NAVER (035420 KS ) Search seeing flywheel effect, but global still needs momentum Internet 2Q18 review: Revenue beats consensus, but OP misses; NP boosted by one-off gain Results Comment For 2Q18, NAVER’s revenue came in above the consensus, but operating profit missed. July 27, 2018 Positives: Revenue from the business platform segment (which includes the core search ad business) was stronger than expected, growing 17% YoY and surpassing W600bn for the first time on a quarterly basis. Ad performance improved, due to increased options for a mobile search ad offering , while shopping search ads also contributed to growth. LINE’s ad revenue also jumped 42% YoY. (Maintain) Buy At the parent IT platform and content services segments, revenue grew a robust 74% Target Price (12M, W) 1,000,000 and 27% YoY, respectively. The IT platform segment was helped by NAVER Pay’s increased transaction volume, while the content services segment was supported by traction in webtoons and V LIVE. Meanwhile, net profit was temporarily boosted by a Share Price (07/26/18, W) 751,000 W112.7bn gain from the disposal of subsidiary investments caused by the exclusion of LINE Mobile (a Japan-based MVNO subsidiary) from consolidation, as a result of Expected Return 33% Softbank’s investment. Negatives: The ad segment (which includes display ads) grew a weaker-than-expected OP (18F, Wbn) 1,106 11% YoY. The ad segment bears close watching, as it could be affected by NAVER’s mobile app overhaul planned in 3Q18. Agent/partner commissions and marketing Consensus OP (18F, Wbn) 1,108 expenses were higher than anticipated, mainly due to NAVER Pay. EPS Growth (18F, %) 7.8 Nstore’s merger with NAVER Webtoon part of global content expansion Market EPS Growth (18F, %) 10.4 P/E (18F, x) 29.7 Original premium content: We expect NAVER Webtoon to play an important role in Market P/E (18F, x) 9.0 NAVER’s original premium content. NAVER plans to spin off its Nstore business, which handles digital content distribution (VOD, e-books, etc.), and merge it with NAVER KOSPI 2,289.06 Webtoon. NAVER has so far invested a total of W210bn in NAVER Webtoon this year . As Market Cap (Wbn) 24,755 for content, NAVER has spent W400bn since 2017 and intends to spend another Shares Outstanding (mn) 33 W200bn by 2019. We expect the global platform business and the intellectual property (IP)-based drama/film investment and production to gain traction. Free Float (%) 78.4 Foreign Ownership (%) 59.9 UGC: We believe Apollo will lead NAVER’s user-generated content (UGC) operations . Beta (12M) 0.80 Apollo, a company-in-company (CIC) created in May that operates and develops NAVER 52-Week Low 652,000 services, like blogs, posts, and Knowledge IN, plans to revamp domestic blogs with a 52-Week High 950,000 focus on videos, and later launch a global UGC service.
(%) 1M 6M 12M We view NAVER’s efforts to expand its content business as part of its move to catch up with global video providers like Netflix (premium content) and YouTube (user content). Absolute 2.2 -19.0 -9.0 We note that a growing number of Chinese internet firms have re cently boosted their Relative 4.9 -8.9 -3.2 enterprise value by separately listing their content and video businesses.
120 NAVER KOSPI Maintain Buy and TP of W1,000,000 (not adjusting for October stock split) 110 We maintain our Buy rating on NAVER. We believe the search business is in the 100 “running on its own” stage of the ‘flywheel effect’ (spinning a heavy flywheel takes 90 significant effort, but once momentum builds the mechanism can eventually run by 80 itself without additional fuel). The commerce business, meanwhile, is in the
70 “momentum building” stage. Meanwhile, LINE, NAVER Webtoon, and Apollo are still in 7.17 11.17 3.18 7.18 the stage where the company needs to make considerable efforts in order to achieve its medium/long-term growth objective of global expansion. Mirae Asset Daewoo Co., Ltd.
