August 25, 2015

KOREA

Sector News & Analysis Major Indices Close Chg Chg (%) Retail (Overweight) KOSPI 1,846.63 16.82 0.92 Focus on stocks positioned for earnings growth KOSPI 200 223.07 1.54 0.70 KOSDAQ 645.43 32.10 5.23

Turnover ('000 shares, Wbn) Volume Value KOSPI 446,401 6,565 KOSPI 200 138,747 4,980 KOSDAQ 512,961 3,301

Market Cap (Wbn) Value KOSPI 1,153,963 KOSDAQ 179,420

KOSPI Turnover (Wbn) Buy Sell Net Foreign 1,707 2,235 -529 Institutional 1,330 1,115 214 Retail 3,490 3,187 303

KOSDAQ Turnover (Wbn) Buy Sell Net Foreign 285 250 35 Institutional 203 155 48 Retail 2,805 2,882 -76

Program Buy / Sell (Wbn) Buy Sell Net KOSPI 1,609 1,841 -232 KOSDAQ 85 69 16

Advances & Declines Advances Declines Unchanged KOSPI 694 145 27 KOSDAQ 993 76 19

KOSPI Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Electronics 1,079,000 0 425 KODEX LEVERAGE 8,400 70 395 Hynix 33,500 2,450 379 KODEX 200 22,305 75 362 KODEX INVERSE 9,050 -45 352

KOSDAQ Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Celltrion 70,500 8,800 183 NaturalendoTech 26,800 3,800 114 Sansung P&C 52,600 3,300 100 Daum Communications 128,300 4,300 79 ilShinbiobase Co., Ltd. 3,840 150 70 Note: As of August 25, 2015

This document is a summary of a report prepared by Daewoo Securities Co., Ltd. (“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. 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. 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.

Retail (Overweight/Maintain)

Focus on stocks positioned for earnings growth

Sector Update ¢ A more selective approach is warranted for 2H August 25, 2015 ¢ Focus on stocks with strong potential for earnings growth ¢ Our top picks are Lotte Himart and HDS; Also watch GS Retail and Emart

Daewoo Securities CCo.,o., Ltd. Focus on earnings [Retail]

Aiden Lee Retail stocks have lately come under pressure alongside a broader selloff in the KOSPI and +822-768-3297 KOSDAQ markets. During this time, retailers that are expected to deliver better earnings [email protected] should see limited downside risks, and eventually stronger upside momentum. Looking at large offline retailers, sales appear to have normalized in July, but given the slow pace of

growth, we believe investors should take a more selective approach. Convenience store operators have continued solid operating earnings, but we think share prices may be at an inflection point. As for home shopping companies, we have yet to see signs of a recovery in

TV channel sales.

Lotte Himart to see strong profit gains once revenue grows

Lotte Himart’s stock has retreated back to the lows seen earlier this year, after earnings growth missed market expectations on disappointing revenue, eroding confidence in future earnings. But despite sluggish revenue in 2Q, operating earnings still improved thanks to profitability enhancement through cost savings. We believe this trend will continue in 2H, with even the slightest increase in revenue driving strong profit gains.

In 2H, we believe Lotte Himart could see revenue growth from the mobile and small household appliance segments. Mobile sales are currently increasing at a 10% rate and should benefit from a low base of comparison in 4Q (due to the introduction of the handset distribution law in 2014). Sales of small household appliances are also growing strongly at nearly 20%, helped by the strategic increase in stock-keeping units (SKU). The growth of small household appliances is especially positive to margins.

Watch department store operators with new store momentum

We believe Hyundai Department Store (HDS) is entering an earnings growth cycle. The new Pangyo Store, which has drawn enormous traffic since its opening last Friday, should become one of HDS’s top-performing stores, driving overall earnings growth from 3Q15 to 2016. Furthermore, the Gimpo premium outlet should begin to meaningfully contribute to earnings in 3Q, while additional store openings are slated through 1H16.

We believe investors should pay attention to later this year, as the company also has strong new store momentum ahead, with retail space expected to increase more than 40% in 2016. We see Emart shares gathering upside momentum around the end of the year, when Emart Mall’s margin improvements are likely to gain pace.

