Iljin Materials (020150 KS ) Why customers are considering acquiring stakes in elecfoil suppliers Technology Maintain TP of W55,000; Malaysia line beginning to normalize Results Comment We maintain our target price of W55,000 on Iljin Materials. Despite the spread of May 18, 2020 COVID-19, the company delivered robust 1Q20 results, supported by normalized yields and utilization at its new Malaysia line. With another 10,000 tonnes coming online in 2Q20 , we expect robust profit growth to continue. At present, Iljin Materials is trading at a 2020F P/E of 28.5x, a discount to global peers (average of 32x) and domestic peers (average of 34.4x). We continue to recommend the stock as our top pick among batter y (Maintain) Buy materials suppliers.
Target Price(12M, W) 55,000 1Q20 review: In line with the recently lowered consensus For 1Q20, Iljin Materials reported revenue of W137.4bn (+13.6% YoY, +8.3% QoQ) and Share Price (05/15/20, W) 42,850 operating profit of W11bn (-7.3% YoY, +451.4% QoQ). The results were in line with the rece ntly lowered consensus. The company’s Malaysia line (10,000 tonnes) posted Expected Return 28% revenue of W25.2bn (+121% QoQ) and net profit of W3.3bn (net margin of 13.1%), suggesting yield and utilization are stabilizing. With another 10,000 tonnes coming
online in 2Q20, we expect stable quarterly earnings to continue. OP (20F, Wbn) 73 Consensus OP (20F, Wbn) 74 Consolidated net profit grew to W18.1bn (+49.8% YoY, +105.3% QoQ), far above the consensus (W11bn), bolstered by F/X-translation gains amid a higher US$/W rate. As a EPS Growth (20F, %) 47.8 result, the company’s valuation has become less expensive on a 2020F P/E basis. Market EPS Growth (20F, %) 27.5 P/E (20F, x) 28.5 Customer diversification is also gathering momentum. In 1Q20, LG Chem (051910 Market P/E (20F, x) 12.9 KS/Buy/TP: W500,000/CP: W354,500) accounted for 20.3% of non-consolidated revenue, KOSPI 1,927.28 up from 6.9% in 4Q19. We expect customer diversification to continue, fueled by: 1) tight supply/demand in the battery-use electrolytic copper foil (elecfoil) market over Market Cap (Wbn) 1,976 the medium and long term; and 2) Ch ina’s EV market recovery in 2H20. In addition to Shares Outstanding (mn) 46 shipments to domestic customers, revenue from Chinese battery makers like CATL Free Float (%) 46.4 (300750 CH/CP: RMB142.76) and BYD (002594 CH/CP: RMB57.97) should also Foreign Ownership (%) 8.1 meaningfully grow in 2H20. Beta (12M) 1.80 52-Week Low 22,550 Why customers are considering acquiring stakes in elecfoil suppliers 52-Week High 53,600 Doosan Group is reportedly looking to sell Doosan Solus (336370 KS/CP: W34,100) as part of its restructuring. According to media reports, the battery arms of Samsung, SK, (%) 1M 6M 12M and LG are all weighing strategic investments in the company. Regardless of whether a Absolute 20.4 10.7 24.7 sale goes through, we believe it is important to understand why customers are looking Relative 16.0 24.2 35.5 to pay high prices for stakes in battery-use elecfoil suppliers. Last year, SK Group acquired stakes in elecfoil makers KCFT and China-based Lingbao Wason Copper Foil. 180 Iljin Materials KOSPI 160 We believe such moves reflect the growing uncertainty over elecfoil supply/demand 140 from 2022, stemming from: 1) the small number of suppliers with strong technology 120 compared to other battery material sectors: and 2) conservative capacity additions over 100 the past several years. We think it is time to revalue the battery-use elecfoil business. 80 60 5.19 9.19 1.20 5.20
Mirae Asset Daewoo Co., Ltd.