[ Internet/Game/Advertising ] FY (Dec.) 12/15 12/16 12/17 12/18F 12/19F 12/20F Revenue (Wbn) 3,254 4,023 4,678 5,665 6,830 8,070 Jee -hyun Moon +822 -3774 -1640 OP (Wbn) 830 1,102 1,179 1,106 1,674 2,061 [email protected] OP margin (%) 25.5 27.4 25.2 19.5 24.5 25.5
NP (Wbn) 519 749 773 834 1,069 1,320 EPS (W) 15,737 22,732 23,447 25,287 32,441 40,058 ROE (%) 26.5 26.2 18.5 16.3 18.0 18.6
P/E (x) 41.8 34.1 37.1 29.7 23.1 18.7 P/B (x) 6.8 5.2 4.8 3.7 3.2 2.7 Dividend yield (%) 0.2 0.1 0.2 0.2 0.2 0.3 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
July 27, 2018 NAVER
Earnings review and forecasts
Table 1. 2Q18 review (Wbn, %) 2Q18P Growth
2Q17 1Q18 Mirae Asset Preliminary Consensus YoY QoQ Daewoo Revenue 1,130 1,309 1,364 1,363 1,351 20.7 4.2 Operating profit 285 257 251 266 267 -12.1 -2.5 OP margin (%) 25.2 19.6 18.4 19.5 19.8 Net profit 171 154 314 159 184 83.1 104.0 Note: All figures are based on consolidated K-IFRS; net profit is attributable to controlling and non-controlling interests Source: Company data, FnGuide, Mirae Asset Daewoo Research estimates
Table 2. Quarterly and annual earnings (Wbn, %) 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18P 3Q18F 4Q18F 2017 2018F 2019F Revenue 1,082 1,130 1,201 1,266 1,309 1,364 1,442 1,550 4,678 5,665 6,830 Ads 112 134 133 151 133 149 148 169 529 598 676 Business platform 511 522 550 586 593 612 643 667 2,168 2,515 2,867 IT platform 43 49 59 66 73 86 96 116 218 370 592 Content services 25 25 27 28 30 32 33 36 105 130 149 LINE and other platforms 391 400 432 446 481 486 523 563 1,669 2,053 2,546 Operating profit 291 285 312 291 257 251 270 329 1,179 1,106 1,674 OP margin 26.9 25.2 26.0 23.0 19.6 18.4 18.7 21.2 25.2 19.5 24.5 Net profit 211 171 216 172 154 314 184 212 770 863 1,099 Net margin 19.5 15.2 18.0 13.6 11.7 23.0 12.7 13.7 16.5 15.2 16.1 YoY growth Revenue 15.5 14.4 18.5 16.7 21.0 20.7 20.1 22.5 16.3 21.1 20.5 Ads 37.7 38.5 35.1 22.4 18.6 11.1 11.0 12.2 32.5 13.0 13.0 Business platform 13.5 12.9 18.9 19.2 16.1 17.2 17.0 13.9 16.2 16.0 14.0 IT platform 92.0 75.8 90.3 70.3 67.1 73.5 64.0 74.6 80.7 70.0 60.0 Content services -19.8 -8.8 20.9 22.7 19.8 26.8 20.0 29.1 1.3 24.0 15.0 LINE and other platforms 11.0 7.2 8.3 8.9 22.9 21.6 21.0 26.2 8.8 23.0 24.0 Operating profit 13.2 4.6 10.6 0.3 -11.6 -12.1 -13.6 13.0 7.0 -6.2 51.4 Net profit 27.8 -19.6 9.0 -6.2 -27.1 83.1 -14.9 23.1 1.5 12.1 27.4 Notes: All figures are based on consolidated K-IFRS; in 2017, revenue was reclassified into five segments: ads, business platform, IT platform, content services, and LINE and other platforms; ads include general and shopping display ads and video ads; business platform includes general and shopping search ads; IT platform includes NAVER Pay, IT services, and cloud services; content services include music, webtoons, and V Live; LINE and other platforms include LINE and Snow; due to the parent firm’s merger with Camp Mobile in February 2018, some of the revenue from LINE and other platforms has been reclassified from 2017 onwards; the YoY revenue comparison for 2017 may have discrepancies due to Camp Mobile’s reclassification; 2Q18 net profit includes W112.7bn in one-off gains related to LINE Mobile; net profit is attributable to controlling and non-controlling interests Source: Company data, Mirae Asset Daewoo Research estimates