Within convenience store plays, GS Retail looks attractive

We believe convenience store operators, which have so far been the best performers this year, may be reaching an inflection point. While we expect shares to trend higher alongside earnings in the long term, currently high valuations suggest share performances may be more moderate in the near term. Within the convenience store segment, we believe GS Retail’s stock will appreciate further, fueled by the turnaround of the supermarket business on top of the growing convenience store business. The supermarket division’s margins have been recovering on the back of cost reductions, and should continue to improve.

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

Key Universe Valuations August 25, 2015

※All data as of close August 24, 2015, unless otherwise noted.

15F Earnings growth Mkt Cap Price P/E (x) P/B (x) ROE (%) Ticker Company Div Yield OP EPS (Wbn) (W) (%) 15F 16F 15F 16F 15F 16F 15F 16F 15F 16F 005930 158,936 1,079,000 1.4 8.7 6.2 -6.9 8.5 8.5 7.9 1.0 0.9 12.6 12.3 005380 Hyundai Motor 32,491 147,500 2.4 -11.9 8.0 -7.1 2.1 6.2 6.0 0.7 0.6 11.4 10.7 015760 KEPCO 30,493 47,500 2.3 56.6 4.5 266.6 -47.6 3.1 5.9 0.5 0.5 16.9 7.9 000660 SK Hynix 24,388 33,500 1.2 13.1 0.6 8.5 2.8 5.3 5.1 1.1 0.9 22.9 19.4 090430 AmorePacific 19,905 340,500 0.3 42.2 37.5 56.2 35.3 39.7 29.3 7.1 5.8 19.2 21.7 000270 Motors 19,275 47,550 2.4 -4.4 25.0 -0.3 14.9 6.5 5.6 0.8 0.7 13.0 13.7 012330 19,274 198,000 1.7 -10.7 11.1 -10.7 15.1 6.3 5.5 0.7 0.7 12.4 12.8 017670 SK Telecom 19,258 238,500 4.2 3.5 7.3 5.2 5.1 10.2 9.7 1.1 1.0 12.8 12.6 055550 19,063 40,200 - - - - 0.0 0.0 032830 Samsung Life 18,960 94,800 - - - - 0.0 0.0 018260 Samsung SDS 18,609 240,500 0.2 14.3 13.8 12.4 12.2 40.1 35.7 4.1 3.7 10.8 11.0 034730 SK Holdings 16,464 234,000 0.9 23.2 9.0 356.4 4.3 20.1 19.3 3.4 3.0 22.7 19.8 035420 NAVER 16,201 491,500 0.2 12.7 34.4 32.0 35.5 27.0 19.9 5.0 4.0 28.8 29.4 005490 POSCO 15,345 176,000 4.5 -9.6 30.8 124.5 65.9 10.9 6.6 0.4 0.3 3.4 5.5 051910 LG Chem 14,513 219,000 1.8 53.5 26.1 61.5 35.5 11.5 8.5 1.2 1.1 11.2 13.8 033780 KT&G 14,278 104,000 3.4 14.8 -6.3 22.9 -10.5 14.1 15.7 2.2 2.0 17.1 14.1 105560 KB Financial Group 13,464 34,850 - - - - 0.0 0.0 000810 Samsung F&M 12,152 256,500 - - - - 0.0 0.0 051900 LG Household & Health Care 11,807 756,000 0.6 