[ Display/Batteries ] FY (Dec.) 12/16 12/17 12/18 12/19 12/20F 12/21F Revenue (Wbn) 399 454 502 550 653 772 Chuljoong Kim +822 -3774 -1464 OP (Wbn) 29 50 49 47 73 100 [email protected] OP margin (%) 7.3 11.0 9.8 8.5 11.2 13.0
NP (Wbn) 39 42 41 47 69 88 EPS (W) 971 1,000 897 1,016 1,501 1,917 ROE (%) 15.1 10.3 7.8 8.5 11.5 13.0
P/E (x) 13.9 38.3 45.7 42.1 28.5 22.4 P/B (x) 1.9 3.3 3.6 3.5 3.1 2.7 Dividend yield (%) 0.4 1.7 0.0 0.1 0.1 0.1 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
May 18, 2020 Iljin Materials
Table 1. Iljin Materials: 1Q20 review (Wbn, %) 1Q20P Growth
1Q19 4Q19 Mirae Asset Preliminary Consensus YoY QoQ Daewoo Revenue 121 127 137 135 141 13.6 8.3 Operating profit 12 2 11 12 13 -7.3 451.5 OP margin (%) 9.8 1.6 8.0 8.9 9.0 -18.4 409.1 Pretax profit 13 6 19 14 14 45.5 242.1 Net profit 12 9 18 11 12 49.8 105.3 Source: Company data, WISEfn, Mirae Asset Daewoo Research estimates
Table 2. Iljin Materials: Quarterly and annual earnings (Wbn, %) 1Q20 2Q20F 3Q20F 4Q20F 1Q21F 2Q21F 3Q21F 4Q21F 19 20F 21F Revenue 137.4 152.3 178.8 184.4 171.7 183.5 207.5 209.0 550.2 652.8 771.8 ICS for PCBs 14.2 12.6 14.6 17.7 17.0 16.3 18.9 23.0 61.1 59.1 75.2 I2B for batteries (incl Malaysia line) 75.7 88.0 105.6 100.4 100.4 110.4 126.9 121.8 243.8 369.7 459.5 Other 8.8 9.2 9.6 10.1 9.4 9.6 9.7 9.7 33.4 37.7 38.4 Consolidated subsidiaries (excl. Malaysia line) 38.6 42.5 48.9 56.2 45.0 47.2 51.9 54.5 211.8 186.3 198.7 % of revenue 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 ICS for PCBs 10.4 8.3 8.2 9.6 9.9 8.9 9.1 11.0 11.1 9.1 9.7 I2B for batteries (incl. Malaysia line) 55.1 57.8 59.1 54.4 58.4 60.2 61.2 58.3 44.3 56.6 59.5 Other 6.4 6.0 5.4 5.5 5.5 5.2 4.7 4.6 6.1 5.8 5.0 Consolidated subsidiaries (excl. Malaysia line) 28.1 27.9 27.3 30.5 26.2 25.7 25.0 26.1 38.5 28.5 25.7 Operating profit 11.0 14.8 23.6 23.6 18.8 20.9 30.4 30.2 46.9 73.0 100.4 Iljin Materials 9.4 13.3 21.8 21.8 17.5 19.3 28.3 27.5 37.2 66.4 92.6 Consolidated subsidiaries (excl. Malaysia line) 1.6 1.5 1.8 1.8 1.4 1.5 2.1 2.7 9.6 6.7 7.8 OP margin 8.0 9.7 13.2 12.8 11.0 11.4 14.7 14.5 8.5 11.2 13.0 Iljin Materials 9.5 12.1 16.8 17.0 13.8 14.2 18.2 17.8 11.0 14.2 16.2 Consolidated subsidiaries (excl. Malaysia line) 4.1 3.5 3.8 3.1 3.0 3.3 4.1 5.0 4.6 3.6 3.9 Note: All figures are based on consolidated K-IFRS. Source: Company data, Mirae Asset Daewoo Research estimates
Figure 1. Malaysia line revenue and net margin Figure 2. Iljin Materials: Revenue by region/segment
(Wbn) (%) (Wbn) 30 Malaysia line revenue (L) 15 200 Subsidiaries Malaysia Malaysia line net margin (R) Other I2B 25 ICS 12 150 20 9 15 100 6 10 50 3 5
0 0 0 1Q20 2Q19 3Q19 4Q19 1Q20 1Q18 3Q18 1Q19 3Q19 1Q20 3Q20F
Source: Company data, Mirae Asset Daewoo Research Source: Company data, Mirae Asset Daewoo Research
Mirae Asset Daewoo Research 2 May 18, 2020 Iljin Materials
Why customers are considering acquiring stakes in elecfoil suppliers: Supply shortages over the medium/long term
For battery-use elecfoil, we project the oversupply ratio to decline from 30% in 2019 to 21% in 2020 and 7% in 2021. Beginning in 2022, we project that undersupply will take shape based on our demand estimate of 399,000 tonnes and supply estimate of 361,000 tonnes (assuming 95% utilization; oversupply ratio of -9.6%).
