November 11, 2015

KOREA

Company News & Analysis Major Indices Close Chg Chg (%) Wonik IPS (030530/Buy/TP: W16,000) KOSPI 1,997.27 0.68 0.03 Implications of the spin-off KOSPI 200 245.86 0.00 0.00 KOSDAQ 667.21 10.51 1.60 CJ E&M (130960/Buy/TP: W110,000) Ready for the next big leap Turnover ('000 shares, Wbn) Volume Value Interpark (108790/Buy/TP: W30,000) KOSPI 282,596 3,796 Mobile and tour growth story remains intact KOSPI 200 63,222 2,712 KOSDAQ 628,336 3,430

Kangwon Land (035250/Buy/TP: W54,000) Market Cap (Wbn) 3Q report reaffirms golden goose status Value KOSPI 1,266,258 Korea Gas (036460/Hold) Downgrade rating KOSDAQ 190,795 Wait until uncertainties are cleared KOSPI Turnover (Wbn) Buy Sell Net Sector News & Analysis Foreign 904 1,128 -224 Institutional 726 720 6 Healthcare (Overweight) Retail 2,067 1,931 136 Healthcare Weekly Briefing KOSDAQ Turnover (Wbn) Buy Sell Net Foreign 218 171 48 Institutional 115 144 -30 Retail 3,090 3,114 -24

Program Buy / Sell (Wbn) Buy Sell Net KOSPI 729 841 -112 KOSDAQ 56 44 12

Advances & Declines Advances Declines Unchanged KOSPI 511 296 68 KOSDAQ 746 297 64

KOSPI Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Hanmi Pharm 818,000 34,000 303 Electronics 1,333,000 12,000 187 KODEX LEVERAGE 10,095 -20 170 Hanmi Science 164,000 -4,000 158 KODEX INVERSE 8,185 5 124

KOSDAQ Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value 79,900 4,100 155 New Pride 15,800 -200 119 NATURECELL 7,680 -320 117 Digital-Tech 2,400 280 97 Kolon Life Science 210,600 11,100 87 Note: As of November 11, 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.

Wonik IPS (030530 KQ/Buy)

Implications of the spin-off Technology  Wonik TGS will take over Wonik IPS’s treasury shares, suggesting the spin-off is part of the company’s efforts to convert to a holding company structure News Comment  History shows that companies tend to have larger market caps (on a combined basis) November 10, 2015 post-split

 Pullback looks overdone; Maintain Buy and TP of W16,000

Daewoo Securities Co., Ltd. Wonik IPS to split into two separate companies [Semiconductor] On November 9th, Wonik IPS announced that it would split into two separate companies. Jonathan Hwang Wonik IPS (new entity) will focus on the semiconductor, display, and solar power equipment +822-768-4140 businesses, while Wonik TGS (surviving entity) will assume the total gas solution (TGS) [email protected] business and investment holdings. The spin-off will be effective as of April 1, 2016 and shareholders will receive 0.5127095 shares of the newly established Wonik IPS for each existing share they own. Trading will be suspended from March 30, 2016 to April 29, 2016, and new shares will be listed on May 2, 2016. No appraisal rights will be offered.

The company stated that the purpose of the split is to 1) better allocate investment resources

to each business division, 2) enhance management accountability and autonomy, and 3)

ensure swift decision-making and management efficiency.

Table 1. Spin-off timeline Event Date Resolution by board of directors Nov. 9, 2015 Record date for shareholders’ meeting for spin-off approval Nov. 30, 2015 Submission of securities registration statement Jan. 14, 2016 Shareholders’ meeting for spin-off approval Feb. 25, 2016 Transfer of old shares Feb. 29-Mar. 31, 2016 Suspension of trading Mar. 30-Apr. 29, 2016 Spin-off Apr. 1, 2016 Spin-off registration Apr. 4, 2016 Relisting May 2, 2016 Source: KDB Daewoo Securities Research

Pullback looks overdone; Spin-off likely part of conversion to holding company

We believe the stock’s pullback following news of the spin-off was due to the lack of clarity surrounding its purpose. We think it is highly likely the split is part of the company’s efforts to convert to a holding company structure. Wonik TGS is likely to serve as the de-facto holding company by taking over Wonik IPS’s treasury shares in addition to existing investment holdings (Wonik Materials, Tera Semicon, Wonik L&D, and Wonik Investment Partners). From this perspective, we believe the stock’s correction is largely overdone. In our view, the transition to a holding company structure would be positive to shares, as it would allow for business specialization, efficient allocation of investment resources, and improved corporate governance.