34.8 20.3 34.4 22.6 28.5 23.3 6.6 5.3 26.1 26.0 003550 LG Corp. 9,680 56,100 1.8 23.9 10.0 22.8 7.3 9.5 8.9 0.8 0.7 8.3 8.3 010130 Korea Zinc 9,039 479,000 1.4 3.2 17.4 9.4 17.6 16.5 14.0 1.8 1.6 11.3 12.0 035250 8,739 40,850 2.7 16.8 12.2 25.3 14.2 19.4 17.0 2.8 2.5 15.8 16.4 096770 SK Innovation 8,544 92,400 3.5 - -29.2 - -27.6 6.3 8.7 0.5 0.5 8.8 6.0 086790 7,711 26,050 - - - - 0.0 0.0 035720 Daum 7,691 128,300 0.1 -42.7 105.4 -75.3 115.3 84.9 39.4 3.0 2.8 3.6 7.4 034220 LG Display 7,675 21,450 2.3 47.1 -34.0 49.0 -33.1 5.7 8.5 0.6 0.6 11.3 7.0 011170 Lotte Chemical 7,575 221,000 0.5 348.5 0.4 696.9 6.9 6.5 6.1 1.0 0.9 16.7 15.3 030200 KT 7,442 28,500 1.8 - 2.1 - -15.8 9.5 11.3 0.6 0.6 7.3 5.8 023530 Lotte Shopping 7,274 231,000 0.6 11.3 12.6 37.8 13.4 9.6 8.5 0.4 0.4 4.4 4.8 024110 7,178 12,900 - - - - 0.0 0.0 000830 Samsung C&T 7,155 45,800 1.3 -19.4 12.2 61.9 9.6 16.8 15.3 0.5 0.5 3.3 3.5 088350 Hanwha Life 6,861 7,900 - - - - 0.0 0.0 004020 6,859 51,400 1.5 10.8 4.8 44.4 -4.6 5.4 5.7 0.4 0.4 7.8 7.0 009240 Hanssem 6,837 290,500 0.3 35.1 34.9 35.3 34.3 58.3 43.4 14.4 11.1 30.8 31.8 066570 LG Electronics 6,685 40,850 1.5 -40.8 56.2 31.8 84.9 14.0 7.6 0.6 0.6 4.5 7.9 19745. 009540 6,597 86,800 - - - - 12.6 0.4 0.4 - 3.4 0 021240 Coway 6,540 84,800 3.2 21.1 12.9 30.7 11.9 20.0 17.9 5.5 4.8 31.0 31.8 010950 S-Oil 6,282 55,800 4.9 - -24.6 - -22.9 6.9 8.9 1.1 1.0 17.8 12.2 139480 Emart 6,244 224,000 0.7 -2.7 25.8 111.3 -18.2 10.2 12.5 0.9 0.8 8.7 6.7 086280 6,225 166,000 1.2 3.7 12.3 -16.5 30.0 13.9 10.7 2.0 1.7 15.3 17.5 006400 Samsung SDI 5,302 77,100 1.3 -73.3 859.1 - 45.4 24.8 17.0 0.5 0.5 1.9 2.7 001800 Orion 5,288 885,000 0.7 17.2 9.4 26.9 14.7 25.5 22.2 3.7 3.2 15.7 15.9 051600 KEPCO KPS 5,130 114,000 - - - - 0.0 0.0 097950 CJ CheilJedang 4,893 372,000 0.6 45.4 11.4 201.6 19.3 19.4 16.2 1.7 1.5 9.1 10.1 032640 LG Uplus 4,759 10,900 2.6 26.4 0.7 80.3 3.9 11.6 11.1 1.1 1.0 9.5 9.3 007070 GS Retail 4,605 59,800 1.0 69.0 25.0 67.0 24.3 24.8 19.9 2.5 2.3 10.6 12.1 036570 NCsoft 4,528 206,500 1.9 12.7 22.1 19.7 15.1 16.5 14.3 2.7 2.4 18.8 18.8 008770 4,514 115,000 0.3 39.1 87.5 67.2 124.2 37.4 16.7 5.5 4.2 15.8 28.7 161390 4,416 35,650 1.1 -21.0 13.2 -12.4 12.7 7.2 6.4 0.9 0.8 12.9 13.0 004800 Hyosung 4,372 124,500 0.8 -1.9 -4.4 9.4 -4.9 14.9 15.6 1.4 1.3 10.1 8.8 Source: KDB Daewoo Securities Research