Table 3. Earnings forecast revisions (Wbn, W, %) Previous Revised % chg. Notes 18F 19F 18F 19F 18F 19F Business platform/IT platform estimates revised upward ; ad Revenue 5,664 6,797 5,665 6,830 0.0 0.5 estimates revised down ward Platform development/operation expenses revised Operating profit 1,142 1,665 1,106 1,674 -3.1 0.6 down ward ; marketing expenses revised up ward Net profit 738 1,077 863 1,099 16.9 2.1 Exclusion of LINE Mobile reflected Profits from non -controlling interests in LINE Mobile EPS (W) 23,191 33,506 25,287 32,441 9.0 -3.2 reflected ; based on existing share count OP margin 20.2 24.5 19.5 24.5
Net margin 13.0 15.8 15.2 16.1
Notes: Net profit is attributable to controlling and non-controlling interests; EPS is attributable to controlling interests Source: Mirae Asset Daewoo Research estimates
Mirae Asset Daewoo Research 2 July 27, 2018 NAVER
LINE overview
Table 4. LINE’s quarterly earnings: Ad revenue grew 42% YoY; shares up by 6.8% on the day following 2Q18 earnings releases (JPYbn) 2Q17 3Q17 4Q17 1Q18 2Q18P YoY QoQ Revenue 41.6 44.3 47.9 48.7 50.6 22% 4% 1) Core business 37.2 40.1 41.4 42.7 44.6 20% 4% Ads 19.1 22.0 23.7 25.2 27.2 42% 8% Communication 7.5 7.5 7.1 7.4 7.3 -3% -1% Content 10.1 9.9 9.7 9.2 9.3 -7% 2% Other 0.5 0.7 0.9 0.9 0.8 59% -17% 2) Strategic business 4.3 4.2 6.3 6.1 6.1 42% 0% LINE Friends 2.5 3.0 4.1 3.4 4.1 64% 21% Fintech/AI/commerce/mobile 1.8 1.2 2.2 2.7 2.0 8% -28% Other operating profit 10.7 0.5 0.5 1.5 9.7 -10% 544% Operating profit 14.6 5.9 0.6 1.2 9.1 -38% 628% OP margin 35.1 13.2 1.3 2.6 17.9 1) Core business operating profit 11.8 16.8 12.9 12.8 7.0 -41% -45% 2) Strategic business operating -3.8 -4.3 -6.9 -7.1 -6.9 82% -3% losses Net profit 8.9 1.6 -4.0 -1.8 3.7 -59% -308% Net margin 21.5 3.7 -8.3 -3.6 7.3 Key indicators Global MAU (mn persons) 169 168 168 165 164 -3% -1% Global paid official accounts (ads) 605 631 645 657 672 11% 2% LINE Pay transaction value (JPYbn) 105 115 228 173 195 86% 13% Ad platform impressions (bn) 15 16 16 18 21 44% 20% Note: 1) NAVER holds a 73.28% stake in LINE. LINE’s 2018 revenue classification has been changed from ads, communication/content, and other to core businesses (ads, communication/content, other) and strategic businesses (fintech, AI, commerce, other) 2) In 2Q18, LINE posted a one-off gain on stake sales of JPY9.4bn, resulting from Softbank’s investments in LINE Mobile 3) As LINE Mobile has not been included in LINE’s consolidated financials starting in 2Q18, LINE recognized earnings from the strategic businesses (fintech/AI/commerce/mobile), in the form of equity-method gains Source: Company data, Mirae Asset Daewoo Research
Figure 1. LINE shares have been rising sharply since June, Figure 2. LINE’s annual earnings consensus: Profit to rebound giving a boost to NAVER shares in 2019, amid continued strong revenue growth
