Morning Focus

August 6, 2018

Korea Morning Focus

Company News & Analysis Major Indices Close Chg Chg (%) Kumho Petrochemical (011780/Buy/TP: W170,000) Raise TP KOSPI 2,287.68 17.48 0.77 Favorable cycles and enhanced earnings power; Raise TP KOSPI 200 295.61 2.06 0.70 KOSDAQ 788.81 7.43 0.95 KT (030200/Buy/TP: W35,000) In-line earnings Turnover ('000 shares, Wbn) Volume Value KOSPI 265,613 4,128 Economy & Strategy Update KOSPI 200 61,129 3,062 KOSDAQ 527,964 2,854 Fixed Income Monthly KTB yields to receive solid downside support Market Cap (Wbn) Value KOSPI 1,531,545 KOSDAQ 261,312

KOSPI Turnover (Wbn) Buy Sell Net Foreign 1,254 1,110 144 Institutional 912 992 -80 Retail 1,928 2,017 -89

KOSDAQ Turnover (Wbn) Buy Sell Net Foreign 265 275 -10 Institutional 140 146 -6 Retail 2,448 2,435 13

Program Buy / Sell (Wbn) Buy Sell Net KOSPI 1,033 862 172 KOSDAQ 114 126 -12

Advances & Declines Advances Declines Unchanged KOSPI 639 198 57 KOSDAQ 779 354 108

KOSPI Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Samsung Electronics 45,750 200 340 LG Chem 391,000 16,000 163 Hynix 83,300 100 161 SAMSUNG BIOLOGICS 392,000 14,000 156 KODEX KOSDAQ150 15,330 410 129 LEVERAGE

KOSDAQ Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value NATURECELL 4,940 -2,090 128 NEXTCHIP 9,080 1,230 123 LB SEMICON 5,420 250 105 SillaJen 59,200 700 94 Dexter studios 11,350 1,250 78 Note: As of August 03, 2018 Mirae Asset Daewoo Research This document is a summary of a report prepared by Mirae Asset Daewoo Co., Ltd. (“Mirae Asset 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. Mirae Asset 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. Mirae Asset 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.

Kumho Petrochemical (011780 KS) Favorable cycles and enhanced earnings power; Raise TP Chemicals Enhanced earnings-generating capability and favorable cycles; Raise TP and recommend as one of our top picks Results Comment August 6, 2018 Enhanced earnings power and favorable cycles: After rallying on improving market conditions for synthetic rubbers and phenol derivatives in 4Q17 and 1Q18, Kumho Petrochemical’s stock has remained range-bound on the slowdown of synthetic rubbers and resins. However, given continued strength in phenol derivatives and improvements in energy resulting from higher oil prices, we believe overall earnings (Maintain) Buy power has increased. Moreover, we believe the resin cycle has bottomed out amid the recent weakness caused by overall demand contraction, and the synthetic rubber ▲ Target Price (12M, W) 170,000 market is likely to recover gradually on the absence of capacity expansion plans. Indeed, given limited capacity expansions for key products (phenol derivatives, Share Price (08/03/18, W) 110,500 synthetic rubbers, and synthetic resins) over the next two to three years, product cycles look favorable. Expected Return 54% Raise TP to W170,000 and add to top picks: We raise our target price on Kumho Petrochemical by 13% to W170,000 (from W150,000), reflecting upward adjustments to OP (18F, Wbn) 628 our synthetic rubber and phenol derivative earnings estimates. We also add the stock Consensus OP (18F, Wbn) 586 to our list of top picks in the chemicals sector. We derived our target price by applying a P/E of 10x to our 12-month-forward EPS. We think our target multiple is justifiable, as EPS Growth (18F, %) 168.5 1) valuation is undemanding, considering the firm’s earnings-generating capability in Market EPS Growth (18F, %) 10.5 the current cycle; and 2) market conditions for key products are likely to improve P/E (18F, x) 6.5 further due to limited capacity expansions. Market P/E (18F, x) 9.0 KOSPI 2,287.68 2Q18 review: In-line earnings In-line earnings on healthy synthetic rubber and phenol derivative cycles: Kumho Market Cap (Wbn) 3,367 Petrochemical’s 2Q18 operating profit came in at W153.5bn, in line with the consensus. Shares Outstanding (mn) 33 Phenol derivative (BPA, etc.) earnings improved on robust market conditions. For Free Float (%) 56.9 synthetic rubbers, despite softening spreads (SBR, etc.), earnings expanded on higher Foreign Ownership (%) 30.1 NB-Latex prices. Meanwhile, synthetic resin earnings fell slightly QoQ on softening Beta (12M) 0.48 spreads, and energy earnings declined QoQ, hurt by large-scale maintenance. 52-Week Low 67,100 52-Week High 117,000 3Q18 preview: OP likely to decline slightly QoQ, but remain high; Earnings improvement through 2020 (%) 1M 6M 12M Absolute -4.3 4.2 42.4 3Q18F OP of W147.7bn: We forecast 3Q18 operating profit at W147.7bn, declining Relative -5.0 15.1 48.6 slightly QoQ but remaining high nonetheless. For synthetic rubbers, margins on specialty products (e.g., NB-Latex) should remain high, partly offsetting a sharp