Market Data August 25, 2015

※All data as of close August 25, 2015, unless otherwise noted.

Other Major Indices Economic Indicators Close Net Chg 1D (%) YTD (%) Close 1D ago 1M ago 1Y ago MSCI Korea* 313.79 -9.92 -3.06 -18.85 USD/KRW 1,198.10 1,192.00 1,162.30 1,019.50 KOSPI 1,846.63 16.82 0.92 -4.14 JPY100/KRW 1,011.05 982.24 938.21 978.41 KOSDAQ 645.43 32.10 5.23 16.56 EUR/KRW 1,389.56 1,357.99 1,276.96 1,345.43 Dow Jones* 15,871.35 -588.40 -3.57 -11.00 3Y Treasury 1.71 1.69 1.71 2.57 S&P 500* 1,893.21 -77.68 -3.94 -8.02 3Y Corporate 1.96 1.95 1.95 2.94 NASDAQ* 4,526.25 -179.79 -3.82 -4.24 DDR2 1Gb* 1.15 1.15 1.18 1.58 Philadelphia Semicon* 566.58 -12.01 -2.08 -17.50 NAND 16Gb* 1.52 1.53 1.64 2.37 FTSE 100* 5,898.87 -288.78 -4.67 -9.91 Oil (Dubai)* 42.97 45.94 54.12 99.93 Nikkei 225 17,806.70 -733.98 -3.96 2.29 Gold* 1,153.40 1,159.60 1,085.50 1,278.60 Hang Seng* 21,251.57 -1,158.05 -5.17 -10.92 Customer deposits (Wbn)* 22,034 21,340 21,393 15,346 Taiwan (Weighted) 7,675.64 265.30 3.58 -17.24 Equity type BC (Wbn)(Aug. 21) 78,358 78,161 77,652 77,569 Note: * as of August 24, 2015 Source: KSDA, Wisefn, 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 8.55 Samsung Electronics 93.40 Hynix 59.10 KODEX LEVERAGE 24.42 TIGER SYNTH-CHINA A HYUNDAI WIA 7.01 Hynix 63.50 Hyundai Motor 44.45 23.29 LEVERAGE S-Oil 6.35 SK Telecom 24.14 Kia Motors 30.82 KODEX INVERSE 15.85 Glovis 5.72 Shinhan Financial Group 22.01 Hanmi Pharm 17.38 CHEIL INDUSTRIES 9.38 SK Energy 5.70 KODEX 200 15.87 Shinhan Financial Group 16.31 KT 7.58 Daou Tech. 3.57 13.74 Hyundai Motor (2P) 13.10 Samsung Electronics 7.49 HANKOOK TIRE 3.42 Hyundai Merchant Marine 12.27 Daewoo Securities 12.87 NHN 7.30 Hyundai M&F Insurance 3.36 TIGER200 12.11 TIGER200 11.56 LG Uplus 7.25 KODEX INVERSE 3.35 NHN 9.97 KOREA AEROSPACE 10.70 Dongbu Insurance 7.16 Hyundai Eng. & Cosnt. 2.87 Hana Financial Group 9.43 KINDEX CHINA A CSI300 10.41 Nongshim 6.60 Source: KSDA, Wisefn

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 EO Technics 4.31 CJ E&M 3.60 CJ E&M 5.01 KEBT 3.77 Celltrion 4.08 CJ O Shopping 3.14 SM 4.80 Access Bio 2.46 Media Flex 3.42 i-SENS 2.10 Daum Communications 4.34 Samcholy 1.40 YG Entertainment 2.30 Interpark 2.07 YG Entertainment 3.24 Paradise 1.24 ATTO 2.10 Daum Communications 2.03 ASTK 2.96 ISPLUS 1.22 Kolon Life Science 2.04 ViroMed 1.84 CJ O Shopping 2.90 PEPTRON 1.19 OSSTEM IMPLANT 1.88 OCI Materials 1.84 Com2us 2.86 Media Flex 1.04 Medy-tox 1.77 Binex 1.78 Interpark 2.63 BITComputer 0.98 Medipost 1.69 Wemade 1.77 Huons 2.20 Alteogen 0.97 KEBT 1.63 PEPTRON 1.73 Amicogen 2.08 Jenexine 0.93 Source: KSDA, Wisefn

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 1,079,000 0 158,936 Celltrion 70,500 8,800 7,898 Hyundai Motor 147,500 5,000 32,491 Daum Communications 128,300 4,300 7,691 KEPCO 47,500 -200 30,493 Dongsuh 42,000 950 4,187 Hynix 33,500 2,450 24,388 CJ E&M 78,500 3,700 3,040 Amore Pacific 340,500 5,000 19,905 Medy-tox 505,800 24,000 2,861 Kia Motors 47,550 2,200 19,275 LOEN 84,000 4,000 2,125 Hyundai Mobis 198,000 3,500 19,274 ViroMed 148,000 17,000 2,101 Samsung Electronics (P) 844,000 3,000 19,271 Paradise 20,350 600 1,851 SK Telecom 238,500 -9,000 19,258 GS Home Shopping 188,800 -2,600 1,239 Shinhan Financial Group 40,200 -50 19,063 SEEGENE 46,900 3,150 1,230 Source: