January 15, 2013

KOREA

Company News & Analysis Major Indices Close Chg Chg (%) Kangwon Land (Buy/TP: W37,000) KOSPI 1,983.74 -23.30 -1.16 New capacity, new demand KOSPI 200 261.43 -3.37 -1.27 KOSDAQ 508.02 -5.42 -1.06

Sector News & Analysis Turnover ('000 shares, Wbn) Machinery (Neutral) Volume Value KOSPI 542,341 4,376 Excellent sales continue KOSPI 200 128,478 3,403 KOSDAQ 489,904 1,848

Market Cap (Wbn) Value KOSPI 1,146,701 KOSDAQ 111,459

KOSPI Turnover (Wbn) Buy Sell Net Foreign 1,088 1,318 -230 Institutional 988 939 49 Retail 2,279 2,095 184

KOSDAQ Turnover (Wbn) Buy Sell Net Foreign 75 79 -4 Institutional 64 84 -20 Retail 1,703 1,681 22

Program Buy / Sell (Wbn) Buy Sell Net KOSPI 742 1,010 -268 KOSDAQ 17 18 -1

Advances & Declines Advances Declines Unchanged KOSPI 264 538 88 KOSDAQ 293 626 78

KOSPI Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value KODEX LEVERAGE 12,765 -285 377 Electronics 1,512,000 -40,000 325 Hynix 25,950 -1,000 176 KODEX INVERSE 7,440 85 174 Hyundai Motor 209,000 0 122

KOSDAQ Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value AHNLAB 51,100 6,300 101 Hicel 3,340 -460 49 SDN 1,670 80 35 Solco Biomedical 1,060 136 26 Interflex 45,350 -3,350 25 Note: As of January 15, 2013

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.

Company January 15, 2013

Entertainment Kangwon Land (035250 KS) Daewoo Securities Co., Ltd. Chang-kwean Kim New capacity, new demand +822-768-4321 [email protected] Capacity expansion expected to drive strong earnings

After our visit to Kangwon Land, we believe the companyÊs expanding casino capacity will generate stronger-than-expected earnings in 2013.

1) We expect Kangwon Land to open its new casino earlier than market forecasts (June-July); we project it will start operating table games in April, and slot machines

in June. Thus, we believe the expansion will start to boost earnings one quarter Buy (Maintain) earlier than the market expects. Target Price (12M, W) 37,000 2) We believe the number of customers will jump sharper than market forecasts Share Price (01/14/13, W) 30,000 (10%-30%) after the new facility opens. We believe a number of gamers might have Expected Return (%) 23.3 stopped visiting Kangwon LandÊs facilities due to space limitations (confirmed after EPS Growth (13F, %) 23.3 Market EPS Growth (13F, %) 20.1 seeing how fully occupied the companyÊs casino tables were during our visit). P/E (13F, x) 16.3 3) We expect expansion costs to be minimal. We estimate expansion-related annual Market P/E (13F, x) 9.0 KOSPI 2,007.04 fixed costs at only W15-20bn (taking out personnel expenses). We estimate the Market Cap (Wbn) 6,418 companyÊs budgets for new facilities and slot machines at ~W150bn. Shares Outstanding (mn) 214 4) We do not expect higher taxes at this time. For now, Kangwon Land is subject to Avg Trading Volume (60D, '000) 500 Avg Trading Value (60D, Wbn) 14 three taxes besides corporate tax: ① taxes for a tourism promotions and Dividend Yield (13F, %) 3.2 development fund, ② taxes for a fund for abandoned mines, and ③ an excise tax. Free Float (%) 52.1 Rates for these taxes were decided in 2012. Beginning in 2013, an additional tax for 52-Week Low (W) 22,300 gambling-addiction prevention will go into effect (0.35% of casino revenues for 52-Week High (W) 31,900 Kangwon). This tax was enacted in November 2012. Beta (12M, Daily Rate of Return) 0.23 Price Return Volatility (12M Daily, %, SD) 1.9 5) We do not expect additional government restrictions on the number of casino Foreign Ownership (%) 32.7 tables for now. Revisions to related laws will take time, and will have to be justified. Major Shareholder(s) Mine Reclamation Corp et al. (36.27%) In conclusion, we believe Kangwon Land is expanding capacity faster than expected. Gangwondo Development Corp. (6.35%) We expect this expansion will lead to strong top-line growth and limited expenses. Treasury Stock (5.04%) Of note, long-term regulatory risks are the nature of the gambling industry. We Price Performance expect Kangwon LandÊs shares will soon gain stronger-than-expected momentum (%) 1M 6M 12M from capacity expansion. Absolute 1.4 23.2 13.4 Relative 0.8 12.5 6.4