FY (Dec.) 12/12 12/13 12/14 12/15F 12/16F 12/17F Revenue (Wbn) 349 423 557 666 649 790 OP (Wbn) 26 55 92 111 97 137 OP margin (%) 7.4 13.0 16.5 16.7 14.9 17.3 NP (Wbn) 8 27 47 82 77 106 EPS (W) 108 373 581 1,012 956 1,313 ROE (%) 3.0 9.3 13.8 20.5 16.1 18.6 P/E (x) 43.3 23.0 24.0 9.7 10.3 7.5 P/B (x) 1.2 2.0 3.0 1.7 1.5 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

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.

CJ E&M (130960 KQ) Ready for the next big leap

3Q review: Earnings beat our expectation and the consensus Media CJ E&M reported 3Q operating profit of W13.6bn, topping our expectation and the consensus. The latest earnings report was a considerable improvement from the more Results Comment than W10bn operating loss recorded in 3Q14, proving the company’s fundamentals are November 11, 2015 indeed strengthening. Revenue: Broadcasting and music/performance revenue was in line with our estimates. Film revenue was stronger than anticipated, buoyed by the revenue recognition for the (Maintain) Buy foreign co-production Miss Granny , which has attracted around 10mn m oviegoers since its release earlier this year in China. Target Price (12M, W) 110,000 Profit: Margins at the broadcasting unit were better than expected, as a combination of stronger ad and content revenue and production cost discipline led to leverage effects. Share Price (11/10/15, W) 81,200 We believe the online show New Journey to the West (which began airing in September) also contributed to the broadcasting unit’s margin gains. Meanwhile, non- operating profit was boosted by strong equity-method gains from Games Expected Return 35% and one-off positives, including dividend income from content funds and profits from the disposal of one of the company’s channels. OP (15F, Wbn) 75 4Q peak-season effects and long-term growth of the digital/global businesses Consensus OP (15F, Wbn) 64 Bullish 4Q outlook: Traditionally, 4Q is the strongest quarter for the broadcasting and music/performance units. In broadcasting, the drama Reply 1988 and shows Unpretty EPS Growth (15F, %) -28.9 Rapstar 2 and Show Me the Money , all of which command higher ad rates, are currently Market EPS Growth (15F, %) 21.5 on air. In music/performance, a number of events are taking place in 4Q, including P/E (15F, x) 19.7 concerts by artists from the company’s own label and the musical Werther , which Market P/E (15F, x) 11.7 boasts an impressive cast. In films, The Priest s starring Kang Dong-won is performing KOSDAQ 656.70 strongly in the box-office, while the drama Himalaya (considered the company’s tentpole) is set to hit theaters in December. Market Cap (Wbn) 3,145 Shares Outstanding (mn) 39 Digital operations: CJ E&M recently acquired the over-the-top (OTT) service “tving” Free Float (%) 56.7 from CJ HelloVision, completing its new media value chain. For digital content, CJ E&M is airing its original TV content and also producing “snack culture” videos via the mobile Foreign Ownership (%) 13.7 production brand tvNgo. For distribution, the company has tving as well as third-party Beta (12M) 1.24 portals. The new media rep subsidiary MezzoMedia, which aids CJ E&M’s monetization 52-Week Low 33,250 efforts, is also showing accelerating growth. 52-Week High 95,000 Global operations: The company has around 10 co-production projects ongoing in (%)(%)(%) 1M1M1M 6M6M6M 12M12M12M China, another 10 in Vietnam, and six in the US. In 2016, approximately 10 co- Absolute -2.9 40.2 136.0 productions are expected to be released, including four or five in China, three in Relative -0.2 45.6 93.8 Vietnam, one in Indonesia and one in the US. The box-office performance of these foreign co-productions could serve as positive catalysts to shares.

330 CJ E&M KOSDAQ 280 Maintain Buy and TP of W110,000

230 CJ E&M’s stock has rallied sharply this year thanks to its enhanced fundamentals. For additional appreciation, we think the company needs to further lift its domestic margins 180 and deliver positive results in its domestic digital operations and overseas film projects . 130 We believe CJ E&M has strengthened the fundamentals of its existing domestic 80 businesses and has laid the groundwork for its digital and global operations. We keep 11.14 3.15 7.15 11.15 our Buy rating and target price of W110,000.

