486 284 316 17.6 17.7 17.9 15.8 2.9 2.6 8.0 7.6 CINEWORLD 5,585 4,830 5,434 636 790 292 509 13.6 13.6 13.7 11.3 1.2 1.1 9.5 7.9 Wanda Cinema Line 6,599 2,559 2,998 359 434 295 362 14.1 15.0 19.5 15.9 3.0 2.6 13.0 10.5 Hengdian Ent. 1,776 477 559 78 97 66 80 17.4 17.8 26.9 22.3 5.0 4.2 16.2 12.9 Jinye Media 616 383 415 47 52 39 46 10.9 10.8 16.1 13.9 1.9 1.7 NA NA Live Nation Ent. 12,537 11,835 12,796 325 457 -15 80 4.0 4.5 815.8 113.1 8.6 6.5 15.1 13.5 Madison Square Garden 6,724 1,839 1,927 24 71 5 21 0.8 1.7 364.7 129.0 2.2 2.2 25.3 20.8 Avex Group 678 1,644 1,692 79 88 41 46 8.5 NA 15.3 13.7 1.3 1.2 NA NA

21| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research IV. Investment strategy

• Media/ads: Growth of advertising media is diverging by channel; companies that are successfully defending Platforms: Attractive negative growth of TV ads and expanding exposure to digital channels are attractive. valuation • Film: Concerns over global box office slowdown are already priced in; share prices will likely rebound on the Content: Highly easing of risks (costs, F/X rates, etc.) and success of films. favorable environment • Drama: Sales to Netflix (both licensing and original) are smoothly leading to higher sales in China and other global markets; Valuation is expected to reach at least previous highs. • Entertainment agencies: Expectations for both top-line and profit growth are increasing (for the first time in 10 years); average P/E is expected to rise to 40x. Entertainment agencies: Expectations for both top-line and Studio Dragon’s P/E is expected to rise to previous high levels profit growth are rising (x) (x) 55 P/E (12MF) 90 Combined P/E Previous high 12MF P/E of 49.7x Korea/Japan profit ( ) Korea/Japan Korea/Japan profit (-) Korea/Japan profit ( ) (Announcement of licensing sale of Mr. Sunshine to Netflix) Expectations for Japan profit (-) Expectations for China Global market 50 business ( ) Expectations business ( → ) expectations ( ) for Japan Chinese market expectations ( → ?) 60 business (-) 45

Earnings growth and expected target P/E of 40x 40 30

0 30 09 10 11 12 13 14 15 16 17 18 19 20 18.1 18.3 18.5 18.7 18.9 18.11

Source: Mirae Asset Daewoo Research Source: Mirae Asset Daewoo Research

22| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research Studio Dragon (253450 KQ)

Long-term plans are becoming reality

Investment points (Maintain) Buy • Studio Dragon is the key beneficiary of growing global demand for video content. • Key strengths include: 1) financial capabilities to invest heavily in content, thanks to the captive market; and 2) Target Price (12M, W) 153,00060,000 superior human resources. • Competition in the platform market is expected to intensify for a while with the expected entry of traditional media firms in the US in 2019. Share Price (11/16/18, W) 108,70041,550 • Tentpoles like Memories of the Alhambra (licensed to both China and Netflix) and Asadal Chronicles await release in December 2018 and 1Q19, respectively. Expected Return 44%41% • The production of two original dramas for Chinese OTTs in 2019 is expected to boost orders in China. • In 2019, revenue and operating profit are expected to grow 48% and 103%, respectively; China-bound OP (18F, Wbn) 1256 licensing and original drama sales are expected to generate positive operating leverage. Consensus OP (18F, Wbn) 1158 Risk factors EPS Growth (18F, %) -57.261.5 • Uncertainties over the success of dramas and diplomatic dynamics Market EPS Growth (18F, %) 10.7 P/E (18F, x) 104.364.1 Market P/E (18F, x) 8.5 KOSDAQ 690.18 Market Cap (Wbn) 3,048 170210 FY (12.) 12/14 12/15 12/16 12/17 12/18F 12/19F Market Cap (Wbn) 756 YGStudio Entertainment Dragon FY (12.) 12/14 12/15 12/16 12/17 12/18F 12/19F 160 Shares Outstanding (mn) 2028 190 KOSDAQKOSDAQ Revenue (Wbn) 1560 1930 322196 350287 287387 300604 150 Free Float (%) 62.723.9 OP (Wbn) 220 220 11132 2433 1256 11825 170 140 Foreign Ownership (%) 14.72.4 OP margin (%) 14.1- 11.4- 56.69.9 11.56.9 14.54.2 19.58.3 130150 Beta (12M) 0.701.13 NP (Wbn) 190 280 190 1824 488 2194 120 52-Week Low 57,800 130 EPS (W) 0 0 0 1,050 1,696 3,344 52-Week Low 27,000 110 EPS (W) 1,290 1,700 1,094 931 398 1,052