170 Kumho Petrochemical KOSPI narrowing of SBR spreads resulting from lackluster tire demand and high butadiene 150 prices. Synthetic resin earnings should decline on a weakening ABS cycle. In contrast, 130 the phenol derivative cycle should remain strong in 2H18, aided by wider BPA spreads

110 and capacity additions in downstream industries (e.g., PC). Energy earnings should also

90 improve, with rising oil prices likely to drive system marginal prices (SMP) higher.

70 7.17 11.17 3.18 7.18 We project Kumho Petrochemical’s earnings to expand further through 2020 on the back of improving cycles of key products (synthetic rubbers, etc.), for which capacity expansions will be limited over the next two to three years. Mirae Asset Daewoo Co., Ltd.

[Oil Refining/Chemicals/Renewables] FY (Dec.) 12/15 12/16 12/17 12/18F 12/19F 12/20F Revenue (Wbn) 3,935 3,970 5,065 6,049 7,805 9,334 Yeon-ju Park +822-3774-1755 OP (Wbn) 164 157 263 628 777 955 [email protected] OP margin (%) 4.2 4.0 5.2 10.4 10.0 10.2 Minkyung Kim NP (Wbn) 119 73 214 573 653 791 +822-3774-1732 EPS (W) 3,550 2,187 6,377 17,121 19,507 23,609 [email protected] ROE (%) 7.6 4.6 12.3 27.1 24.2 23.4 P/E (x) 14.7 37.5 15.6 6.5 5.7 4.7 P/B (x) 1.1 1.7 1.8 1.5 1.2 1.0 Dividend yield (%) 1.5 1.0 1.0 1.4 1.4 1.4 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

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.

August 6, 2018 Kumho Petrochemical

Table 1. Quarterly and annual earnings (Wbn) 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18P 3Q18F 4Q18F 2017 2018F 2019F Revenue Total 1,408.2 1,239.1 1,205.2 1,212.3 1,339.9 1,441.8 1,669.3 1,598.1 5,064.8 6,049.1 7,804.6 Synthetic rubbers 636.2 499.5 463.5 468.9 474.5 516.6 611.3 540.1 2,068.1 2,142.5 3,403.3 Synthetic resins 303.5 293.8 308.9 299.3 299.6 324.1 338.6 338.6 1,205.5 1,301.0 1,423.1 Phenol derivatives 309.2 295.5 287.3 288.9 416.2 452.9 566.2 566.2 1,180.9 2,001.5 2,322.7 Energy 38.0 36.3 35.8 36.6 57.0 42.4 53.2 53.2 146.7 205.8 255.6 Other 121.3 114.0 109.6 118.6 92.6 105.8 100.0 100.0 463.5 398.4 400.0 Operating Total 65.7 44.2 57.8 95.0 165.8 153.5 147.7 160.8 262.7 627.8 776.9 profit Synthetic rubbers 12.7 5.0 9.3 23.4 33.2 41.3 18.3 27.0 50.4 119.9 189.0 Synthetic resins 9.1 8.8 21.6 18.0 24.0 16.2 10.2 16.9 57.5 67.3 71.2 Phenol derivatives 9.3 3.0 0.0 14.4 66.6 67.9 84.9 84.9 26.7 304.4 348.4 Energy 20.0 18.0 16.0 23.8 34.2 21.2 29.3 31.9 77.8 116.6 153.4 Other 14.6 9.3 10.8 15.4 7.8 6.8 5.0 0.0 50.1 19.7 15.0 Pretax profit 88.4 52.9 78.1 70.4 194.2 181.3 174.2 187.7 289.8 737.4 888.9 Net profit 69.1 36.7 56.5 51.3 132.1 175.3 128.0 137.9 213.6 573.4 653.3 Source: Company data, Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 2