Daewoo Securities CCo.,o., Ltd. FY (Dec.) 12/12 12/13 12/14 12/15F 12/16F 12/17F Revenue (Wbn) 1,395 1,246 1,233 1,348 1,419 1,479 [Telecom Service / Media] OP (Wbn) 39 -9 -13 75 85 95

Jee-hyun Moon OP margin (%) 2.8 -0.7 -1.1 5.6 6.0 6.4 +822-768-3615 NP (Wbn) 37 5 225 160 107 123 [email protected] EPS (W) 975 133 5,796 4,120 2,762 3,170 ROE (%) 3.1 0.4 16.4 10.0 6.2 6.7 Nu-ri Ha +822-768-4130 P/E (x) 27.2 229.0 6.6 19.7 29.4 25.6 [email protected] P/B (x) 0.8 1.0 1.0 1.9 1.8 1.7 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

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 IMPORTIMPORTANTANT DISCLOSURESDISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.

Interpark (108790 KQ) Mobile and tour growth story remains intact

Internet Shopping 3Q15 review: Revenue of W103.7bn and OP of W8.3bn For 3Q, Interpark reported 3Q consolidated revenue and operating profit of W103 .7bn Results Comment (+1.7% YoY) and W8.3bn (+43.8% YoY), respectively. Operating profit reached a record November 11, 2015 high, boosted by smaller losses at the shopping and book divisions, and the continued strong growth of the tour division.

The book division’s profitability has been improving ever since the introduction of the (Maintain) Buy fixed-pricing scheme in November 2014 . In 3Q, operating loss narrowed further to W0.4bn. The entertainment division saw gross merchandise volume (GMV) grow 2% YoY Target Price (12M, W) 30,000 in 3Q, fully recovering from the MERS impact. At the shopping division, GMV expanded 13% YoY, lifted by a surge in mobile transaction volume. Share Price (11/10/15, W) 23,350 On the expense side, marketing spend, which increased W1.7bn YoY in 1Q and W1.2bn Expected Return 28% YoY in 2Q due to package tour promotions, remained flat YoY in 3Q. The improved profitability of each business division and overall SG&A expense savings pushed OP

margin up by 2.3%p YoY. OP (15F, Wbn) 26 Consensus OP (15F, Wbn) 27 Mobile to expand from 38% of shopping transactions in 3Q to 50% by year-end

EPS Growth (15F, %) 76.0 The to ur division’s GMV climbed 20% YoY in 3Q, driving overall growth. More Market EPS Growth (15F, %) 21.5 specifically, GMV of domestic flights and accommodations surged 86% YoY, while the P/E (15F, x) 39.1 number of people going on the company’s outbound tour packages increased 43% YoY. Market P/E (15F, x) 11.7 In 3Q, mobile shopping transaction volume soared 265% YoY, bolstered by stronger KOSDAQ 656.70 competitiveness and a partnership with NAVER. Mobile accounted for 38% of shopping Market Cap (Wbn) 767 transactions in 3Q and is expected to represent half of shopping transactions by year- Shares Outstanding (mn) 33 end. Elsewhere, mobile made up 37% of transactions for tour (vs. 32% in 2Q), 24% for Free Float (%) 30.6 entertainment (vs. 22% in 2Q), and 20% for books (vs. 17% in 2Q). Foreign Ownership (%) 15.2 Beta (12M) 0.60 Maintain Buy and TP of W30,000 52-Week Low 19,000 The 3Q earnings report reaffirmed the normalization of the entertainment division (the 52-Week High 26,000 company’s cash cow) from the MERS shock, as well as the margin recovery of the book (%)(%)(%) 1M1M1M 6M6M6M 12M12M12M division (which had been the primary source of last year’s margin deterioration). It also Absolute 9.6 15.3 -1.5 showed that the long-term growth stories of the tour business and mobile commerce Relative 12.7 19.7 -19.1 remain intact.

160 Interpark KOSDAQ We reiterate our Buy rating and target price of W30,000. A number of business 140 indicators are pointing to continued growth in 4Q, and this is likely to be accompanied

120 by margin improvements. Another key point to watch is the government’s issuance of

100 online-only bank licenses, which is set to take place at the end of the year.

80

60 11.14 3.15 7.15 11.15

Daewoo Securities CCo.,o., Ltd. FY (Dec.) 12/12 12/13 12/14 12/15F 12/16F 12/17F Revenue (Wbn) 356 386 407 420 472 517 [Internet/Game/Entertainment] OP (Wbn) 15 20 17 26 31 38

Chang-kwean Kim OP margin (%) 4.2 5.2 4.2 6.2 6.6 7.4 +822-768-4321 NP (Wbn) 11 13 11 20 22 26 [email protected] EPS (W) 620 487 339 597 673 804 ROE (%) 16.9 13.8 8.5 12.0 12.3 13.1 Jeong-yeob Park P/E (x) - - 67.6 39.1 34.7 29.0 +822-768-4124 P/B (x) - - 4.8 4.5 4.1 3.6 [email protected] 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

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.