52-Week High 119,80046,700 100110 ROE (%) 13.40.0 14.70.0 7.70.0 5.79.5 12.12.3 20.25.8 (%) 1M 6M 12M 90 P/E (x) 34.3- 26.2- 25.9- 31.061.9 104.364.1 39.532.5 90 Absolute -1.88.1 53.017.0 24.60.0 80 P/B (x) 4.1- 3.6- 1.8- 1.64.9 2.37.3 2.26.0 70 Relative 14.5 44.2 0.0 70 Div.Yield (%) - - - 0.0 0.0 0.0 Relative 4.1 88.5 40.8 17.11 18.3 18.7 18.11 Div.Yield (%) 0.6 0.8 0.7 0.5 0.4 0.4 Note: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Source: YGStudio Entertainment, Dragon , Mirae Mirae Asset Asset Daewoo Daewoo Research Research estimates estimates

23| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research Studio Dragon (253450 KQ)

Comprehensive Income Statement (Summarized) Statement of Financial Condition (Summarized) Forecasts/Valuations (Summarized)

(Wbn) 12/16 12/17 12/18F 12/19F (Wbn) 12/16 12/17 12/18F 12/19F 12/16 12/17 12/18F 12/19F Revenue 196 287 387 604 Current Assets 81 290 299 431 P/E (x) - 61.9 64.1 32.5 Cost of Sales 0 240 316 466 Cash and Cash Equivalents 12 51 201 264 P/CF (x) - 21.2 25.3 16.1

Gross Profit 196 47 71 138 AR & Other Receivables 39 55 55 95 P/B (x) - 4.9 7.3 6.0 SG&A Expenses 58 14 15 19 Inventories 0 1 1 2 EV/EBITDA (x) - 22.1 23.6 14.5 Operating Profit (Adj) 111 33 56 118 Other Current Assets 30 183 42 70 EPS (W) 0 1,050 1,696 3,344 Operating Profit 111 33 56 118 Non-Current Assets 161 170 198 217 CFPS (W) 1,735 3,068 4,302 6,731 Non-Operating Profit -47 -3 5 2 Investments in Associates 0 0 0 0 BPS (W) 6,176 13,141 14,847 18,191 Net Financial Income -1 -1 4 4 Property, Plant and Equipment 1 1 1 1 DPS (W) 0 0 0 0 Net Gain from Inv in Associates 0 0 0 0 Intangible Assets 124 128 150 167 Payout ratio (%) 0.0 0.0 0.0 0.0 Pretax Profit 64 30 61 120 Total Assets 242 459 497 649 Dividend Yield (%) - 0.0 0.0 0.0