(18.1=100) (Wbn) Revenue (L) (Wbn) Operating profit (R) 120 3,000 300 LINE Net profit (R) NAVER 2,500 250 110
2,000 200 100 1,500 150 90 1,000 100
80 500 50
70 0 0 1/18 2/18 3/18 4/18 5/18 6/18 7/18 2017 2018F 2019F
Source: Thomson Reuters, Mirae Asset Daewoo Research Note: All figures are based on won-based value Source: Bloomberg, Mirae Asset Daewoo Research estimates
Mirae Asset Daewoo Research 3 July 27, 2018 NAVER
Stock split; Nstore to merge with NAVER Webtoon
Table 5. Following 5:1 stock split, NAVER to list shares on October 12th; any impact on EV to be marginal Before stock split After stock split
Per-share value (W) 500 100 No. of total issued shares 32,962,679 164,813,395 General shareholders ’ meeting Sep. 7th Existing share submission Sep. 10 th – Oct. 10 th Suspension of trading Oct. 8 th , 10 th , 11 th (three business days) Registry closure Oct. 11 th – 18 th Listing of new shares Oct. 12 th Objective Expansion of outstanding shares Source: Company data, Mirae Asset Daewoo Research
Table 6. NAVER to spin off its Nstore business and merge it with NAVER Webtoon NAVER Webtoon Nstore (wholly -owned subsidiary ) Decision Spun off from NAVER Set to acquire the spun-off Nstore business Value W391,138,693 W473,594 2017 revenue of W 34 .1bn , Key financials - and net loss of W36.5bn Spin-off/merger ratios 1:0.0000000 [0.0000003(spin off ratio)×0.0012108(merger ratio)] Spin-off/merger contract date Jul. 25 th Record date Aug. 10 th Registry closure Aug. 13 th – 16 th Notice of shareholder intent to Aug. 23 rd – Sep. 6 th exercise appraisal rights Shareholders’ meeting Sep. 7 th Exercise of appraisal rights Sep. 8 th – 27 th Effective date of merger Nov. 1 st Merger registration Nov. 5 th Increase in the number of original content (webtoons/web novels) Major expected benefits users via content distribution on VOD apps Note: Merger value is based on Han Kyung Accounting Corp’s data Source: Company data, Mirae Asset Daewoo Research
Figure 4. Cases of content subsidiary spin-off: Shares of Figure 3. Cases of stock-split: SEC’s 50:1 stock split relevant Chinese players
Notes: Based on adjusted share prices Source: Thomson Reuters, Mirae Asset Daewoo Research Source: Thomson Reuters, Mirae Asset Daewoo Research
Mirae Asset Daewoo Research 4 July 27, 2018 NAVER
Valuation
Table 7. 12-month target price calculation: Post-split adjusted target price of W250,000 (Wbn, x, W) Valuation Notes
Operating value (1) 36,126
2018F NP attributable to Multiple controlling interests Considering P/E s of Alphabet, Baidu, and Amazon Consolidated 969 37.3 36,126 (reflecting the nature of search /shopping -oriented business es ) Investment asset value (2) 1,505
Available-for-sale financial assets 925 As of end-1Q18; fair value; including unlisted shares Investments in associates 580 Book value as of end-1Q18 Total asset value (1+2=3) 37,631
Net debt (4) -2,939 Consolidated as of end-1Q18 Net asset value (3-4) 40,570