Kangwon Land (035250 KS) 3Q report reaffirms golden goose status

Entertainment 3Q15 review: In-line results; Revenue up 5% YoY and OP up 18.9% YoY Kangwon Land’s 3Q revenue came in at W413.5bn (+5% YoY). The number of visitors Results Comment grew 2.2% YoY, increasing for the fifth consecutive quarter. Drop amount rose 4.4% November 11, 2015 YoY, while hold rate remained flat YoY at 22.8%. Revenue from the VIP segment fell 16.5% YoY, but revenue from mass tables and slot machines expanded 7.9% and 11.6% YoY, respectively , helped by higher table utilization (Maintain) Buy due to increased dealer hires.

Target Price (12M, W) 54,000 Despite the revenue increase, COGS and SG&A expenses declined 4.0% and 9.4% YoY, respectively, lifting OP margin to 38.2% (from 33.7% in 3Q14). The government’s Share Price (11/10/15, W) 42,050 efforts to strengthen the management discipline of state enterprises appear to be bearing fruit in the form of cost savings (employee pay, welfare, and marketing, etc.). Expected Return 28% Utilization to continue to rise in 2016

As of 3Q, the new mass tables that were added in 2013 have still not fully come online. OP (15F, Wbn) 607 We think the company is raising utilization at a moderate pace by adjusting dealer Consensus OP (15F, Wbn) 600 hiring. We estimate around 80% of mass tables are cu rrently running during the EPS Growth (15F, %) 24.6 weekends. Market EPS Growth (15F, %) 21.5 The second Yeongdong Expressway scheduled to open in 2016 is expected to shorten P/E (15F, x) 20.1 the travel time from Seoul to Wonju by 23 minutes. Hence, the travel time between the Market P/E (15F, x) 11.7 Seoul capital area and Kangwon Land should also b e reduced, and better accessibility is KOSPI 1,996.59 likely to serve as an upside catalyst to casino attendance. Market Cap (Wbn) 8,996 Shares Outstanding (mn) 214 The company is expected to open a water park in time for the 2018 summer season. Free Float (%) 58.4 This should help draw new visitors to the casino, just as the opening of the golf course Foreign Ownership (%) 28.4 and ski resort did back in 2005-06. As long as Kangwon Land remains the only casino Beta (12M) 0.72 open to Korean citizens, we think the company will continue to attract new demand. 52-Week Low 30,100 Reiterate Buy and TP of W54,000; Current dividend yield of 2.6% 52-Week High 45,250 We slightly trimmed our 2015-16F EPS by 0.6% and 0.2%, respectively, in light of the 3Q (%)(%)(%) 1M1M1M 6M6M6M 12M12M12M results. We keep our Buy rating and target price of W54,000, which is based on a 2015F Absolute 1.6 14.3 21.5 dividend yield of 2%. Relative 2.7 19.4 19.2

Kangwon Land’s dividend yield has historically ranged from 2% to 3%. The casino 140 Kangwon Land KOSPI 130 operator has nearly W1.4tr in cash. Looking ahead, we see potential upside to dividend 120 payout ratio. 110

100 90 80 11.14 3.15 7.15 11.15

Daewoo Securities CCo.,o., Ltd. FY (Dec.) 12/12 12/13 12/14 12/15F 12/16F 12/17F Revenue (Wbn) 1,296 1,361 1,497 1,621 1,734 1,820 [Internet/Game/Entertainment] OP (Wbn) 405 388 513 607 677 712

Chang-kwean Kim OP margin (%) 31.3 28.5 34.3 37.4 39.0 39.1 +822-768-4321 NP (Wbn) 306 298 359 448 513 562 [email protected] EPS (W) 1,431 1,391 1,680 2,093 2,400 2,629 ROE (%) 13.2 12.2 13.8 15.8 16.4 16.4 Jeong-yeob Park +822-768-4124 P/E (x) 20.4 22.2 18.1 20.1 17.5 16.0 [email protected] P/B (x) 2.5 2.5 2.3 2.9 2.6 2.4 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

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.