Income Tax 1 6 14 26 Current Liabilities 84 91 81 138 Revenue Growth (%) - 46.4 34.8 56.1 Profit from Continuing Operations 8 24 48 94 AP & Other Payables 20 32 32 54 EBITDA Growth (%) - -44.4 63.5 58.7 Profit from Discontinued Operations 0 0 0 0 Short-Term Financial Liabilities 8 10 0 0 Operating Profit Growth (%) - -70.3 69.7 110.7 Net Profit 0 24 48 94 Other Current Liabilities 56 49 49 84 EPS Growth (%) - - 61.5 97.2 Controlling Interests 0 24 48 94 Non-Current Liabilities 21 0 0 1 Accounts Receivable Turnover (x) 5.3 6.2 7.0 8.1 Non-Controlling Interests 0 0 0 0 Long-Term Financial Liabilities 20 0 0 0 Inventory Turnover (x) 0.0 443.0 298.8 344.1 Total Comprehensive Profit 8 24 47 94 Other Non-Current Liabilities 1 0 0 1 Accounts Payable Turnover (x) 0.0 40.5 52.0 56.7 Controlling Interests 8 24 47 94 Total Liabilities 106 91 81 139 ROA (%) 0.0 6.8 9.9 16.4

Non-Controlling Interests 0 0 0 0 Controlling Interests 136 368 416 510 ROE (%) 0.0 9.5 12.1 20.2 EBITDA 133 74 121 192 Capital Stock 11 14 14 14 ROIC (%) 72.2 15.6 21.9 41.5 FCF (Free Cash Flow) -13 -7 65 151 Capital Surplus 115 320 320 320 Liability to Equity Ratio (%) 77.8 24.7 19.5 27.2 EBITDA Margin (%) 67.9 25.8 31.3 31.8 Retained Earnings 8 32 80 173 Current Ratio (%) 96.4 319.6 370.5 312.0 Operating Profit Margin (%) 56.6 11.5 14.5 19.5 Non-Controlling Interests 0 0 0 0 Net Debt to Equity Ratio (%) 12.1 -49.4 -48.4 -51.8 Net Profit Margin (%) 0.0 8.4 12.4 15.6 Stockholders' Equity 136 368 416 510 Interest Coverage Ratio (x) 129.7 19.0 1,240.3 0.0

Source: Studio Dragon , Mirae Asset Daewoo Research estimates

24| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research YG Entertainment (122870 KQ)

Biggest beneficiary of growing clout of global media platforms

Investment points (Maintain) Buy • Among the three major entertainment firms in Korea, YG Entertainment stands out as the strongest potential beneficiary from the growing clout of global music and video platforms. Target Price (12M, W) 60,000 • For BLACKPINK, fan loyalty remains strong in Southeast Asia; monetization from 15mn subscribers for YouTube channel is progressing. BLACKPINK is making forays into the North American and European markets, in partnership with Universal Share Price (11/16/18, W) 41,550 • Music Group. • Core businesses: Sluggish earnings are expected through end-2019, due to the absence of Big Bang; the Expected Return 44% strong rises of BLACKPINK, iKON, and WINNER are positive. • Content: The business is expected to depress earnings in the short term (combined losses of W9.6bn over the OP (18F, Wbn) 12 past four quarters); earnings contribution is expected to improve over the long term, as competitiveness strengthens. Consensus OP (18F, Wbn) 11 The company expects to add a new boy group to its artist line-up through the in-house program Treasure EPS Growth (18F, %) -57.2 • Box. Market EPS Growth (18F, %) 10.7 Risk factors P/E (18F, x) 104.3 Market P/E (18F, x) 8.5 • Human (artist) risks KOSDAQ 690.18

170 Market Cap (Wbn) 756 YG Entertainment FY (12.) 12/14 12/15 12/16 12/17 12/18F 12/19F 160 Shares Outstanding (mn) 20 KOSDAQ Revenue (Wbn) 156 193 322 350 287 300 150 Free Float (%) 62.7 OP (Wbn) 22 22 32 24 12 25 140 Foreign Ownership (%) 14.7 OP margin (%) 14.1 11.4 9.9 6.9 4.2 8.3 130 Beta (12M) 0.70 NP (Wbn) 19 28 19 18 8 21 120