While the entries of new players—e.g., Doosan Solus and Korea Zinc (010130 KS/Buy/TP: W550,000/CP: W372,000)—have raised concerns about potential oversupply, we still see a shortage coming. Given the likely supply/demand imbalance over the medium to long term, we believe leading market players will need to expand their combined production capacity by 20,000 tonnes annually from 2022.
For battery materials suppliers, larger-than-expected capacity additions generally serve as a source of share price momentum (given the resultant changes in revenue assumptions). For other segments of the battery materials market (e.g., cathode materials), we see limited capacity additions in light of supply/demand conditions. Accordingly, we see stronger upside for elecfoil stocks compared to other battery materials plays.
Table 3. Battery-use elecfoil supply/demand forecasts 2018 2019 2020F 2021F 2022F 2023F 2024F 2025F Global battery market (GWh) Small batteries 36 36 40 42 44 47 50 55 ESS 12 11 20 30 48 77 98 124 EV batteries 82 89 156 261 433 624 839 1,002 Total 130 136 216 333 525 748 987 1,180 Battery elecfoil demand (tonnes) Small batteries 29,040 28,670 31,677 32,447 33,548 34,815 36,822 39,164 ESS 9,440 8,867 15,684 23,465 36,305 57,572 71,371 88,645 EV batteries 65,568 70,353 122,079 202,297 329,288 465,487 612,935 717,379 Total 104,048 107,890 169,440 258,209 399,141 557,874 721,128 845,189 Elecfoil usage (tonnes/GWh) 800 792 784 776 761 746 731 716 Capacity (tonnes) Iljin Materials 17,000 25,000 35,000 45,000 55,000 65,000 75,000 85,000 KCFT (LS Mtron) 19,000 19,500 29,500 39,500 49,500 59,500 69,500 79,500 Wason (Lingbao) 15,000 23,000 35,000 47,000 58,000 68,000 78,000 88,000 Chang Chun 12,500 22,000 28,000 38,000 42,000 52,000 62,000 72,000 Nuode 17,500 23,000 38,000 48,000 63,000 73,000 83,000 93,000 Doosan Solus 0 0 0 10,000 20,000 30,000 40,000 50,000 Other 24,000 35,500 49,500 62,500 92,500 102,500 112,500 122,500 Total 105,000 148,000 215,000 290,000 380,000 450,000 520,000 590,000 Battery elecfoil supply (95% utilization, tonnes) Iljin Materials 16,150 23,750 33,250 42,750 52,250 61,750 71,250 80,750 KCFT (LS Mtron) 18,050 18,525 28,025 37,525 47,025 56,525 66,025 75,525 Wason (Lingbao) 14,250 21,850 33,250 44,650 55,100 64,600 74,100 83,600 Chang Chun 11,875 20,900 26,600 36,100 39,900 49,400 58,900 68,400 Nuode 16,625 21,850 36,100 45,600 59,850 69,350 78,850 88,350 Doosan Solus 0 0 0 9,500 19,000 28,500 38,000 47,500 Other 22,800 33,725 47,025 59,375 87,875 97,375 106,875 116,375 Total 99,750 140,600 204,250 275,500 361,000 427,500 494,000 560,500 Oversupply (%) -4.13 30.32 20.54 6.70 -9.56 -23.37 -31.50 -33.68 Source: Company data, Mirae Asset Daewoo Research
Mirae Asset Daewoo Research 3 May 18, 2020 Iljin Materials
Figure 3. Battery-use elecfoil supply/demand analysis ‰‰‰ Capacity additions needed from 2022
('000 tonnes) (%) 600 Elecfoil demand (L) Elecfoil supply (L) Oversupply ratio (R) 40
400 20
200 0
0 -20 2018 2019 2020 2021 2022
Source: Mirae Asset Daewoo Research estimates
Table 4. Battery-use elecfoil: Medium/long-term supply contracts
Customer Contract term Total volume (tonnes) Value (Wbn)
Iljin Materials Samsung SDI 2019-23 (5 years) 60,000 800
KCFT LG Chem 2020-23 (4 years) 60,000 800