Korea Gas (036460 KS) Wait until uncertainties are cleared

Energy 3Q15 review: Operating loss widens YoY to W145bn Korea Gas’s (KOGAS) 3Q revenue contracted 33.6% YoY to W4.39tr, as sales volume fell Results Comment 8.2% YoY due to a 7.1% YoY volume decline in power generation gas. 3Q operating loss November 10, 2015 expanded W59bn YoY to W145bn (vs. loss of W85.9bn in 3Q14), missing the market consensus (loss of W103.5bn). While 3Q is traditionally a weak season , a number of

other factors affected earnings, including 1) a temporary fall in cost re covery (down (Downgrade) Hold W14.9bn YoY), 2) higher operating expenses (up W10bn) due to increases in depreciation expenses (following the completion of the Samcheok facility) and Target Price (12M, W) - commission payments, and 3) a W35bn operating loss from the Gladstone LNG (GLNG) project, which has begun production. Share Price (11/10/15, W) 40,050 On a positive note, operating profit improved YoY at major overseas projects excluding GLNG; 3Q operating profit grew to W39.2bn at the Zubair project (from W7.7bn in Expected Return - 3Q14), W8.5bn at the Badra project (from W7.5bn in 3Q14), and W19.4bn at the Myanmar project (from W8.9bn in 3Q14). The retrieval of accrued receivables also OP (15F, Wbn) 1,188 continued, with the company recovering W233.4bn in 3Q, bringing the YTD figure to Consensus OP (15F, Wbn) 1,192 W923.9bn. Meanwhile, currency translation losses and net interest expenses contributed to a net loss of W240.7bn (vs. loss of W143.9bn in 3Q14), which was worse EPS Growth (15F, %) -8.7 than our expectation (loss of W214.7bn). Taken altogether, we lowered our 2015 and Market EPS Growth (15F, %) 21.5 2016 net profit estimates by 0.4% and 13.6%, respectively. P/E (15F, x) 9.1 Market P/E (15F, x) 11.7 Profits to improve in 4Q, but GLNG margins in doubt KOSPI 1,996.59 Looking to 4Q, we forecast operating profit to improve 35.6% YoY to W464bn (vs. Market Cap (Wbn) 3,697 W342.1bn in 4Q14), as cost recovery is likely to increase W100bn YoY on a seasonal Shares Outstanding (mn) 92 pickup in sales volume. The E&P business should continue to perform well, with 4Q Free Float (%) 48.8 operating profit likely rising W30bn YoY (excluding GLNG). Foreign Ownership (%) 12.7 We do see a chance of GLNG’s margins improving in 4Q, as the project is expected to Beta (12M) 1.16 52-Week Low 35,500 begin generating revenue in the quarter. However, it looks unlikely margins will improve 52-Week High 57,600 meaningfully, given that additional depreciation expenses are likely to be booked. We estimate GLNG’s 4Q operating loss to be around W20bn. (%)(%)(%) 1M1M1M 6M6M6M 12M12M12M Absolute 0.5 -19.8 -26.0 Downgrade to Hold; Stay on the sidelines until uncertainties are cleared Relative 1.7 -16.2 -27.4 We downgrade our rating on KOGAS from Trading Buy to Hold. In the near term , margins should pick up QoQ (due to seasonality) and YoY (due to better cost recovery 130 Korea Gas KOSPI and stronger E&P profits). But the early losses from the GLNG project are a major 110 concern. Given that GLNG (total investment of W4.3tr) is the company’s biggest E&P 90 project, we believe investors should wait until margins begin to improve on the back of

70 stronger output or until we know for sure profits could be guaranteed by the government (GLNG is a regulated project). Valuation looks cheap at a 2016F P/B of 0.4x, 50 11.14 3.15 7.15 11.15 but we recommend staying on the sidelines until uncertainties are cleared.

Daewoo Securities CCo.,o., Ltd. FY (Dec.) 12/12 12/13 12/14 12/15F 12/16F 12/17F Revenue (Wbn) 35,031 38,063 37,285 25,673 25,046 24,081 [Transportation/Energy] OP (Wbn) 1,267 1,488 1,072 1,188 1,242 1,454

Jay JH Ryu OP margin (%) 3.6 3.9 2.9 4.6 5.0 6.0 +822-768-4175 NP (Wbn) 367 -201 447 408 445 402 [email protected] EPS (W) 4,580 -2,444 4,845 4,424 4,823 4,360 ROE (%) 4.5 -2.3 4.8 4.1 4.3 3.8 Choong-hyun Kim +822-768-4126 P/E (x) 15.8 - 10.2 9.1 8.3 9.2 [email protected] P/B (x) 0.7 0.7 0.5 0.4 0.4 0.3 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

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.