52-Week Low 27,000 110 EPS (W) 1,290 1,700 1,094 931 398 1,052

52-Week High 46,700 100 ROE (%) 13.4 14.7 7.7 5.7 2.3 5.8 (%) 1M 6M 12M 90 P/E (x) 34.3 26.2 25.9 31.0 104.3 39.5 Absolute -1.8 53.0 24.6 80 P/B (x) 4.1 3.6 1.8 1.6 2.3 2.2 70 Relative 4.1 88.5 40.8 17.11 18.3 18.7 18.11 Div.Yield (%) 0.6 0.8 0.7 0.5 0.4 0.4 Note: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Source: YG Entertainment, Mirae Asset Daewoo Research estimates

25| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research YG Entertainment (122870 KQ)

Comprehensive Income Statement (Summarized) Statement of Financial Condition (Summarized) Forecasts/Valuations (Summarized)

(Wbn) 12/16 12/17 12/18F 12/19F (Wbn) 12/16 12/17 12/18F 12/19F 12/16 12/17 12/18F 12/19F Revenue 322 350 287 300 Current Assets 276 307 340 363 P/E (x) 25.9 31.0 104.3 39.5 Cost of Sales 227 249 199 200 Cash and Cash Equivalents 62 99 181 201 P/CF (x) 11.0 12.9 51.5 39.5

Gross Profit 95 101 88 100 AR & Other Receivables 29 40 34 34 P/B (x) 1.8 1.6 2.3 2.2 SG&A Expenses 63 77 76 75 Inventories 16 18 16 16 EV/EBITDA (x) 10.3 13.8 31.2 19.4 Operating Profit (Adj) 32 24 12 25 Other Current Assets 169 150 109 112 EPS (W) 1,094 931 398 1,052 Operating Profit 32 24 12 25 Non-Current Assets 210 276 238 232 CFPS (W) 2,570 2,245 806 1,052 Non-Operating Profit 1 6 0 1 Investments in Associates 14 14 12 12 BPS (W) 16,007 17,816 17,983 18,897 Net Financial Income 4 7 8 9 Property, Plant and Equipment 61 87 93 89 DPS (W) 200 150 150 150 Net Gain from Inv in Associates 0 0 0 0 Intangible Assets 33 63 60 57 Payout ratio (%) 23.2 22.7 57.7 15.1 Pretax Profit 33 30 12 26 Total Assets 487 584 578 594 Dividend Yield (%) 0.7 0.5 0.4 0.4

Income Tax 19 18 7 8 Current Liabilities 68 73 65 66 Revenue Growth (%) 66.8 8.7 -18.0 4.5 Profit from Continuing Operations 14 12 5 18 AP & Other Payables 32 47 40 41 EBITDA Growth (%) 50.0 -12.8 -38.2 57.1 Profit from Discontinued Operations 0 0 0 0 Short-Term Financial Liabilities 0 2 4 4 Operating Profit Growth (%) 45.5 -25.0 -50.0 108.3 Net Profit 14 12 5 18 Other Current Liabilities 36 24 21 21 EPS Growth (%) -35.6 -14.9 -57.3 164.3 Controlling Interests 19 18 8 21 Non-Current Liabilities 68 78 82 82 Accounts Receivable Turnover (x) 13.0 10.7 8.2 9.2 Non-Controlling Interests -5 -6 -3 -3 Long-Term Financial Liabilities 67 75 79 79 Inventory Turnover (x) 20.5 20.1 16.7 18.9 Total Comprehensive Profit 19 6 6 18 Other Non-Current Liabilities 1 3 3 3 Accounts Payable Turnover (x) 30.8 22.7 18.3 19.7 Controlling Interests 22 13 56 216 Total Liabilities 136 151 146 147 ROA (%) 3.3 2.2 0.8 3.0