Share price FY Revenues OP OP Margin NP EPS EBITDA FCF ROE P/E P/B EV/EBITDA 120 KOSPI (Wbn) (Wbn) (%) (Wbn) (Won) (Wbn) (Wbn) (%) (X) (X) (X) 110 12/10 1,313 564 43.0 434 2,031 631 219 21.7 13.8 2.7 7.9 100 12/11 1,264 501 39.7 393 1,839 566 237 17.9 14.8 2.4 8.4 90 12/12F 1,300 416 32.0 319 1,493 477 209 13.6 19.6 2.4 11.6 80 12/13F 1,522 501 32.9 394 1,840 570 314 15.6 16.3 2.3 9.7

70 12/14F 1,675 553 33.0 441 2,063 628 339 16.0 14.6 2.1 8.6 1/12 5/12 9/12 1/13 Note: 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

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. Industry January 15, 2013

Neutral Machinery Daewoo Securities Co., Ltd. Ki-jong Sung Excellent sales continue +822-768-3263 [email protected] 4Q preview: Disappointing earnings, but solid fundamentals Ryan Kang +822-768-3065 We expect 4Q earnings at both TK Corp. and SungKwang Bend to slightly miss [email protected] market expectations due to won appreciation against the US dollar, and delays in shipments. For both companies, more than 50% of revenues come from exports,

while raw materials imports account for 40% of total raw materials purchased, which represents 40% of revenues. We thus estimate each companyÊs net F/X exposure (in US dollars) at around 35% (50% - 40% x 40%) of revenues. We expect a decrease in the W/US$ rate (-4.2% QoQ) will hurt the earnings of fittings companies. Additionally, heavy snow in Busan delayed SungKwang BendÊs shipments of completed products; however, we do not anticipate this will hurt the companyÊs fundamentals, as we expect the delayed shipments will be recognized in 1Q13 earnings.

Catalysts: Excellent sales continue TK Corp.Ês and SungKwang BendÊs share prices dropped recently due to concerns over tepid 4Q earnings. These corrections provide an excellent buying opportunity, however, as we believe each companyÊs fundamentals remain solid. TK Corp. and SungKwang Bend are taking steady, robust new orders and have secured order backlogs of greater than six months. We expect significant earnings in 2013, as raw material prices are falling, and both companies have improved their product mixes.

Also, TK Corp. and SungKwang Bend have improved their brand awareness, and their major competitors in Southern Europe are faring poorly. We project both companies to post rapid M/S growth, thanks to increased investments, and more diversified client bases. Both companies are successfully adapting to changes in the international business environment for industrial plants (including power, gas, and offshore plants). We project both companies to show an excellent combination of earnings and growth despite depressed petrochemical demand, thanks to increasing demand for power generation, gas, and offshore plants.

Valuation: Strong potential for growth, attractive valuation We maintain our Buy recommendation and target price of W30,000 on SungKwang Bend. However, we lower our target price for TK Corp. by 10% to W33,500; this reflects the gap in 2013F OP margin between TK Corp. (15.8%) and SungKwang Bend (21.0%). We used to give a 10% premium to TK Corp.Ês valuation due to the companyÊs greater production capacity (and debt-free financial statement); however, we do not anticipate the gap in projected OP margin will narrow in 2013 even if we incorporate these factors.

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. Industry January 15, 2013

4Q12 earnings preview We expect the following 4Q earnings for TK Corp.: revenues of W100.1bn (+20.8% YoY), operating profit of W13bn (-27.6% YoY), pretax profit of W12.5bn, and OP margin of 13.0%. We project the companyÊs operating profit to slightly miss expectations due to won appreciation against the US dollar. We also expect other negative factors, including year-end bonus payments, F/X-related losses, and additional one-off losses (due to issues regarding defective products, which have hurt the companyÊs earnings from 2Q12).

For SungKwang Bend, we project the following 4Q earnings: revenues of W92.5bn (+22.0% YoY), operating profit of W17.7bn (+109.3% YoY), pretax profit of W16.3bn, and OP margin of 19.1%. We believe SungKwang BendÊs earnings will also be affected by won appreciation against the US dollar, bonus payments, and F/X-related losses. In addition, heavy snows have delayed the companyÊs shipments of completed fittings products (amounting to about W4-5bn). However, we believe the companyÊs fundamentals remain unchanged.

2

Key Universe Valuations January 15, 2013

※All data as of close January 14, 2013, unless otherwise noted.

12F Earnings growth Mkt Cap Price P/E (x) P/B (x) ROE (%) Ticker Company Div Yield OP EPS (Wbn) (W) (%) 12F 13F 12F 13F 12F 13F 12F 13F 12F 13F 005930 228,609 1,552,000 0.5 82.5 25.3 76.5 26.0 11.0 8.9 2.1 1.7 21.7 22.2 005380 Hyundai Motor 46,038 209,000 0.9 16.4 3.7 18.7 1.1 6.9 6.5 1.4 1.1 21.9 18.2 005490 POSCO 31,562 362,000 2.7 -35.9 42.7 -21.0 25.4 12.1 10.0 0.7 0.7 6.6 7.8 012330 24,628 253,000 0.7 6.3 15.3 16.0 5.8 8.0 6.6 1.7 1.3 22.7 19.7 000270 Motors 21,687 53,500 1.2 24.3 0.6 21.4 1.9 5.4 5.1 1.4 1.1 27.2 22.0 051910 LG Chem 21,107 318,500 1.2 -26.7 24.3 -25.4 21.0 15.3 12.2 2.3 1.9 15.6 16.5 032830 Samsung Life 19,580 97,900 2.0 33.2 0.0 23.0 4.2 16.8 16.1 1.0 0.9 6.2 6.0 000660 SK Hynix 18,707 26,950 - - - - - 16.8 2.0 1.9 - 10.7 055550 18,612 39,250 2.0 -18.2 -1.5 -14.1 2.3 8.1 8.0 0.7 0.7 9.2 8.7 009540 17,898 235,500 -45.2 34.0 -32.4 17.6 10.6 8.8 1.1 1.0 10.2 11.1 096770 SK Innovation 15,303 165,500 1.7 -32.1 40.1 -60.6 51.3 13.1 8.2 1.1 1.0 8.3 11.6 105560 KB Financial Group 14,990 38,800 1.6 -19.5 3.6 -11.8 3.5 7.2 7.1 0.6 0.6 8.5 8.2 066570 LG Electronics 12,306 75,200 0.7 327.2 31.5 - 40.6 19.7 14.4 1.1 1.1 5.2 7.0 035420 NHN 11,406 237,000 0.2 2.4 29.9 12.8 31.4 21.5 17.1 4.0 3.4 27.9 29.1 003550 LG Corp. 11,251 65,200 1.5 13.8 8.8 22.5 9.1 9.6 8.8 1.0 0.9 10.9 10.9 023530 Lotte Shopping 11,124 383,000 0.4 -15.3 11.7 8.4 12.6 10.8 9.8 1.1 1.0 7.0 7.4 010950 S-Oil 10,966 97,400 3.1 -35.2 55.4 -41.6 86.4 17.4 8.8 2.2 1.8 13.0 21.7 033780 KT&G 10,791 78,600 4.0 -7.3 6.7 -5.1 11.4 14.3 12.5 2.1 1.9 15.7 16.3 034220 LG Display 10,341 28,900 1.0 - 129.5 - 180.4 35.5 11.8 1.1 1.0 3.1 8.2 051900 LG Household & Health Care 10,199 653,000 0.5 19.0 16.6 27.2 19.1 34.6 28.9 32.6 15.3 29.7 27.8 000810 Samsung F&M 10,067 212,500 2.3 12.6 20.2 17.0 19.2 11.7 9.8 1.2 1.1 11.1 11.7 000830 Samsung C&T 9,686 62,000 1.0 17.1 -19.7 18.8 -19.7 21.1 26.0 1.0 0.9 4.7 3.3 086790 8,969 36,900 2.9 49.3 -19.3 66.0 -32.8 4.4 6.9 0.9 0.5 16.1 9.4 010140 8,739 37,850 2.9 2.0 5.2 