Healthcare (Overweight/Maintain)

Healthcare Weekly Briefing

1. Major issues Sector Update November 6, 2015 Allergan and Spectrum released 3Q earnings (November 4th) On November 4th, Allergan and Spectrum Pharmaceutical announced 3Q earnings. On the same day, Allergan also hosted R&D Day. Daewoo Securities Co., Ltd. Allergan reported Botox revenue of US$604.6mn (+7.9%% YoY; 13% YoY stripping away F/X [Healthcare] effects) in 3Q15 with US$435.7bn generated in the US. The company recorded filler revenue Hyun-tae Kim of US$167.7mn (US$89.7mn in the US). +822-768-3251 [email protected] Unveiling a roadmap for adding new indications for Botox, Allergan announced that Medytox’s program is in the preclinical and phase 1 clinical trial stages. However, the Seung-min Kim company did not present clear guidance on earnings and development schedule related to +822-768-4157 [email protected] Medytox’s programs. Meanwhile, Spectrum Pharmaceutical updated its development pipeline. The company is in discussions with the FDA on a protocol for phase 3 clinical trial for SPI-2012, and expects to finalize within this year. With regard to poziotinib, Spectrum plans to file an investigational new drug (IND) application for phase 2 clinical trial for the treatment of breast cancer in November and launch trials in the US.

The company’s clinical trials for the SPI-2012 (a neutropenia treatment) and poziotinib, which it licensed from , are progressing smoothly.

Expected launches of phase 3 clinical trial for the SPI-2012 and phase 2 trial for poziotinib should boost Hanmi Pharmaceutical’s medium- to long-term fundamentals. Hanmi should see milestone payments when each clinical trial begins or is completed.

Figure 1. Botox’s additional indications roadmap

Source: Allergan, KDB Daewoo Securities Research

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.