KT (030200 KS) In-line earnings

Telecom Service 2Q18 review: In-line OP Results Comment For 2Q18, KT announced revenue of W5.81tr and operating profit of W399.1bn. Results August 6, 2018 were on par with the 1Q18 performance, and operating profit slightly exceeded the market consensus. Stripping out a one-off gain of W85bn (handset subsidy VAT return) and one-off expenses of W65bn (early retirement and the lump-sum recognition of base wage hikes), operating profit was W380bn, in line with the consensus. (Maintain) Buy Although gross subscriber additions (new, device upgrades, and mobile number porting combined) came in 100,000 below the market estimate, the wireless division’s Target Price (12M, W) 35,000 marketing spend remained flattish QoQ, as the share of subscribers opting for the 25% discount rate fell to 50% of total subscribers, and the percentage of those choosing Share Price (08/03/18, W) 29,250 handset subsidies increased. For high-speed internet and IPTV, marketing spend increased QoQ due to efforts to attract new subscribers and induce contract renewals, Expected Return 20% with three-year contracts on GiGA internet service (launched in 2014) beginning to expire.

Slowing pace of ARPU decline is positive; KT is likely to defend ARPU OP (18F, Wbn) 1,430 Consensus OP (18F, Wbn) 1,382 ARPU declined only 0.8% QoQ. Notably, the share of subscribers choosing discount rate plans fell to 50%, although the share remains much higher than it was when the EPS Growth (18F, %) 37.6 discount rate was 20%. Moreover, despite pressure on ARPU (e.g., rate cuts for low- Market EPS Growth (18F, %) 10.5 income subscribers), KT is defending its ARPU with the introduction of higher-priced P/E (18F, x) 11.6 plans (e.g., unlimited data) and various value-added services. The release of the Galaxy Market P/E (18F, x) 9.0 Note 9 and new iPhone models in 2H18 will likely lead to a higher share of subscribers KOSPI 2,287.68 opting for the 25% discount rate, putting more pressure on ARPU. Nevertheless, we believe KT will continue to defend ARPU by encouraging subscribers to switch to Market Cap (Wbn) 7,638 higher-priced plans. Shares Outstanding (mn) 261 Free Float (%) 83.2 Fixed-line and new platform businesses on a growth path Foreign Ownership (%) 49.0 The high-speed internet unit’s net subscribers increased, albeit slightly, and the IPTV Beta (12M) 0.47 business also net added 100,000 subscribers, offsetting the weakness in the fixed-line 52-Week Low 26,700 business. For the high-speed internet business, GiGA internet service net added 65,000 52-Week High 35,000 subscribers in 2Q18, despite three-year contracts beginning to expire. Notably, high- (%) 1M 6M 12M speed internet subscriber growth is driven by the 1Gbps segment. We expect the IPTV Absolute 8.7 -0.7 -16.4 division’s content business to continue growing, supported by synergy with the voice- Relative 8.0 9.6 -12.8 activated AI platform GiGA Genie and enhanced pre-school education content.

110 KT KOSPI Maintain Buy and TP of W35,000 100 We maintain our Buy call and target price of W35,000 on KT. Despite ARPU declines 90 resulting from a higher share of subscribers choosing discount rate plans, we are

80 encouraged by the steady profits in wireless and the growth potential in media. We

70 reiterate our Buy rating, as our target price implies 20% upside from current share prices. 60 7.17 11.17 3.18 7.18

Mirae Asset Daewoo Co., Ltd.

[Telecom Service/IoT] FY (Dec.) 12/15 12/16 12/17 12/18F 12/19F 12/20F Revenue (Wbn) 22,281 22,744 23,387 23,371 23,644 23,972 Hakmoo Lee +822-3774-1785 OP (Wbn) 1,293 1,440 1,375 1,430 1,414 1,513 [email protected] OP margin (%) 5.8 6.3 5.9 6.1 6.0 6.3 NP (Wbn) 553 711 477 656 754 846 EPS (W) 2,118 2,723 1,826 2,513 2,888 3,239 ROE (%) 5.2 6.4 4.1 5.4 5.8 6.2 P/E (x) 13.3 10.8 16.6 11.6 10.1 9.0 P/B (x) 0.6 0.6 0.6 0.6 0.5 0.5 Dividend yield (%) 1.8 2.7 3.3 3.4 3.4 3.4 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

August 6, 2018 KT

Earnings and forecasts

Table 1. 2Q18 review (Wbn, %) 2Q18P Growth 2Q17 1Q18 Mirae Asset Preliminary Consensus YoY QoQ Daewoo Revenue 5,842 5,710 5,807 5,828 5,854 -0.6 1.7 Operating profit 447 397 399 359 383 -10.8 0.5 OP margin (%) 7.7 7.0 6.9 6.2 6.5 - - Pretax profit 316 353 268 228 292 -15.3 -24.2 Net profit 222 197 195 166 199 -32.8 -24.2 Notes: All figures are based on consolidated K-IFRS; net profit is attributable to controlling interests Source: Company data, WISEfn, Mirae Asset Daewoo Research estimates

Table 2. Quarterly earnings and forecasts (Wbn, %) 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18P 3Q18F 4Q18F Operating revenue 5,515 5,678 5,530 6,021 5,612 5,842 5,827 6,107 5,710 5,807 5,868 5,986 Wireless 1,851 1,880 1,884 1,803 1,794 1,781 1,816 1,813 1,741 1,764 1,765 1,779 Fixed-line 1,279 1,286 1,255 1,245 1,254 1,226 1,218 1,203 1,199 1,181 1,166 1,147 Media/content 442 471 495 514 520 561 573 585 554 595 609 623 Finance 823 858 866 881 847 915 874 893 833 867 891 911 Other 505 546 540 584 534 586 567 565 537 597 573 570 Merchandise sales 616 636 490 995 663 773 779 1,048 847 803 863 956 Operating expenses 5,119 5,251 5,128 5,795 5,195 5,395 5,449 5,972 5,313 5,408 5,494 5,727 * Marketing expenses 625 738 687 702 640 627 678 703 616 552 577 573 Operating profit 396 427 402 226 417 447 377 134 397 399 374 260 OP margin (%) 7.2 7.5 7.3 3.8 7.4 7.7 6.5 2.2 7.0 6.9 6.4 4.3 Net profit 223 255 235 93 224 258 203 -122 224 195 229 124 Net margin (%) 4.0 4.5 4.2 1.5 4.0 4.4 3.5 -2.0 3.9 3.4 3.9 2.1 YoY Operating revenue 1.4 4.7 0.8 1.0 1.8 2.9 5.4 1.4 1.8 -0.6 0.7 -2.0 Wireless 1.6 2.8 2.5 -3.8 -3.1 -5.3 -3.6 0.6 -2.9 -1.0 -2.8 -1.9 Fixed-line -2.0 -0.8 -2.3 -1.8 -1.9 -4.7 -3.0 -3.4 -4.4 -3.6 -4.3 -4.6 Media/content 15.2 15.1 15.3 16.6 17.5 19.2 15.8 13.8 6.6 6.0 6.4 6.5 Finance -0.8 7.1 3.7 -10.4 3.0 6.7 0.9 1.3 -1.7 -5.3 2.0 2.0 Other 22.9 12.8 7.3 14.2 5.8 7.2 5.0 -3.2 0.6 1.9 1.0 1.0 Merchandise sales -10.2 5.2 -17.8 12.9 7.7 21.5 59.1 5.4 27.7 3.9 10.8 -8.8 Operating expenses 0.1 3.7 -0.4 1.8 1.5 2.8 6.3 3.1 2.3 0.2 0.8 -4.1 * Marketing expenses -12.4 4.7 -7.8 -5.0 2.4 -15.0 -1.3 0.2 -3.7 -12.0 -14.9 -18.6 Operating profit 23.3 18.0 19.1 -15.3 5.4 4.8 -6.0 -40.7 -4.8 -10.8 -0.9 93.4 Net profit -23.3 -19.3 92.1 TTB 3.6 1.8 -10.8 -41.5 -6.4 -10.2 -1.6 97.3 Notes: All figures are based on consolidated K-IFRS; net profit is attributable to controlling and non-controlling interests Source: Mirae Asset Daewoo Research estimates

Table 3. Earnings forecast revisions (Wbn, W, %)

Previous Revised % chg. Notes 2018F 2019F 2018F 2019F 2018F 2019F Revenue 2,311 2,322 2,337 2,364 1.1 1.8 Operating profit 123 123 143 141 15.9 15.0 Pretax profit 91 90 110 109 21.6 20.4 Net profit 62 73 66 75 5.8 2.8 EPS (W) 238 281 251 289 5.8 2.8 OP margin (%) 5.3 5.3 6.1 6.0 Net margin (%) 2.7 3.2 2.8 3.2 Note: All figures are based on consolidated K-IFRS; net profit is attributable to controlling interests Source: Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 2

Fixed Income Monthly KTB yields to receive solid downside support

Bond yield outlook and investment strategies ■ DM: 10-year UST yield to test 3% levels again Fixed Income Report As the agreement between the US and the EU to work toward a “zero tariff” deal has August 3, 2018 eased concerns over intensifying trade protectionism, the 10-year UST yield will likely test 3% levels again. However, it remains to be seen whether the job market and CPI uptrends in the US will continue through 2H. In addition, the Fed plans to accelerate quantitative tightening after end-3Q. Thus, the Fed’s rate hike is expected to happen in Mirae Asset Daewoo Co., Ltd. 4Q. Accordingly, limited changes in expected inflation and term premium should

[Fixed Income Strategy ] depress the rise in long-term interest rates.

Hyeyoung Koo Meanwhile, growing concerns over the US’ potential imposition of tariffs on Chinese +822 -3774 -1357 imports are expected to provide a renewed boost to investors’ preference to safe [email protected] assets heading into the end of August. As the US bond market is expected to be weak

Min -hyung Kim in the first half of August, but to strengthen in the latter half, we recommend trading +822 -3774 -1830 approaches to US bonds. [email protected] ■ EM: EMBI spreads to narrow steadily

In August, F/X and interest rate volatility will likely become more stable, compared with the 1H levels, with a steady narrowing of EMBI spreads. We recommend a selective approach, rather than aggressive overweighting.

■ KTB: Base rate to remain unchanged throughout 2018

The BOK and government have shifted to a more conservative stance . In our view, export and consumption indictors that had improved in 1H are likely to stagnate in 2H. Indeed, Korea’s GDP grew just 0.7% QoQ and QoQ capex growth slowed sharply, to - 6.6%, in 2Q. Such unfavorable economic fundamentals should lower the likel ihood of a base rate hike in 2H.

Despite the ease of global market jitters, KTBs are expected to be relatively stronger than USTs, due to the sluggish domestic economy and likelihood of a base-rate freeze throughout this year. However, KTBs are likely to largely move in the same directions with USTs. Thus, we advise investors to expand the weight of KTBs after early- or mid- August. Trading of short-term bonds looks attractive, but high prices could be a drag.

Slowdown in Korea’s cyclical components of coincident CI and leading CI

(2015=100) 103 Coincident index cyclical change Leading index cyclical change

102

101

100

99 10 11 12 13 14 15 16 17 18

Source: Mirae Asset Daewoo Research

Mirae Asset Daewoo Research Key Universe Valuations August 6, 2018

※All data as of close August 02, 2018, unless otherwise noted.