Doosan Solus LG Chem 2021-25 (5 years) 30,000 400
Doosan Solus SK Innovation 2021-24 (4 years) 6,000 100
Source: DART, press reports, Mirae Asset Daewoo Research
Figure 4. Battery-use elecfoil demand forecasts Figure 5. Battery-use elecfoil production capacity forecasts
('000 tonnes) ('000 tonnes) 1,000 EV 800 Other ESS Doosan Solus Small-sized 800 Nuode 600 Chang Chun Wason (Lingbao) 600 KCFT (LS Mtron) 400 Iljin Materials 400
200 200
0 0 2018 2019 2020 2021 2022 2023 2024 2025 2018 2019 2020 2021 2022 2023 2024 2025
Source: Industry data, Mirae Asset Daewoo Research Source: Company data, Mirae Asset Daewoo Research
Mirae Asset Daewoo Research 4 May 18, 2020 Iljin Materials
Table 5. Global peer valuation table (Wbn, %, x) Market Revenue Operating profit Net profit ROE P/E P/B EV/EBITDA cap 20F 21F 20F 21F 20F 21F 20F 21F 20F 21F 20F 21F 20F 21F Iljin Materials 1,976 653 772 73 100 69 88 11.5 13.0 28.5 22.4 3.1 2.7 16.5 12.3 Doosan Solus 1,008 471 654 72 100 50 68 26.2 27.3 22.5 16.3 6.1 4.6 10.8 8.3 L&F 477 454 687 16 36 12 24 8.6 15.9 40.7 19.5 3.1 2.7 19.0 10.9 COSMO AM&T 306 342 457 10 17 9 16 6.2 9.6 32.7 19.5 2.0 1.8 12.9 8.7 POSCO Chemical 3,287 1,837 2,368 95 150 77 122 7.5 11.1 42.3 26.9 3.1 2.9 21.6 15.0 Ecopro BM 1,795 772 1,667 48 108 38 89 9.8 19.9 46.2 19.7 4.3 3.5 22.1 11.7 Chunbo 699 178 255 36 53 30 45 16.4 19.8 22.3 15.1 3.1 2.6 13.3 9.5 Umicore 11,996 4,148 4,926 614 778 307 410 10.4 12.1 34.1 24.6 3.2 3.0 15.3 12.2 Sumitomo Metal Mining 9,277 9,211 10,322 503 863 467 814 3.9 6.1 18.7 10.8 0.7 0.7 12.5 9.2 Easpring 1,870 497 715 64 89 56 77 9.6 11.8 29.7 23.2 3.2 2.9 25.0 16.8 Shanshan 2,234 1,635 1,881 86 117 70 86 3.5 4.1 30.4 26.0 1.1 1.0 15.4 12.5 Average 10.3 13.7 32.0 20.4 3.0 2.6 16.8 11.5 Notes: Based on May 15 th closing prices; Mirae Asset Daewoo estimates were used for Iljin Materials, L&F, COSMO AM&T, and Ecopro BM data. Source: Bloomberg, Mirae Asset Daewoo Research
Figure 6. Major global battery materials suppliers: 2020F P/E- Figure 7. Major global battery materials suppliers: 2020F P/B-
EPS growth ROE
(P/E, x) (P/B, x) 50 7.0 Ecopro BM Doosan Solus 6.0 40 5.0 Ecopro BM 30 Shanshan Iljin Materials 4.0 Easpring Umicore POSCO Chunbo Chemical 20 3.0 Chunbo L&F Iljin Materials SKC 2.0 COSMO AM&T 10 1.0 Shanshan SKC (EPS growth, %) SMM (ROE, %) 0 0.0 0 50 100 150 200 0.0 5.0 10.0 15.0 20.0 25.0 30.0
Source: Bloomberg, Mirae Asset Daewoo Research Source: Bloomberg, Mirae Asset Daewoo Research
Figure 8. Iljin Materials: 12-month forward P/B band Figure 9. Iljin Materials: 12-month forward P/E band
(W) (W) 55.0x 80,000 80,000
4.5x 35.0x 4.0x 60,000 60,000 30.0x 3.5x 25.0x 3.0x 40,000 40,000 20.0x 2.0x
20,000 20,000
0 0 15 16 17 18 19 20 16 17 18 19 20 Source Bloomberg, Mirae Asset Daewoo Research Source Bloomberg, Mirae Asset Daewoo Research
Mirae Asset Daewoo Research 5 May 18, 2020 Iljin Materials
Iljin Materials (020150 KS/Buy/TP: W55,000)