8.8 9.9 9.0 1.5 1.2 17.8 16.5 003600 SK Holdings 8,359 178,000 1.1 -28.1 20.1 -35.3 27.3 7.9 6.1 2.1 1.4 9.7 11.2 000720 Hyundai E&C 7,973 71,600 1.0 2.6 17.3 -11.0 20.9 13.8 11.7 1.7 1.5 12.7 13.7 086280 7,706 205,500 0.9 34.9 22.0 34.7 14.2 20.4 16.6 4.7 3.5 25.2 23.2 010130 Korea Zinc 7,444 394,500 0.6 -8.7 24.6 -7.8 30.6 11.8 8.8 2.0 1.6 17.6 19.3 004020 7,073 82,900 0.6 -32.2 40.3 6.4 18.8 9.4 7.5 0.8 0.7 8.3 9.1 009150 Samsung Electro-Mechanics 7,059 94,500 0.8 101.0 17.4 35.5 20.7 16.3 12.8 2.2 1.8 12.9 14.1 090430 Amorepacific 6,904 1,181,000 0.5 7.3 14.4 -2.4 16.1 26.3 22.0 3.7 3.1 14.1 14.4 006400 Samsung SDI 6,788 149,000 1.3 739.0 -82.4 377.0 -59.9 4.7 11.5 1.0 0.9 22.5 8.0 088350 Hanwha Life 6,757 7,780 3.3 - - 11.5 3.5 11.4 11.0 1.0 0.9 8.8 8.6 139480 Emart 6,676 239,500 0.3 55.6 6.5 71.4 5.8 12.7 12.0 1.1 1.0 9.1 8.9 078930 GS 6,551 70,500 1.7 -14.9 65.3 -27.8 62.9 12.2 7.3 1.2 1.0 9.0 13.3 024110 6,470 11,850 3.4 -11.0 -15.4 -13.0 -12.3 6.0 6.9 0.5 0.5 9.3 7.6 035250 Kangwon Land 6,418 30,000 2.9 -17.0 20.5 -18.8 23.3 19.6 16.3 2.4 2.3 13.6 15.6 001800 Orion 6,402 1,073,000 0.3 37.0 23.7 66.1 27.3 39.7 30.5 7.0 5.7 17.4 18.8 028050 6,200 155,000 1.8 0.4 9.5 -0.6 11.1 13.0 10.9 3.3 2.5 32.8 28.4 034730 SK C&C 5,350 107,000 1.1 13.3 17.5 4.6 28.4 11.2 9.1 1.8 1.5 18.2 18.9 068270 5,185 25,850 17.2 36.3 1.3 30.2 26.3 20.0 6.5 5.4 17.6 19.2 034020 Doosan Heavy I&C 5,171 48,850 7.6 3.2 40.2 24.8 12.4 10.8 1.2 1.2 7.9 9.4 097950 CJ CheilJedang 4,985 381,000 0.6 38.2 13.3 5.7 49.7 15.9 2.8 11.0 14.3 001300 4,777 91,100 0.8 28.2 30.5 -9.7 51.7 20.5 13.1 1.6 1.4 7.3 10.2 004940 Bank 4,759 7,380 2.3 -51.5 -4.8 -55.1 0.0 6.6 6.4 - - - - 047050 Daewoo International 4,646 40,800 0.6 18.3 10.5 -45.5 13.0 35.2 32.1 5.2 4.6 6.5 7.0 010060 OCI 4,567 191,500 2.0 -77.5 30.8 -87.1 24.6 39.2 36.4 1.2 1.4 3.0 3.7 016360 Samsung Securities 4,143 54,200 1.4 9.6 19.4 24.0 18.6 16.1 13.6 1.2 1.1 6.9 7.7 047040 Daewoo E&C 4,048 9,740 1.0 1.1 34.6 4.2 50.2 17.5 11.4 1.2 1.0 6.8 9.5 011210 Hyundai Wia 3,911 152,000 0.9 62.9 15.8 66.5 12.9 11.0 8.6 2.6 1.9 24.6 22.3 Source: KDB Daewoo Research

Market Data January 15, 2013

※All data as of close January 15, 2013, unless otherwise noted.

Other Major Indices Economic Indicators Close Net Chg 1D (%) YTD (%) Close 1D ago 1M ago 1Y ago MSCI Korea* 435.04 1.40 0.32 1.36 USD/KRW 1,056.10 1,056.50 1,072.30 1,158.80 KOSPI 1,983.74 -23.30 -1.16 -2.33 JPY100/KRW 1,180.53 1,180.58 1,282.35 1,509.54 KOSDAQ 508.02 -5.42 -1.06 1.28 EUR/KRW 1,412.53 1,411.33 1,402.14 1,484.77 Dow Jones* 13,507.32 18.89 0.14 0.71 3Y Treasury 2.73 2.76 2.87 3.37 S&P 500* 1,470.68 -1.37 -0.09 0.56 3Y Corporate 3.21 3.25 3.31 4.24 NASDAQ* 3,117.50 -8.13 -0.26 0.17 DDR2 1Gb* 1.21 1.22 1.17 1.36 Philadelphia Semicon* 401.89 -0.97 -0.24 0.54 NAND 16Gb* 1.92 1.92 1.88 2.72 FTSE 100* 6,107.86 -13.72 -0.22 1.34 Oil (Dubai)* 106.90 107.52 104.20 110.65 Nikkei 225 10,879.08 77.51 0.72 1.79 Gold* 1,668.00 1,660.60 1,695.80 1,630.80 Hang Seng* 23,413.26 149.19 0.64 0.43 Customer deposits (Wbn)* 17,758 17,686 17,223 18,328 Taiwan (Weighted) 7,765.02 -58.95 -0.75 -0.18 Equity type BC (Wbn)(Jan. 11) 94,074 94,204 95,469 104,612 Note: * as of January 14, 2013 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 Honam Petrochemical 15.96 Samsung Electronics 54.02 KEPCO 27.07 KODEX LEVERAGE 48.34 OCI 15.12 KEPCO 41.25 Hyundai Motor 24.82 Samsung Electronics 27.20 LG Household & Health Care 11.34 KT 22.47 SK Telecom 22.91 Hyundai Heavy Industries 18.48 SEMCO 11.14 LG Display 20.40 KT 22.58 TIGER200 13.37 CJ Corp. 8.14 Hynix 17.93 19.44 Kumho Petrochemical 12.19 CJ Cheiljedang 7.83 SK Telecom 16.28 Hyundai Mobis 17.17 HYUNDAI WIA 12.11 GS Holdings 6.36 LG Electronics 14.06 KODEX INVERSE 13.02 Honam Petrochemical 11.15 Korea Zinc 5.93 Hyundai Mobis 11.37 DSME 11.94 CJ Cheiljedang 9.57 Hyundai Heavy Industries 5.66 SK Energy 11.21 Woori Finance Group 11.77 GS Holdings 9.35 LG Corp. 5.07 KB Financial Group 9.51 LG Uplus 9.13 KODEX 200 9.28 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 Partrion 6.69 NEOWIZ Games 3.51 Sung Kwang Bend 3.82 Interflex 6.49 Daum Communications 2.19 Genic 3.09 SK Broadband 3.18 Partrion 3.16 Interflex 1.96 Com2us 2.29 HaanSoft 1.28 Daum Communications 2.77 CJ E&M 1.67 Komipharm 1.53 TK Corp. 1.27 SEEGENE 2.41 POSCO ICT 1.44 Seoul Semiconductor 1.14 OSSTEM IMPLANT 0.97 Modetour Network 1.77 CJ O Shopping 1.41 Melfas 1.09 Kolon Life Science 0.89 Samjung Packing & Aluminum 1.71 Dongsuh 1.04 Medy-tox 1.01 Silicon Works 0.86 Interpark 1.69 Samjung Packing & Aluminum 0.94 Paradise 0.91 GOLFZON 0.66 NEPES 1.39 OSSTEM IMPLANT 0.93 Sung Kwang Bend 0.89 CJ E&M 0.57 Paradise 1.19 Eugene Technology 0.82 SEEGENE 0.82 Bixolon 0.55 WiSoL 1.10 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 1,512,000 -40,000 222,717 Celltrion 25,750 -100 4,497 Hyundai Motor 209,000 0 46,038 CJ O Shopping 291,400 -600 1,808 POSCO 358,500 -3,500 31,256 Paradise 17,650 -750 1,605 Hyundai Mobis 255,500 2,500 24,871 SK Broadband 5,020 30 1,486 Kia Motors 53,400 -100 21,646 Seoul Semiconductor 25,300 -550 1,475 KEPCO 33,450 -1,400 21,474 Daum Communications 101,800 -2,200 1,375 LG Chem 316,000 -2,500 20,942 CJ E&M 30,400 250 1,153 Samsung Life Insurance 98,800 900 19,760 POSCO ICT 8,000 30 1,096 Samsung Electronics (P) 845,000 -11,000 19,294 Dongsuh 18,400 150 1,089 Shinhan Financial Group 39,350 100 18,660 GS Home Shopping 163,700 0 1,074 Source: Korea Exchange