Non-Controlling Interests -4 -7 -50 -198 Controlling Interests 281 343 346 364 ROE (%) 7.7 5.7 2.3 5.8 EBITDA 39 34 21 33 Capital Stock 8 9 9 9 ROIC (%) 13.7 7.1 2.0 10.7 FCF (Free Cash Flow) 14 -8 -2 25 Capital Surplus 160 209 209 209 Liability to Equity Ratio (%) 38.9 35.1 33.9 33.0 EBITDA Margin (%) 12.1 9.7 7.3 11.0 Retained Earnings 110 124 126 144 Current Ratio (%) 404.8 419.4 526.1 552.8 Operating Profit Margin (%) 9.9 6.9 4.2 8.3 Non-Controlling Interests 69 89 86 83 Net Debt to Equity Ratio (%) -38.1 -32.8 -42.1 -45.4 Net Profit Margin (%) 5.9 5.1 2.8 7.0 Stockholders' Equity 350 432 432 447 Interest Coverage Ratio (x) 21.4 14.0 5.7 11.9

Source: YG Entertainment, Mirae Asset Daewoo Research estimates

26| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research Coverage overview

Target Price Current Price Company Ticker Rating (12M, W) (11/16/18, W)

Studio Dragon 253450 KQ Buy 153,000 108,700

YG Entertainment 122870 KQ Buy 60,000 41,550

SM Entertainment 041510 KQ Buy 70,000 54,000

JYP Entertainment 035900 KQ Buy 46,500 34,450

J Contentree 036420 KQ Buy 6,500 4,740

CJ CGV 079160 KS Buy 56,000 39,400

SBS 034120 KS Hold - 21,050

Source: Company data, Mirae Asset Daewoo Research

27| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research APPENDIX 1

Important Disclosures & Disclaimers 2-Year Rating and Target Price History

Company (Code) Date Rating Target Price Company (Code) Date Rating Target Price Studio Dragon (253450) 11/08/2018 Buy 153,000 05/13/2018 Trading Buy 30,000 06/22/2018 Buy 150,000 02/22/2018 Trading Buy 32,000 03/06/2018 Buy 110,000 12/05/2017 Buy 39,000 YG Entertainment(122870) 10/24/2018 Buy 60,000 09/05/2017 Buy 35,000 08/12/2018 Buy 43,000 01/02/2017 No Coverage 07/22/2018 Trading Buy 43,000 11/09/2016 Buy 36,000

(W) Studio Dragon (W) YG Entertainment 200,000 80,000

150,000 60,000

100,000 40,000

50,000 20,000

0 0 Nov 16 Nov 17 Nov 18 Nov 16 Nov 17 Nov 18

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 Mirae Asset Daewoo Co., Ltd., 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.

28| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research APPENDIX 1

Equity Ratings Distribution & Investment Banking Services Buy Trading Buy Hold Sell Equity Ratings Distribution 73.71% 13.92% 12.37% 0.00% Investment Banking Services 82.61% 4.35% 13.04% 0.00% * Based on recommendations in the last 12-months (as of September 30, 2018)

Disclosures As of the publication date, Mirae Asset Daewoo Co., Ltd. and/or its affiliates do not have any special interest with the subject 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 or regulations thereof. Each Analyst responsible for the preparation of this report certifies that (i) all views expressed in this report accurately reflect the personal views of the Analyst about any and all of the issuers and securities named in this report and (ii) no part of the compensation of the Analyst was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report. Mirae Asset Daewoo Co., Ltd. (“Mirae Asset Daewoo”) policy prohibits its Analysts and members of their households from owning securities of any company in the Analyst’s area of coverage, and the Analysts do not serve as an officer, director or advisory board member of the subject companies. Except as otherwise specified herein, the Analysts have not received any compensation or any other benefits from the subject companies in the past 12 months and have not been promised the same in connection with this report. Like all employees of Mirae Asset Daewoo, the Analysts receive compensation that is determined by overall firm profitability, which includes revenues from, among other business units, the institutional equities, investment banking, proprietary trading and private client 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 Mirae Asset Daewoo except as otherwise stated herein.

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29| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research APPENDIX 1

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30| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research Mirae Asset Daewoo International Network

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31| 2019 Outlook [Media platform/Content] Mirae Asset Daewoo Research