Comprehensive Income Statement (Summarized) Statement of Financial Condition (Summarized) (Wbn) 12/18 12/19 12/20F 12/21F (Wbn) 12/18 12/19 12/20F 12/21F Revenue 502 550 653 772 Current Assets 357 593 651 702 Cost of Sales 422 473 544 629 Cash and Cash Equivalents 53 333 304 318 Gross Profit 80 77 109 143 AR & Other Receivables 65 72 105 119 SG&A Expenses 31 31 36 43 Inventories 51 84 122 138 Operating Profit (Adj) 49 47 73 100 Other Current Assets 188 104 120 127 Operating Profit 49 47 73 100 Non-Current Assets 335 444 521 587 Non-Operating Profit 5 8 13 10 Investments in Associates 0 0 0 0 Net Financial Income 1 0 -1 -1 Property, Plant and Equipment 271 375 452 518 Net Gain from Inv in Associates 0 0 0 0 Intangible Assets 4 6 5 4 Pretax Profit 54 55 86 110 Total Assets 692 1,037 1,172 1,289 Income Tax 12 11 16 21 Current Liabilities 109 101 146 165 Profit from Continuing Operations 41 44 69 88 AP & Other Payables 48 52 75 85 Profit from Discontinued Operations 0 2 0 0 Short-Term Financial Liabilities 15 5 6 6 Net Profit 41 47 69 88 Other Current Liabilities 46 44 65 74 Controlling Interests 41 47 69 88 Non-Current Liabilities 55 112 138 149 Non-Controlling Interests 0 0 0 0 Long-Term Financial Liabilities 5 54 54 54 Total Comprehensive Profit 25 43 69 88 Other Non-Current Liabilities 50 58 84 95 Controlling Interests 25 43 69 88 Total Liabilities 164 213 283 314 Non-Controlling Interests 0 0 0 0 Controlling Interests 528 571 636 722 EBITDA 73 82 116 155 Capital Stock 23 23 23 23 FCF (Free Cash Flow) -33 -84 -25 16 Capital Surplus 385 385 385 385 EBITDA Margin (%) 14.5 14.9 17.8 20.1 Retained Earnings 110 154 221 307 Operating Profit Margin (%) 9.8 8.5 11.2 13.0 Non-Controlling Interests 0 253 253 253 Net Profit Margin (%) 8.2 8.5 10.6 11.4 Stockholders' Equity 528 824 889 975
Cash Flows (Summarized) Forecasts/Valuations (Summarized) (Wbn) 12/18 12/19 12/20F 12/21F 12/18 12/19 12/20F 12/21F Cash Flows from Op Activities 86 48 95 136 P/E (x) 45.7 42.1 28.5 22.4 Net Profit 41 47 69 88 P/CF (x) 23.7 20.0 15.3 12.0 Non-Cash Income and Expense 39 52 60 77 P/B (x) 3.6 3.5 3.1 2.7 Depreciation 24 34 43 54 EV/EBITDA (x) 23.3 23.9 16.5 12.3 Amortization 0 1 1 1 EPS (W) 897 1,016 1,501 1,917 Others 15 17 16 22 CFPS (W) 1,733 2,136 2,809 3,585 Chg in Working Capital 6 -37 -17 -7 BPS (W) 11,460 12,390 13,794 15,661 Chg in AR & Other Receivables -4 -7 -32 -14 DPS (W) 0 50 50 50 Chg in Inventories 6 -35 -38 -16 Payout ratio (%) 0.0 4.9 3.3 2.6 Chg in AP & Other Payables 2 8 11 5 Dividend Yield (%) 0.0 0.1 0.1 0.1 Income Tax Paid -3 -14 -16 -21 Revenue Growth (%) 10.6 9.6 18.7 18.2 Cash Flows from Inv Activities -62 -47 -121 -120 EBITDA Growth (%) 0.0 12.3 41.5 33.6 Chg in PP&E -119 -115 -120 -120 Operating Profit Growth (%) -2.0 -4.1 55.3 37.0 Chg in Intangible Assets 0 -2 0 0 EPS Growth (%) -10.3 13.3 47.7 27.7 Chg in Financial Assets 245 22 -1 0 Accounts Receivable Turnover (x) 8.5 8.1 7.5 7.0 Others -188 48 0 0 Inventory Turnover (x) 9.2 8.1 6.3 5.9 Cash Flows from Fin Activities -18 283 -1 -2 Accounts Payable Turnover (x) 18.3 20.0 17.6 16.1 Chg in Financial Liabilities 9 39 1 0 ROA (%) 6.2 5.4 6.3 7.2 Chg in Equity 6 0 0 0 ROE (%) 7.8 8.5 11.5 13.0 Dividends Paid -30 0 -2 -2 ROIC (%) 12.5 9.1 11.1 12.7 Others -3 244 0 0 Liability to Equity Ratio (%) 31.0 25.8 31.9 32.2 Increase (Decrease) in Cash 7 280 -29 14 Current Ratio (%) 327.9 586.9 446.6 425.5 Beginning Balance 46 53 333 304 Net Debt to Equity Ratio (%) -33.5 -33.3 -35.1 -33.4 Ending Balance 53 333 304 318 Interest Coverage Ratio (x) 33.9 46.0 21.2 28.8 Source: Company data, Mirae Asset Daewoo Research estimates
Mirae Asset Daewoo Research 6 May 18, 2020 Iljin Materials
APPENDIX 1
Important Disclosures & Disclaimers 2-Year Rating and Target Price History
Company (Code) Date Rating Target Price (W) Iljin Materials Iljin Materials (020150) 04/07/2020 Buy 55,000 80,000 11/15/2019 Buy 59,000 08/16/2019 After 1yr 60,000 08/16/2018 Buy 64,000 06/03/2018 Buy 55,000 40,000
20,000
0 May 18 May 19 May 20
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 82.04% 12.57% 5.39% 0.00% Investment Banking Services 80.77% 11.54% 7.69% 0.00% * Based on recommendations in the last 12-months (as of March 31, 2020)
Disclosures As of the publication date, Mirae Asset Daewoo Co., Ltd. and/or its affiliates do not have any special interest with the subject company and do not own 1% or more of the subject company's shares outstanding.
Analyst Certification The research analysts who prepared this report (the “Analysts”) are registered with the Korea Financial Investment Association and are subject to Korean securities regulations. They are neither registered as research analysts in any other jurisdiction nor subject to the laws or regulations thereof. Each Analyst responsible for the preparation of this report certifies that (i) all views expressed in this report accurately reflect the personal views of the Analyst about any and all of the issuers and securities named in this report and (ii) no part of the compensation of the Analyst was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report. Mirae Asset Daewoo Co., Ltd. (“Mirae Asset Daewoo”) policy prohibits its Analysts and members of their households from owning securities of any company in the Analyst’s area of coverage, and the Analysts do not serve as an officer, director or advisory board member of the subject companies. Except as otherwise specified herein, the Analysts have not received any compensation or any other benefits from the subject companies in the past 12 months and have not been promised the same in connection with this report. Like all employees of Mirae Asset Daewoo, the Analysts receive compensation that is determined by overall firm profitability, which includes revenues from, among other business units, the institutional equities, investment banking, proprietary trading and private client division. At the time of publication of this report, the Analysts do not know or have reason to know of any actual, material conflict of interest of the Analyst or Mirae Asset Daewoo except as otherwise stated herein.
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 client of Mirae Asset Daewoo by virtue of receiving this report. This report does not take into account the particular investment objectives, financial
Mirae Asset Daewoo Research 7 May 18, 2020 Iljin Materials
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 May 18, 2020 Iljin Materials
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 Units 8501, 8507-8508, 85/F 41st Floor, Tower 42 Mirae Asset Center 1 Building International Commerce Centre 25 Old Broad Street, 26 Eulji-ro 5-gil, Jung-gu, Seoul 04539 1 Austin Road West London EC2N 1HQ Korea Kowloon United Kingdom Hong Kong 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