Key Universe Valuations November 11, 2015

※All data as of close November 10, 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 196,350 1,333,000 1.9 8.6 2.2 -10.0 5.3 10.9 10.4 1.2 1.1 12.2 11.7 005380 Hyundai Motor 35,905 163,000 2.5 -9.7 15.6 -9.1 12.6 7.0 6.2 0.7 0.7 11.1 11.4 015760 KEPCO 32,548 50,700 2.8 80.0 8.3 370.9 -46.9 2.6 4.8 0.5 0.5 21.2 9.8 012330 24,628 253,000 1.3 -5.9 15.0 -10.3 22.5 8.0 6.6 0.9 0.8 12.4 13.4 000270 Motors 23,146 57,100 2.0 3.2 27.7 -0.5 25.8 7.8 6.2 0.9 0.8 12.6 14.2 000660 SK Hynix 22,568 31,000 1.3 7.6 -21.9 1.9 -22.9 5.2 6.7 1.0 0.9 21.5 14.1 090430 AmorePacific 21,893 374,500 0.3 41.3 33.4 63.3 25.2 41.8 33.4 7.6 6.3 19.7 20.6 032830 Samsung Life 21,700 108,500 - - - - 0.0 0.0 035420 NAVER 20,602 625,000 0.2 5.1 33.3 20.1 35.7 37.7 27.8 6.4 5.3 26.5 27.7 055550 20,343 42,900 - - - - 0.0 0.0 051910 LG Chem 19,649 296,500 1.3 45.9 17.6 47.8 35.9 17.1 12.6 1.7 1.5 10.1 12.6 018260 Samsung SDS 19,267 249,000 0.2 4.4 12.2 7.3 8.3 43.5 40.2 4.3 3.9 10.3 10.1 017670 SK Telecom 18,491 229,000 4.4 -0.6 4.8 -8.2 0.4 11.2 11.1 1.0 1.0 10.9 10.1 034730 SK Holdings 17,731 252,000 0.8 23.2 9.0 356.4 4.3 21.7 20.8 3.7 3.2 22.7 19.8 005490 POSCO 15,301 175,500 3.4 -13.9 10.9 -66.1 593.2 72.2 10.4 0.4 0.4 0.5 3.5 000810 Samsung F&M 15,207 321,000 - - - - 0.0 0.0 033780 KT&G 15,102 110,000 3.3 16.7 -4.9 27.6 -9.4 14.3 15.8 2.3 2.1 17.7 14.7 105560 KB Financial Group 13,870 35,900 - - - - 0.0 0.0 051900 LG Household & Health Care 13,838 886,000 0.5 37.0 21.6 37.7 22.7 32.6 26.6 7.4 6.0 26.2 25.7 003550 LG Corp. 11,510 66,700 1.5 23.9 10.0 22.8 7.3 11.3 10.5 0.9 0.8 8.3 8.3 096770 SK Innovation 10,541 114,000 2.2 - -14.7 - -25.1 8.3 11.1 0.6 0.6 8.2 5.7 035250 Kangwon Land 8,814 41,200 2.7 18.4 11.5 24.6 14.7 19.7 17.2 2.8 2.6 15.8 16.4 010130 Korea Zinc 8,803 466,500 1.4 3.9 22.0 7.6 23.5 16.3 13.2 1.7 1.5 11.1 12.4 066570 LG Electronics 8,510 52,000 1.2 -38.2 63.8 -7.0 153.4 25.3 10.0 0.8 0.7 3.1 7.6 047810 Korea Aerospace Industries 8,490 87,100 0.3 93.4 27.7 91.2 42.2 40.0 28.1 6.9 5.6 18.8 22.1 128940 Hanmi Pharmaceutical 8,369 818,000 54.1 63.1 42.6 73.0 227.8 131.7 17.0 15.0 7.8 12.1 086790 7,962 26,900 - - - - 0.0 0.0 011170 Lotte Chemical 7,781 227,000 0.4 366.0 7.6 639.9 19.0 7.2 6.0 1.0 0.9 15.5 15.8 034220 LG Display 7,729 21,600 2.3 30.9 -40.9 22.0 -43.9 7.0 12.5 0.6 0.6 9.2 4.9 024110 7,651 13,750 - - - - 0.0 0.0 030200 KT 7,572 29,000 1.7 - 1.1 - -13.4 8.8 10.1 0.6 0.6 8.0 6.5 010950 S-Oil 7,442 66,100 3.5 - -13.7 - 4.2 11.2 10.7 1.4 1.3 13.3 12.6 006400 Samsung SDI 7,358 107,000 0.9 -69.7 468.2 - 385.4 23.5 4.8 0.6 0.6 2.7 12.3 009540 7,311 96,200 - - - - - 29.8 0.5 0.5 - 1.7 086280 7,256 193,500 1.0 7.4 9.5 -31.2 57.8 19.7 12.5 2.4 2.0 12.6 17.6 088350 Hanwha Life 6,992 8,050 - - - - 0.0 0.0 023530 Lotte Shopping 6,944 220,500 0.7 11.3 12.6 37.8 13.4 9.2 8.1 0.4 0.4 4.4 4.8 004020 6,846 51,300 1.5 10.8 4.8 44.4 -4.6 5.4 5.7 0.4 0.4 7.8 7.0 021240 Coway 6,802 88,200 3.2 23.1 11.8 33.9 9.6 20.3 18.6 5.0 4.5 29.5 28.1 035720 Corp. 6,692 111,500 0.2 -45.9 109.1 -76.5 85.0 77.5 41.9 2.6 2.5 3.4 6.1 161390 6,231 50,300 0.8 -13.8 7.1 -5.3 7.7 9.4 8.7 1.2 1.1 13.6 12.8 001800 Orion 6,042 1,011,000 0.6 6.5 13.3 12.2 17.9 32.9 27.9 4.2 3.7 13.8 14.4 139480 Emart 5,924 212,500 0.7 -3.9 21.7 100.1 -23.2 10.2 13.3 0.8 0.8 8.3 6.1 009240 Hanssem 5,248 223,000 0.4 35.5 44.2 33.9 41.7 45.2 31.9 10.7 8.2 29.9 32.1 032640 LG Uplus 4,781 10,950 2.6 20.4 2.0 79.1 5.4 11.7 11.1 1.1 1.0 9.4 9.2 19814. 009150 Samsung Electro-Mechanics 4,773 63,900 0.8 25.4 -84.2 240.2 62.2 18.3 1.1 1.0 1.8 6.0 5 051600 KEPCO KPS 4,725 105,000 - - - - 0.0 0.0 078930 GS Holdings 4,720 50,800 2.7 - -8.0 - -12.8 9.1 10.4 0.5 0.5 6.9 4.8 005830 Dongbu Insurance 4,666 65,900 - - - - 0.0 0.0 036570 NCSOFT 4,583 209,000 1.6 -9.6 29.5 -12.7 34.3 22.8 17.0 2.9 2.6 14.1 17.0 Source: KDB Daewoo Securities Research

Market Data November 11, 2015

※All data as of close November 11, 2015, unless otherwise noted.