Share count (‘000 shares) 32,963 Total issued shares including treasury shares Target price 1,000,000 Rounded up Post-split assumption Reflected share count (including treasury shares) changes expected on Share count (‘000 shares) 164,813 Oct. 12 th Recalculation of 250,000 Rounded up Target price Note: Figures based on 1Q18, as 2Q18 report is not yet submitted Source: Bloomberg, Mirae Asset Daewoo Research estimates
Figure 5. Global internet ad-related firms’ valuations Figure 6. LINE displays particularly strong rerating in 12MF
(12MF P/E) are recently trending upwards P/E
(x) (x) 40 NAVER Alphabet 400 LINE Kakao Tencent Baidu Facebook Netflix Amazon
35 300
30 200
25 100
20 0 7/17 9/17 11/17 1/18 3/18 5/18 7/18 7/17 9/17 11/17 1/18 3/18 5/18 7/18
Source: Thomson Reuters, Mirae Asset Daewoo Research Source: Thomson Reuters, Mirae Asset Daewoo Research
Mirae Asset Daewoo Research 5 July 27, 2018 NAVER
NAVER (035420 KS/Buy/TP: W1,000,000)
Comprehensive Income Statement (Summarized) Statement of Financial Condition (Summarized) (Wbn) 12/17 12/18F 12/19F 12/20F (Wbn) 12/17 12/18F 12/19F 12/20F Revenue 4,678 5,665 6,830 8,070 Current Assets 4,784 5,677 6,683 8,093 Cost of Sales 0 0 0 0 Cash and Cash Equivalents 1,908 2,155 2,490 3,138 Gross Profit 4,678 5,665 6,830 8,070 AR & Other Receivables 1,014 1,242 1,444 1,706 SG&A Expenses 3,499 4,559 5,155 6,009 Inventories 36 44 53 63 Operating Profit (Adj) 1,179 1,106 1,674 2,061 Other Current Assets 1,826 2,236 2,696 3,186 Operating Profit 1,179 1,106 1,674 2,061 Non-Current Assets 3,235 3,720 4,200 4,702 Non-Operating Profit 17 127 17 16 Investments in Associates 281 344 415 490 Net Financial Income 36 23 27 32 Property, Plant and Equipment 1,150 1,302 1,402 1,502 Net Gain from Inv in Associates -14 110 0 0 Intangible Assets 340 374 404 434 Pretax Profit 1,196 1,233 1,691 2,077 Total Assets 8,019 9,397 10,882 12,795 Income Tax 423 370 592 727 Current Liabilities 2,303 2,802 3,141 3,661 Profit from Continuing Operations 773 863 1,099 1,350 AP & Other Payables 544 666 802 948 Profit from Discontinued Operations -3 1 0 0 Short-Term Financial Liabilities 361 425 275 275 Net Profit 770 863 1,099 1,350 Other Current Liabilities 1,398 1,711 2,064 2,438 Controlling Interests 773 834 1,069 1,320 Non-Current Liabilities 411 540 630 726 Non-Controlling Interests -3 30 30 30 Long-Term Financial Liabilities 55 103 103 103 Total Comprehensive Profit 627 947 1,099 1,350 Other Non-Current Liabilities 356 437 527 623 Controlling Interests 673 863 1,002 1,230 Total Liabilities 2,714 3,342 3,771 4,387 Non-Controlling Interests -45 84 98 120 Controlling Interests 4,762 5,444 6,471 7,737 EBITDA 1,385 1,106 1,674 2,061 Capital Stock 16 16 16 16 FCF (Free Cash Flow) 468 838 1,332 1,558 Capital Surplus 1,508 1,513 1,513 1,513 EBITDA Margin (%) 29.6 19.5 24.5 25.5 Retained Earnings 4,556 5,369 6,396 7,663 Operating Profit Margin (%) 25.2 19.5 24.5 25.5 Non-Controlling Interests 543 611 641 671 Net Profit Margin (%) 16.5 14.7 15.7 16.4 Stockholders' Equity 5,305 6,055 7,112 8,408
Cash Flows (Summarized) Forecasts/Valuations (Summarized) (Wbn) 12/17 12/18F 12/19F 12/20F 12/17 12/18F 12/19F 12/20F Cash Flows from Op Activities 940 1,024 1,432 1,658 P/E (x) 37.1 29.7 23.1 18.7 Net Profit 770 863 1,099 1,350 P/CF (x) 20.0 21.5 15.0 12.2 Non-Cash Income and Expense 663 287 553 683 P/B (x) 4.8 3.7 3.2 2.7 Depreciation 183 0 0 0 EV/EBITDA (x) 18.8 19.6 12.4 9.6 Amortization 24 0 0 0 EPS (W) 23,447 25,287 32,441 40,058 Others 456 287 553 683 CFPS (W) 43,488 34,906 50,109 61,665 Chg in Working Capital -139 133 333 308 BPS (W) 180,040 204,486 235,645 274,062 Chg in AR & Other Receivables -176 -761 -156 -167 DPS (W) 1,446 1,446 1,850 2,300 Chg in Inventories 0 -11 -9 -10 Payout ratio (%) 5.5 4.9 4.9 5.0 Chg in AP & Other Payables 97 0 0 0 Dividend Yield (%) 0.2 0.2 0.2 0.3 Income Tax Paid -415 -295 -592 -727 Revenue Growth (%) 16.3 21.1 20.6 18.2 Cash Flows from Inv Activities -1,310 -1,136 -834 -880 EBITDA Growth (%) 9.5 -20.1 51.4 23.1 Chg in PP&E -466 -184 -100 -100 Operating Profit Growth (%) 7.0 -6.2 51.4 23.1 Chg in Intangible Assets -28 -31 -30 -30 EPS Growth (%) 3.1 7.8 28.3 23.5 Chg in Financial Assets -514 -628 -704 -750 Accounts Receivable Turnover (x) 8.5 8.2 8.1 8.1 Others -302 -293 0 0 Inventory Turnover (x) 201.0 140.7 139.7 138.4 Cash Flows from Fin Activities 636 -50 -192 -54 Accounts Payable Turnover (x) 0.0 0.0 0.0 0.0 Chg in Financial Liabilities 38 112 -150 0 ROA (%) 10.7 9.9 10.8 11.4 Chg in Equity 291 5 0 0 ROE (%) 18.5 16.3 18.0 18.6 Dividends Paid -33 -33 -42 -54 ROIC (%) 125.6 92.2 134.8 188.0 Others 340 -134 0 0 Liability to Equity Ratio (%) 51.2 55.2 53.0 52.2 Increase (Decrease) in Cash 181 247 335 649 Current Ratio (%) 207.8 202.6 212.8 221.0 Beginning Balance 1,726 1,908 2,155 2,490 Net Debt to Equity Ratio (%) -60.0 -61.0 -64.8 -67.9 Ending Balance 1,908 2,155 2,490 3,138 Interest Coverage Ratio (x) 2,073.9 0.0 0.0 0.0 Source: Company data, Mirae Asset Daewoo Research estimates
Mirae Asset Daewoo Research 6 July 27, 2018 NAVER
APPENDIX 1
Important Disclosures & Disclaimers 2-Year Rating and Target Price History
Company (Code) Date Rating Target Price (W) NAVER NAVER (035420) 04/26/2018 Buy 1,000,000 1,500,000 10/26/2017 Buy 1,200,000 04/04/2017 Buy 1,160,000 1,000,000 01/02/2017 No Coverage 08/30/2016 Buy 1,050,000 04/28/2016 Buy 900,000 500,000
0 Jul 16 Jul 17 Jul 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.
Equity Ratings Distribution & Investment Banking Services Buy Trading Buy Hold Sell Equity Ratings Distribution 73.40% 14.78% 11.82% 0.00% Investment Banking Services 77.42% 9.68% 12.90% 0.00% * Based on recommendations in the last 12-months (as of June 30, 2018)
Disclosures As of the publication date, Mirae Asset Daewoo Co., Ltd. has acted as a liquidity provider for equity-linked warrants backed by shares of NAVER as an underlying asset, and other than this, Mirae Asset Daewoo has no other special interests in the covered companies. As of the publication date, Mirae Asset Daewoo Co., Ltd. and/or its affiliates own 1% or more of NAVER`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.
Disclaimers This report was prepared by Mirae Asset Daewoo, a broker-dealer registered in the Republic of Korea and a member of the Korea Exchange. Information and opinions contained herein have been compiled in good faith and from sources believed to be reliable, but such information has not been independently verified and Mirae Asset Daewoo makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy, completeness or correctness of the information and opinions contained herein or of any translation into English from the Korean language. In case of an English translation of a report prepared in the Korean language, the original Korean language report may have been made available to investors in advance of this report. The intended recipients of this report are sophisticated institutional investors who have substantial knowledge of the local business environment, its common practices, laws and accounting principles and no person whose receipt or use of this report would violate any laws or regulations or subject Mirae Asset Daewoo or any of its affiliates to registration or licensing requirements in any jurisdiction shall receive or make any use hereof. This report is for general information purposes only and it is not and shall not be construed as an offer or a solicitation of an offer to effect transactions in any securities or other financial instruments. The report does not constitute investment advice to any person and such person shall not be treated as a
Mirae Asset Daewoo Research 7 July 27, 2018 NAVER
client of Mirae Asset Daewoo by virtue of receiving this report. This report does not take into account the particular investment objectives, financial situations, or needs of individual clients. The report is not to be relied upon in substitution for the exercise of independent judgment. Information and opinions contained herein are as of the date hereof and are subject to change without notice. The price and value of the investments referred to in this report and the income from them may depreciate or appreciate, and investors may incur losses on investments. Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur. Mirae Asset Daewoo, its affiliates and their directors, officers, employees and agents do not accept any liability for any loss arising out of the use hereof. Mirae Asset Daewoo may have issued other reports that are inconsistent with, and reach different conclusions from, the opinions presented in this report. The reports may reflect different assumptions, views and analytical methods of the analysts who prepared them. Mirae Asset Daewoo may make investment decisions that are inconsistent with the opinions and views expressed in this research report. Mirae Asset Daewoo, its affiliates and their directors, officers, employees and agents may have long or short positions in any of the subject securities at any time and may make a purchase or sale, or offer to make a purchase or sale, of any such securities or other financial instruments from time to time in the open market or otherwise, in each case either as principals or agents. Mirae Asset Daewoo and its affiliates may have had, or may be expecting to enter into, business relationships with the subject companies to provide investment banking, market-making or other financial services as are permitted under applicable laws and regulations. No part of this document may be copied or reproduced in any manner or form or redistributed or published, in whole or in part, without the prior written consent of Mirae Asset Daewoo.
Distribution United Kingdom: This report is being distributed by Mirae Asset Securities (UK) Ltd. in the United Kingdom only to (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), and (ii) high net worth companies and other persons to whom it may lawfully be communicated, falling within Article 49(2)(A) to (E) of the Order (all such persons together being referred to as “Relevant Persons”). This report is directed only at Relevant Persons. Any person who is not a Relevant Person should not act or rely on this report or any of its contents. United States: Mirae Asset Daewoo is not a registered broker-dealer in the United States and, therefore, is not subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. This report is distributed in the U.S. by Mirae Asset Securities (USA) Inc., a member of FINRA/SIPC, to “major U.S. institutional investors” in reliance on the exemption from registration provided by Rule 15a-6(b)(4) under the U.S. Securities Exchange Act of 1934, as amended. All U.S. persons that receive this document by their acceptance hereof represent and warrant that they are a major U.S. institutional investor and have not received this report under any express or implied understanding that they will direct commission income to Mirae Asset Daewoo or its affiliates. Any U.S. recipient of this document wishing to effect a transaction in any securities discussed herein should contact and place orders with Mirae Asset Securities (USA) Inc. Mirae Asset Securities (USA) Inc. accepts responsibility for the contents of this report in the U.S., subject to the terms hereof, to the extent that it is delivered to a U.S. person other than a major U.S. institutional investor. Under no circumstances should any recipient of this research report effect any transaction to buy or sell securities or related financial instruments through Mirae Asset Daewoo. The securities described in this report may not have been registered under the U.S. Securities Act of 1933, as amended, and, in such case, may not be offered or sold in the U.S. or to U.S. persons absent registration or an applicable exemption from the registration requirements. Hong Kong: This report is distributed in Hong Kong by Mirae Asset Securities (HK) Limited, which is regulated by the Hong Kong Securities and Futures Commission. The contents of this report have not been reviewed by any regulatory authority in Hong Kong. This report is for distribution only to professional investors within the meaning of Part I of Schedule 1 to the Securities and Futures Ordinance of Hong Kong (Cap. 571, Laws of Hong Kong) and any rules made thereunder and may not be redistributed in whole or in part in Hong Kong to any person. All Other Jurisdictions: Customers in all other countries who wish to effect a transaction in any securities referenced in this report should contact Mirae Asset Daewoo or its affiliates only if distribution to or use by such customer of this report would not violate applicable laws and regulations and not subject Mirae Asset Daewoo and its affiliates to any registration or licensing requirement within such jurisdiction.
Mirae Asset Daewoo Research 8 July 27, 2018 NAVER
Mirae Asset Daewoo International Network
Mirae Asset Daewoo Co., Ltd. (Seoul) Mirae Asset Securities (HK) Ltd. Mirae Asset Securities (UK) Ltd. Global Equity Sales Team Suites 1109-1114, 11th Floor 41st Floor, Tower 42 Mirae Asset Center 1 Building Two International Finance Centre 25 Old Broad Street, 26 Eulji-ro 5-gil, Jung-gu, Seoul 04539 8 Finance Street, Central London EC2N 1HQ Korea Hong Kong United Kingdom China Tel: 82-2-3774-2124 Tel: 852-2845-6332 Tel: 44-20-7982-8000
Mirae Asset Securities (USA) Inc. Mirae Asset Wealth Management (USA) Inc. Mirae Asset Wealth Management (Brazil) CCTVM 810 Seventh Avenue, 37th Floor 555 S. Flower Street, Suite 4410, Rua Funchal, 418, 18th Floor, E-Tower Building Vila New York, NY 10019 Los Angeles, California 90071 Olimpia USA USA Sao Paulo - SP 04551-060 Brasil Tel: 1-212-407-1000 Tel: 1-213-262-3807 Tel: 55-11-2789-2100
PT. Mirae Asset Sekuritas Indonesia Mirae Asset Securities (Singapore) Pte. Ltd. Mirae Asset Securities (Vietnam) LLC Equity Tower Building Lt. 50 6 Battery Road, #11-01 7F, Saigon Royal Building Sudirman Central Business District Singapore 049909 91 Pasteur St. Jl. Jend. Sudirman, Kav. 52 -53 Jakarta Selatan Republic of Singapore District 1, Ben Nghe Ward, Ho Chi Minh City 12190 Vietnam Indonesia Tel: 62-21-515-3281 Tel: 65-6671-9845 Tel: 84-8-3911-0633 (ext.110) Mirae Asset Securities Mongolia UTsK LLC Mirae Asset Investment Advisory (Beijing) Co., Ltd Beijing Representative Office #406, Blue Sky Tower, Peace Avenue 17 2401B, 24th Floor, East Tower, Twin Towers 2401A, 24th Floor, East Tower, Twin Towers 1 Khoroo, Sukhbaatar District B12 Jianguomenwai Avenue, Chaoyang District B12 Jianguomenwai Avenue, Chaoyang District Ulaanbaatar 14240 Beijing 100022 Beijing 100022 Mongolia China China
Tel: 976-7011-0806 Tel: 86-10-6567-9699 Tel: 86-10-6567-9699 (ext. 3300) Shanghai Representative Office Ho Chi Minh Representative Office 38T31, 38F, Shanghai World Financial Center 7F, Saigon Royal Building 100 Century Avenue, Pudong New Area Shanghai 91 Pasteur St. 200120 District 1, Ben Nghe Ward, Ho Chi Minh City China Vietnam
Tel: 86-21-5013-6392 Tel: 84-8-3910-7715
Mirae Asset Daewoo Research 9