18F Earnings growth Mkt Cap Price P/E (x) P/B (x) ROE (%) Ticker Company Div Yield OP EPS (Wbn) (W) (%) 18F 19F 18F 19F 18F 19F 18F 19F 18F 19F 005930 Samsung Electronics 293,684 45,750 3.1 23.2 3.2 28.8 8.5 6.6 6.0 1.3 1.1 22.4 20.3 000660 SK Hynix 60,643 83,300 1.2 64.8 4.8 59.2 3.7 3.6 3.5 1.2 0.9 40.5 30.2 068270 Celltrion, Inc. 35,174 280,500 - - - - 0.0 0.0 005490 POSCO 28,074 322,000 2.5 19.3 3.5 21.5 10.4 8.3 7.5 0.6 0.6 7.6 7.9 051910 LG Chem 27,602 391,000 1.5 -13.4 15.8 -4.9 18.7 16.6 13.9 1.7 1.6 11.1 12.1 005380 Hyundai Motor 27,314 124,000 3.2 -19.0 11.1 -17.0 18.6 10.6 8.9 0.5 0.5 4.8 5.3 207940 Samsung Biologics 25,937 392,000 4.5 277.0 - 375.1 500.9 105.4 6.4 6.1 1.3 5.9 035420 NAVER 24,096 731,000 0.2 -6.2 51.3 7.8 28.3 28.9 22.5 3.6 3.1 16.3 18.0 028260 Samsung C&T Corporation 23,142 122,000 1.6 26.8 7.7 96.0 2.2 18.6 18.2 0.9 0.9 5.4 5.2 105560 KB Financial Group 22,076 52,800 22.1 5.0 8.1 3.7 6.1 5.9 0.6 0.6 10.3 10.0 012330 Hyundai Mobis 21,854 224,500 1.6 -0.2 10.5 34.9 11.7 10.3 9.2 0.7 0.7 7.0 7.4 017670 SK Telecom 20,752 257,000 3.9 -13.2 5.1 29.7 4.8 6.2 5.9 0.9 0.8 17.0 15.2 015760 KEPCO 20,447 31,850 -80.1 280.7 - - - 13.7 0.3 0.3 - 2.1 055550 Shinhan Financial Group 20,414 43,050 23.1 2.1 16.6 2.5 6.0 5.9 0.6 0.5 10.0 9.6 051900 LG Household & Health Care 19,866 1,272,000 0.9 9.0 10.1 13.1 10.5 32.9 29.7 6.2 5.4 20.9 19.7 032830 Samsung Life 19,040 95,200 - - - - 0.0 0.0 034730 SK Holdings 18,047 256,500 1.6 4.6 7.0 26.5 6.1 8.6 8.1 1.1 1.0 14.5 13.6 096770 SK Innovation 17,476 189,000 4.2 -9.7 -8.5 -7.4 0.1 9.1 9.1 0.9 0.9 10.5 10.0 018260 Samsung SDS 16,172 209,000 1.2 24.5 13.4 31.7 12.1 23.2 20.7 2.7 2.4 12.0 12.3 090430 AmorePacific 16,105 275,500 0.7 16.7 20.7 23.6 19.5 39.1 32.7 4.2 3.8 11.2 12.2 006400 Samsung SDI 15,885 231,000 0.4 438.9 40.6 7.9 45.3 22.9 15.8 1.3 1.2 6.1 8.3 033780 KT&G 14,278 104,000 4.4 -8.2 16.7 -13.6 13.3 14.2 12.5 1.8 1.7 13.0 14.2 086790 Hana Financial Group 13,181 43,900 24.8 9.6 18.1 9.7 5.4 4.9 0.5 0.5 9.7 9.7 091990 Celltrion Healthcare 13,096 93,200 79.4 45.2 65.7 17.5 44.8 38.2 6.6 5.8 15.7 16.1 010950 S-Oil 13,003 115,500 4.0 1.9 31.4 -26.5 52.5 14.7 9.6 2.1 1.8 13.7 20.2 003550 LG Corp. 12,873 74,600 1.7 0.8 6.8 -21.5 7.1 7.0 6.5 0.7 0.7 11.1 10.8 000810 Samsung F&M 12,578 265,500 - - - - 0.0 0.0 000270 Kia Motors 12,566 31,000 3.2 101.3 10.0 59.2 14.5 8.2 7.1 0.4 0.4 5.6 6.1 066570 LG Electronics 12,306 75,200 0.9 34.0 14.1 -6.4 40.2 8.4 6.0 0.9 0.8 11.5 14.3 251270 Netmarble 12,185 143,000 0.3 -19.4 10.7 -7.6 10.4 42.5 38.5 2.7 2.5 6.4 6.7 009150 Samsung Electro-Mechanics 11,839 158,500 0.5 196.0 30.7 254.7 29.9 21.4 16.5 2.5 2.2 12.7 14.5 011170 Lotte Chemical 11,345 331,000 3.2 -15.6 8.0 -9.8 12.2 5.6 5.0 0.9 0.8 16.5 16.3 035720 Kakao Corp. 8,620 113,000 0.1 -39.5 76.0 -19.1 46.6 87.2 59.5 2.1 2.0 2.4 3.5 024110 Industrial Bank of Korea 8,512 15,200 24.2 6.2 20.5 6.0 5.5 5.2 0.5 0.4 8.9 8.8 002790 AmoreG 8,328 101,000 0.5 24.5 12.2 30.3 7.7 34.0 31.5 2.7 2.5 8.5 8.5 036570 NCSOFT 8,128 370,500 2.2 19.0 70.1 14.5 70.3 16.1 9.5 2.5 2.0 17.2 24.6 034220 LG Display 7,765 21,700 2.3 ------0.6 0.6 - - 030200 KT 7,638 29,250 3.4 -10.3 -0.3 30.1 18.3 12.3 10.4 0.6 0.6 5.2 5.9 010130 Korea Zinc 7,473 396,000 2.5 -8.6 2.9 -1.2 9.5 12.0 11.0 1.2 1.1 10.1 10.3 004020 Hyundai Steel 7,113 53,300 1.4 1.1 2.5 8.3 7.0 9.2 8.6 0.4 0.4 4.6 4.7 032640 LG Uplus 7,008 16,050 3.4 3.2 4.3 -1.9 3.7 13.0 12.6 1.0 1.0 9.0 8.1 021240 Coway 6,782 91,900 4.5 10.9 5.4 13.2 4.2 18.8 18.0 5.6 5.3 35.6 34.8 000720 Hyundai E&C 6,637 59,600 0.8 9.7 15.9 171.2 14.2 12.1 10.6 1.0 1.0 8.4 9.3 139480 Emart 6,119 219,500 0.8 4.4 9.7 -28.6 15.6 13.9 12.0 0.7 0.7 5.2 5.8 018880 Hanon Systems 5,979 11,200 - - - - 0.0 0.0 023530 Lotte Shopping 5,906 210,000 2.5 36.3 16.2 - 123.4 26.7 12.0 0.5 0.5 1.7 3.8 036460 KOGAS 5,308 57,500 1.7 29.8 4.9 - 6.8 7.6 7.1 0.6 0.6 8.6 8.4 097950 CJ CheilJedang 5,178 344,000 0.9 5.8 11.8 109.9 -60.3 6.4 16.2 1.2 1.1 21.2 7.0 271560 Orion 5,060 128,000 0.5 172.8 13.3 54.9 16.9 25.3 21.7 3.4 3.0 14.3 14.6 086280 Hyundai Glovis 4,969 132,500 2.3 -5.1 5.6 -37.4 29.3 11.7 9.0 1.2 1.1 10.4 12.6 Source: Mirae Asset Daewoo Research