Other Major Indices Economic Indicators Close Net Chg 1D (%) YTD (%) Close 1D ago 1M ago 1Y ago MSCI Korea* 370.19 -4.73 -1.26 -4.27 USD/KRW 1,158.20 1,154.10 1,165.20 1,085.20 KOSPI 1,997.27 0.68 0.03 3.68 JPY100/KRW 940.06 937.72 971.28 945.05 KOSDAQ 667.21 10.51 1.60 20.49 EUR/KRW 1,241.82 1,241.18 1,309.74 1,348.25 Dow Jones* 17,758.21 27.73 0.16 -0.42 3Y Treasury 1.80 1.78 1.62 2.18 S&P 500* 2,081.72 3.14 0.15 1.14 3Y Corporate 2.16 2.14 1.94 2.49 NASDAQ* 5,083.24 -12.06 -0.24 7.54 DDR2 1Gb* 1.11 1.11 1.13 1.40 Philadelphia Semicon* 657.96 -11.98 -1.79 -4.19 NAND 16Gb* 1.51 1.51 1.51 2.36 FTSE 100* 6,275.28 -19.88 -0.32 -4.16 Oil (Dubai)* 45.55 47.11 46.70 79.33 Nikkei 225 19,691.39 20.13 0.10 13.11 Gold* 1,088.50 1,088.10 1,156.30 1,159.80 Hang Seng* 22,401.70 -325.07 -1.43 -6.10 Customer deposits (Wbn)* 21,638 20,792 20,585 15,766 Taiwan (Weighted) 8,415.01 -121.89 -1.43 -9.26 Equity type BC (Wbn)(Nov. 9) 80,857 80,925 81,172 78,666 Note: * as of November 10, 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 Hanmi Pharm 15.01 Samsung Electronics 37.58 SK Telecom 16.79 GKL 10.66 KEPCO 12.24 SK Telecom 30.00 Hanmi Pharm 16.33 KEPCO 10.60 HANKOOK TIRE 9.90 POSCO 29.53 LG Electronics 13.82 SAMSUNG C&T 9.30 LG Chem 8.63 Samsung Electronics (P) 17.76 Hyundai Motor 12.32 LG Chem 8.48 NHN 7.50 Hyundai Motor 14.11 POSCO 11.24 Hanmi Science 7.36 GS Retail 4.21 13.86 Samsung Life Insurance 9.71 SK Energy 7.10 Hyundai Motor (2P) 3.45 LG Electronics 12.02 KODEX INVERSE 9.45 KOREA KOLMAR 6.49 GKL 3.40 Hyundai Mobis 11.23 Samsung F&M Insurance 8.10 KOREA AEROSPACE 6.21 KB Financial Group 2.92 Kia Motors 10.59 Samsung Electronics (P) 6.74 KODEX LEVERAGE 5.82 2.79 Samsung F&M Insurance 8.20 Kia Motors 6.68 HANKOOK TIRE 5.75 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 CJ E&M 6.91 LOEN 2.77 Celltrion 18.52 CJ E&M 11.80 ATTO 5.00 ASTK 2.39 Gamevil 1.94 Value Added Technology 5.46 Value Added Technology 4.06 New Pride 2.31 LOEN 1.84 SEEGENE 3.59 Interpark 3.96 Com2us 2.20 ATGen 1.52 Paradise 3.00 OCI Materials 3.84 KEBT 1.92 LegoChem Bio 1.32 iNtRON Bio 2.89 Sansung P&C 2.67 Diostech 1.77 Leeno 1.02 Cell Biotech 1.76 Medy-tox 2.38 KH Vatec 1.44 SundayToz 0.95 Wemade 1.49 ViroMed 2.36 CrucialTec 1.30 EM-Tech 0.80 ISC 1.48 Crosscert 1.80 DoubleUGames 1.21 DoubleUGames 0.75 EO Technics 1.44 SM 1.55 GemVax 1.14 GS Home Shopping 0.73 Interpark 1.35 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 1,333,000 12,000 196,350 Celltrion 79,900 4,100 8,951 Hyundai Motor 163,000 500 35,905 Daum Communications 111,500 -200 6,692 KEPCO 50,700 200 32,548 Dongsuh 34,000 -800 3,390 SAMSUNG C&T 143,500 -2,000 27,221 CJ E&M 79,400 -1,800 3,075 Samsung Electronics (P) 1,140,000 19,000 26,030 Medy-tox 482,400 21,000 2,729 Hyundai Mobis 253,000 -2,000 24,628 ViroMed 177,300 15,200 2,517 Kia Motors 57,100 -1,000 23,146 Paradise 21,700 -1,050 1,973 Hynix 31,000 -150 22,568 LOEN 65,600 -3,400 1,659 Amore Pacific 374,500 1,500 21,893 Komipharm 29,700 2,000 1,583 Samsung Life Insurance 108,500 -3,000 21,700 Kolon Life Science 210,600 11,100 1,409 Source: