December 27, 2019 Korea Morning Focus

Company News & Analysis Major Indices Close Chg Chg (%) Electronics (005930/Buy/TP: W70,000) Raise TP KOSPI 2,197.93 7.85 0.36 Profit growth set to resume; Raise TP KOSPI 200 294.06 1.16 0.40 KOSDAQ 652.07 13.16 2.06

Turnover ('000 shares, Wbn) Volume Value KOSPI 562,160 4,795 KOSPI 200 66,940 3,065 KOSDAQ 901,586 4,353

Market Cap (Wbn) Value KOSPI 1,477,950 KOSDAQ 235,648

KOSPI Turnover (Wbn) Buy Sell Net Foreign 604 644 -40 Institutional 1,305 845 460 Retail 2,781 3,249 -467

KOSDAQ Turnover (Wbn) Buy Sell Net Foreign 616 384 232 Institutional 495 167 328 Retail 3,190 3,735 -544

Program Buy / Sell (Wbn) Buy Sell Net KOSPI 787 592 195 KOSDAQ 642 383 258

Advances & Declines Advances Declines Unchanged KOSPI 607 230 71 KOSDAQ 982 261 104

KOSPI Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value 55,400 400 526 Celltrion 189,500 4,500 390 KODEX Kosdaq150 8,300 400 214 Leverage KAL 38,700 -4,200 192 Hynix 94,800 1,000 147

KOSDAQ Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value HLB 101,000 900 226 GemVax 35,400 2,950 205 Celltrion Healthcare 57,300 2,100 117 Energy Solutions 27,250 1,400 111 Telcon RF Pharm. 5,030 -430 105 Note: As of December 26, 2019

This document is a summary of a report prepared by Mirae Asset Daewoo Co., Ltd. (“Mirae Asset Daewoo”) and published on our website. Please review the compliance notices contained in the original report. Information and opinions contained herein have been compiled in good faith from sources deemed to be reliable. However, the information has not been independently verified. Mirae Asset Daewoo makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy or completeness of the information and opinions contained in this document. Mirae Asset Daewoo accepts no responsibility or liability whatsoever for any loss arising from the use of this document or its contents or otherwise arising in connection therewith. Information and opinions contained herein are subject to change without notice. This document is for informational purposes only. It is not and should not be construed as an offer or solicitation of an offer to purchase or sell any securities or other financial instruments. This document may not be reproduced, further distributed or published in whole or in part for any purpose.

Samsung Electronics (005930 KS) Profit growth set to resume; Raise TP

Technology 4Q19 preview: Solid OP of W6.97tr (-35.5% YoY, -10.4% QoQ) Company Report For 4Q19, we forecast Samsung Electronics (SEC) to deliver revenue of W58.69tr (-1.0% December 27, 2019 YoY, -5.4% QoQ) and operating profit of W6.97tr (-35.5% YoY, -10.4% QoQ), up 1.1% and 10.2% from our previous estimates of W58.02tr and W6.32tr, respectively. The market is looking for revenue of W61tr and operating profit of W6.57tr. By business division, we expect operating profit of: 1) W0.63tr (unchanged) for (Maintain) Buy consumer electronics (CE); 2) W2.74tr (including W0.23tr from the networks business; vs. previous estimate of W2.25tr) for IT & mobile communications (IM); 3) W3.18tr (vs. Target Price (12M, W) ▲ 70,000 previous estimate of W3.03tr) for semiconductors; and 4) W0.34tr (unchanged) for display. We estimate overall OP margin at 11.9% (-6.4%p YoY, -0.7%p QoQ). Share Price (12/26/19, W) 55,400 We revised up our operating profit forecasts for the semiconductor and smartphone businesses. For semiconductors, we believe DRAM prices have fallen less than Expected Return 26% previously anticipated. We now see ASP declining 7% QoQ, vs. -9% QoQ previously. For IM, despite the waning impact of the Galaxy Note 10, we expect margins to be better than previously projected, thanks to scale effects. Currency effects should also have a OP (19F, Wbn) 27,576 positive impact. Consensus OP (19F, Wbn) 27,144 Following four straight quarters of YoY declines in 2019, quarterly operating EPS Growth (19F, %) -46.6 profit should grow YoY throughout 2020 Market EPS Growth (19F, %) -33.4 P/E (19F, x) 17.2 For the 2019 full year, we look for revenue of W229.2tr (-6.0%) and operating profit of Market P/E (19F, x) 15.0 W27.58tr (-53.2%). We see semiconductor operating profit plunging from W44.57tr in KOSPI 2,197.93 2018 to W13.75tr in 2019 due to the steep decline in memory prices.

Market Cap (Wbn) 330,726 Looking ahead to 2020, we forecast revenue to grow to W245.56tr (+7.1%) and Shares Outstanding (mn) 6,793 operating profit to improve to W38.88tr (+41.0%). By business division, we expect Free Float (%) 78.8 operating profit of: 1) W2.38tr for CE; 2) W11.19tr for IM; 3) W22.16tr for Foreign Ownership (%) 57.0 semiconductors; and 4) W2.86tr for display. We expect semiconductors to be the Beta (12M) 1.59 primary driver of profit growth. The IM division should benefit from higher ASP on increased sales of foldable smartphones, while the display division should see stronger 52-Week Low 37,450 small-sized OLED revenue from China. 52-Week High 56,700 For semiconductors, we upped our 2020 and 2021 operating profit estimates by 4.8% (%) 1M 6M 12M and 5.2%, respectively (to W22.16tr and W33tr), reflecting changes in the DRAM ASP Absolute 6.9 21.2 44.5 outlook. As SEC’s 1Xnm server DRAM inventory meaningfully comes down, market Relative 3.2 17.0 33.3 prices should rise faster than anticipated.

160 Samsung Electronics KOSPI Maintain Buy and raise TP to W70,000 140 In 2019, SEC’s quarterly operating profit has declined at a rate of roughly 50% YoY. 120 From 1Q20, we believe quarterly operating profit will begin to grow YoY. The IM

100 division’s competitiveness should also strengthen with the release of foldable phones. We maintain our Buy rating on SEC and raise our target price from W60,000 to 80 12.18 4.19 8.19 12.19 W70,000, applying a P/B of 1.71x (30% premium to five-year average; vs. 1.51x, previously).

Mirae Asset Daewoo Co., Ltd.

[ Telecom Equipment/Electronic FY (Dec.) 12/16 12/17 12/18 12/19F 12/20F 12/21F Components] Revenue (Wbn) 201,867 239,575 243,771 229,201 245,561 261,970

Wonjae Park OP (Wbn) 29,241 53,645 58,887 27,576 38,876 52,570 +822-3774-1426 OP Margin (%) 14.5 22.4 24.2 12.0 15.8 20.1 [email protected] NP (Wbn) 22,416 41,345 43,891 21,860 29,985 40,167

Chuljoong Kim EPS (W) 2,735 5,421 6,024 3,218 4,414 5,913 +822-3774-1464 ROE (%) 12.5 21.0 19.6 8.7 11.1 13.5 [email protected] P/E (x) 13.2 9.4 6.4 17.2 12.6 9.4 Young-gun Kim P/B (x) 1.5 1.8 1.1 1.4 1.3 1.2 +822-3774-1448 Dividend Yield (%) 1.6 1.7 3.7 2.6 2.6 2.6 [email protected] Note: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Source: Company data, Mirae Asset Daewoo Research estimates

Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including the U.S. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.

Mirae Asset Daewoo Research Key Universe Valuations December 27, 2019

※All data as of close December 24, 2019, unless otherwise noted.

19F Earnings growth Mkt Cap Price P/E (x) P/B (x) ROE (%) Ticker Company Div Yield OP EPS (Wbn) (W) (%) 19F 20F 19F 20F 19F 20F 19F 20F 19F 20F 005930 Samsung Electronics 330,726 55,400 2.6 -53.2 41.0 -46.6 37.2 17.2 12.6 1.4 1.3 8.7 11.1 000660 SK Hynix 69,015 94,800 1.6 -85.8 150.5 -85.5 140.0 30.5 12.7 1.4 1.2 4.7 10.7 035420 NAVER 29,749 180,500 0.2 -17.8 77.0 -47.3 132.4 87.1 37.5 4.4 3.9 6.3 13.4 005380 Hyundai Motor 26,174 122,500 3.3 49.6 41.9 118.5 48.0 10.5 7.1 0.5 0.4 4.7 6.6 012330 24,875 261,000 1.9 17.9 16.4 24.3 17.1 10.8 9.2 0.8 0.7 7.3 7.9 068270 Celltrion 24,320 189,500 - - - - 0.0 0.0 051910 LG Chem 21,742 308,000 1.3 -55.7 70.9 -72.5 164.0 59.5 22.5 1.4 1.3 2.4 6.1 055550 21,695 45,750 12.3 3.9 10.0 -0.2 6.2 6.3 0.5 0.5 9.1 8.4 005490 POSCO 21,186 243,000 4.5 -23.9 -9.2 37.8 -0.3 9.1 9.1 0.5 0.4 5.3 5.1 105560 KB Financial Group 20,655 49,400 9.3 2.3 12.6 0.9 6.0 5.9 0.5 0.5 9.2 8.5 028260 Samsung C&T 20,202 106,500 1.9 -27.7 39.8 -42.8 17.9 20.8 17.6 0.6 0.6 4.0 3.9 017670 SK Telecom 19,742 244,500 4.1 7.3 -3.5 -60.6 68.2 16.0 9.5 0.8 0.7 5.4 8.8 051900 LG H&H 19,632 1,257,000 0.9 12.8 9.7 16.5 10.7 24.7 22.3 5.4 4.6 20.3 19.1 034730 SK Holdings 18,470 262,500 1.9 -2.8 21.5 -36.6 11.0 13.0 11.7 1.0 0.9 8.2 8.3 000270 Motors 18,282 45,100 2.0 70.4 29.1 79.8 24.5 8.8 7.1 0.6 0.6 7.4 8.5 015760 KEPCO 17,750 27,650 - - - - - 144.8 0.3 0.3 - 0.2 032830 Samsung Life 15,320 76,600 - - - - 0.0 0.0 006400 Samsung SDI 15,300 222,500 0.4 -33.0 108.9 -38.3 99.8 36.2 18.1 1.2 1.1 3.5 6.7 018260 Samsung SDS 15,050 194,500 1.3 10.4 12.3 10.3 11.8 21.7 19.4 2.3 2.1 11.1 11.3 096770 SK Innovation 14,332 155,000 4.1 -42.8 18.2 -68.7 92.4 28.1 14.6 0.8 0.7 2.8 5.4 033780 KT&G 13,400 97,600 4.3 12.8 5.6 17.5 5.1 12.6 12.0 1.5 1.4 12.7 12.6 003550 LG Corp. 12,925 74,900 3.3 -28.0 45.0 -18.4 16.8 8.7 7.4 0.7 0.6 8.1 8.9 035720 12,760 148,000 0.1 184.6 138.3 226.0 114.7 74.1 34.5 2.4 2.3 3.2 6.7 036570 NCsoft 11,789 537,000 1.1 6.0 76.9 33.5 52.9 21.1 13.8 3.6 3.0 21.6 27.0 000810 Samsung F&M 11,702 247,000 - - - - 0.0 0.0 066570 LG Electronics 11,668 71,300 1.1 -4.2 15.6 -39.2 107.1 17.1 8.3 0.9 0.8 5.1 9.9 086790 11,604 38,650 4.6 2.7 14.8 -6.2 4.5 4.8 0.4 0.4 9.2 8.1 090430 AmorePacific 11,487 196,500 0.6 -15.7 30.9 -9.8 31.4 38.3 29.2 2.9 2.7 6.6 8.1 010950 S-Oil 10,718 95,200 0.3 -13.3 197.8 -54.2 948.9 94.0 9.0 1.7 1.4 1.8 17.3 009150 Samsung Electro-Mechanics 9,187 123,000 0.9 -32.8 17.4 -5.4 -2.9 15.4 15.8 1.7 1.6 12.1 10.5 009540 KSOE 8,811 124,500 - 88.1 - -39.1 35.9 58.9 0.8 0.8 2.1 1.3 091990 Celltrion Healthcare 8,247 57,300 - 144.5 435.7 165.0 134.5 50.8 4.6 4.4 3.7 9.3 010130 Korea Zinc 8,067 427,500 2.6 12.2 15.7 25.4 9.3 12.2 11.2 1.2 1.1 10.2 10.3 011170 Lotte Chemical 7,900 230,500 4.6 -46.0 12.7 -54.7 32.3 11.0 8.3 0.6 0.6 5.5 6.9 251270 7,751 90,400 1.8 57.7 14.5 36.9 35.4 25.9 1.6 1.5 4.9 6.3 024110 7,214 12,500 0.6 -0.8 -1.0 -2.3 4.7 4.8 0.4 0.3 8.0 7.3 030200 KT 7,154 27,400 4.0 -2.4 -1.1 -7.8 21.0 11.3 9.3 0.5 0.5 4.7 5.5 032640 LG Uplus 6,265 14,350 4.5 -11.8 10.9 -16.7 15.0 15.6 13.6 0.9 0.9 5.8 6.4 018880 Hanon Systems 6,085 11,400 - - - - 0.0 0.0 267250 5,863 360,000 5.1 -1.6 92.1 74.3 199.2 12.5 4.2 0.7 0.6 6.0 16.5 Holdings 034220 LG Display 5,671 15,850 ------0.4 0.5 - - 086280 5,550 148,000 2.2 22.7 2.0 3.3 34.0 12.3 9.2 1.2 1.1 10.1 12.2 000720 Hyundai E&C 4,749 42,650 1.2 12.4 10.9 42.6 -6.7 8.7 9.4 0.7 0.7 8.3 7.3 029780 Samsung Card 4,594 39,650 11.7 -28.6 1.7 6.8 13.1 12.2 0.7 0.6 1.5 1.6 010140 4,429 7,030 - - - - - 44.9 0.7 0.7 - 1.7 004020 4,257 31,900 2.4 -45.2 39.1 -75.8 289.4 44.2 11.4 0.2 0.2 0.6 2.1 271560 Orion 4,191 106,000 0.6 14.2 7.7 56.5 9.1 19.2 17.6 2.6 2.3 14.4 13.7 004990 4,091 39,000 2.1 91.0 11.9 198.2 20.3 7.5 6.2 0.4 0.4 7.5 8.3 071050 Korea Investment Holdings 4,079 73,200 - - - - 0.0 0.0 023530 Lotte Shopping 3,861 136,500 3.8 -2.6 14.7 - 16.9 16.5 14.1 0.3 0.3 2.0 2.3 Source: Mirae Asset Daewoo Research

Mirae Asset Daewoo Research Market Data December 27, 2019

※All data as of close December 26, 2019, unless otherwise noted.

Other Major Indices Economic Indicators Close Net Chg 1D (%) YTD (%) Close 1D ago 1M ago 1Y ago MSCI Korea* 468.82 -3.28 -0.70 9.30 USD/KRW 1,163.70 1,161.70 1,176.20 1,125.20 KOSPI 2,197.93 7.85 0.36 9.35 JPY100/KRW 1,063.76 1,061.88 1,079.73 1,021.42 KOSDAQ 652.07 13.16 2.06 -2.58 EUR/KRW 1,290.78 1,288.50 1,295.29 1,284.25 Dow Jones* 28,515.45 22.24 3Y Treasury 1.37 1.37 1.48 1.81 S&P 500* 3,223.38 -0.63 -0.02 28.42 3Y Corporate 1.94 1.95 1.99 2.28 NASDAQ* 8,952.88 7.23 0.08 34.31 DDR4 8Gb* 3.03 3.03 2.75 6.36 Philadelphia Semicon* 1,862.20 5.08 0.27 59.80 NAND MLC 64G* 2.37 2.35 2.34 2.71 FTSE 100* 7,632.24 8.65 0.11 13.34 Oil (Dubai)* 66.77 66.21 63.74 53.51 Nikkei 225 23,924.92 142.05 0.60 22.30 Gold* 1,499.10 1,482.50 1,463.60 1,267.50 Hang Seng* 27,864.21 -42.20 -0.15 10.88 Customer deposits (Wbn)* 26,740 26,628 26,458 23,233 Taiwan (Weighted) 12,001.01 -7.12 -0.06 -99.81 Equity type BC (Wbn)(Dec. 23) 85,862 85,893 81,075 84,377 Note: * as of December 24, 2019 Source: KSDA, FnGuide, DRAMeXchange, MSCI

KOSPI Top 10 Foreign Net Buy / Net Sell (Wbn) KOSPI Top 10 Institutional Net Buy / Net Sell (Wbn) Net Buy Net Sell Net Buy Net Sell SEMCO 35.93 Samsung Electronics 57.56 Samsung Electronics 162.46 Hanjin KAL 29.27 Kakao 10.17 KT&G 26.18 Celltrion 49.71 Samsung Electronics (P) 7.09 Hynix 7.24 Hyundai Motor 21.92 Hynix 47.72 KEPCO 6.26 Celltrion 7.02 KT 8.83 23.49 KODEX Kosdaq150 Leverage 6.01 Hyundai Mobis 5.73 KB Financial Group 7.80 Samsung C&T 18.21 KODEX KOSDAQ150 INVERSE 5.97 Feelux 4.61 Amore Pacific 6.60 NAVER 11.47 KODEX 200 5.68 Samsung SDI 4.27 SK C&C 4.85 SEMCO 11.24 LG Chem 4.98 Douzone Bizon 4.15 AK Petrochemical 4.47 KT&G 9.85 Amore Pacific 4.94 KODEX Kosdaq150 Leverage 4.03 KODEX Inverse 4.23 KB Financial Group 9.33 Samsung F&M Insurance 4.48 S-Oil 3.88 LG Household & Health Care 3.92 KODEX Leverage 9.23 S-Oil 3.40 Source: KSDA, FnGuide

KOSDAQ Top 10 Foreign Net Buy / Net Sell (Wbn) KOSDAQ Top 10 Institutional Net Buy / Net Sell (Wbn) Net Buy Net Sell Net Buy Net Sell HLB 14.89 Celltrion Healthcare 2.87 HLB 40.27 ChunLab 5.32 KMW 12.54 CJ ENM 2.76 GemVax 25.05 SK Materials 4.17 Telcon RF Pharm. 10.91 MC Nex 2.38 Mezzion Pharma 13.91 PPI 2.62 GemVax 9.97 Leeno 2.17 Celltrion Healthcare 11.85 Solid Technologies 1.40 Mezzion Pharma 8.09 AfteecaTV 1.99 SangSangIn 9.67 PSK 1.39 EO Technics 7.71 SFA Semicon 1.82 Wonik IPS 8.39 Celltrion 1.35 KH Vatec 4.63 JC Chemical 1.32 CJ ENM 8.03 H&H 1.29 Energy Solutions 4.38 Cafe24 Corp. 1.21 KMW 7.04 Metal-Life 1.27 AP Systems 3.59 TCK 1.09 Alteogen 6.95 Kyungnam Pharm. 1.00 RFHIC 3.58 SFA Engineering 1.03 ViroMed 4.75 Wemade 0.86 Source: KSDA, FnGuide

KOSPI Top 10 by Market Cap (Wbn) KOSDAQ Top 10 by Market Cap (Wbn) Close (W) Chg (W) Mkt Cap Close (W) Chg (W) Mkt Cap Samsung Electronics 55,400 400 330,726 Celltrion Healthcare 57,300 2,100 8,247 Hynix 94,800 1,000 69,015 HLB 101,000 900 4,317 Samsung Electronics (P) 45,300 400 37,277 CJ ENM 158,100 2,200 3,467 NAVER 180,500 -1,500 29,749 PearlAbyss 188,500 4,500 2,455 Samsung Biologics 413,500 -3,500 27,359 78,400 2,100 2,203 Hyundai Motor 122,500 500 26,174 KMW 50,300 1,950 2,002 Hyundai Mobis 261,000 3,500 24,875 SK Materials 184,700 900 1,948 Celltrion 189,500 4,500 24,320 Medy-tox 314,600 12,300 1,829 LG Chem 308,000 -4,500 21,742 ViroMed 85,100 -200 1,822 Shinhan Financial Group 45,750 200 21,695 Paradise 19,450 350 1,769 Source: Korea Exchange