Mirae Asset Daewoo Research Market Data August 6, 2018

※All data as of close August 03, 2018, unless otherwise noted.

Other Major Indices Economic Indicators Close Net Chg 1D (%) YTD (%) Close 1D ago 1M ago 1Y ago MSCI Korea* 480.04 -11.25 -2.29 -13.38 USD/KRW 1,122.60 1,119.30 1,117.40 1,123.20 KOSPI* 2,270.20 -36.87 -1.60 -8.45 JPY100/KRW 1,005.60 1,002.51 1,008.26 1,013.95 KOSDAQ* 781.38 -8.87 -1.12 -3.82 EUR/KRW 1,301.04 1,305.50 1,300.82 1,331.39 Dow Jones* 25,326.16 -7.66 -0.03 2.02 3Y Treasury 2.11 2.11 2.14 1.74 S&P 500* 2,827.22 13.86 0.49 4.87 3Y Corporate 2.77 2.77 2.78 2.28 NASDAQ* 7,802.69 95.40 1.24 11.36 DDR2 1Gb* 1.35 1.35 1.35 1.23 Philadelphia Semicon* 1,378.83 13.72 1.01 7.08 NAND 16Gb* 2.83 2.83 2.84 2.97 FTSE 100* 7,575.93 -76.98 -1.01 -0.94 Oil (Dubai)* 71.14 72.42 75.57 50.29 Nikkei 225* 22,512.53 -234.17 -1.03 -4.23 Gold* 1,210.60 1,217.90 1,241.70 1,271.80 Hang Seng* 27,714.56 -626.18 -2.21 -9.18 Customer deposits (Wbn)* 27,033 25,949 28,510 24,743 Taiwan (Weighted)* 10,929.77 -168.36 -1.52 2.05 Equity type BC (Wbn)(Aug. 1) 81,450 81,306 81,385 70,199 Note: * as of August 02, 2018 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 LG Chem 38.25 SK Energy 24.62 KT 21.91 Samsung Electronics 43.54 SEMCO 24.57 POSCO 10.85 KODEX LEVERAGE 21.76 Hynix 36.68 SK Telecom 22.15 Honam Petrochemical 9.12 LG Chem 15.29 Hyundai Motor 21.16 Hanwha Chemical 10.86 Hana Tour 6.52 HYUNDAI HEAVY INDUSTRIES HOLDINGS 14.41 KODEX 200 Futures Inverse 2X 9.10 Hyundai Heavy Industries 10.12 Shinsegae 5.81 KODEX KOSDAQ150 LEVERAGE 12.11 SEMCO 8.88 Doosan Infracore 8.08 emart 5.12 Hyundai Eng. & Cosnt. 10.55 Samsung Electronics (P) 8.68 Samsung Electronics (P) 8.02 HYUNDAI ROTEM 4.53 SAMSUNG BIOLOGICS 7.66 LG Innotek 7.86 Kumho Petrochemical 7.94 Hyundai Elevator 4.33 Doosan Corp. 6.64 SK C&C 7.00 Hyundai Motor 7.33 HYUNDAI HEAVY INDUSTRIES HOLDINGS 4.24 POSCO 6.37 Samsung Life Insurance 5.56 Woori Bank 7.07 Korea Zinc 4.09 CJ Cheiljedang 5.85 HANJINKAL 5.56 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 Medy-tox 7.24 Modetour Network 5.35 ISPLUS 3.01 Celltrion Healthcare 4.93 WONIK IPS 3.27 AP Systems 2.95 Maeil Dairies 2.55 SK Materials 3.26 Dexter studios 3.19 Nexen Tech 2.57 PearlAbyss 2.45 SillaJen 2.42 Silicon Works 1.99 BH,LTD. 2.31 Modetour Network 2.00 Silicon Works 1.73 Cafe24 Corp. 1.63 RFHIC 1.85 Com2us 1.92 Eugene Technology 1.67 Jusung Engineering 1.33 CJ O Shopping 1.79 NICE e-Banking Services 1.69 NCB Networks 1.55 Wonik Quartz 1.20 DoubleUGames 1.78 NeoPharm 1.64 NUTRIBIOTECH 1.43 Com2us 1.09 KEBT 1.77 CJ O Shopping 1.56 WONIK IPS 1.31 ViroMed 1.07 HLB 1.72 BH,LTD. 1.53 Daejoo Electronic Materials 1.26 SFA Engineering 1.02 Komipharm 1.47 SM 1.41 ANAPASS 1.16 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 45,750 200 293,684 Celltrion Healthcare 93,200 -100 13,096 Hynix 83,300 100 60,643 CJ O Shopping 239,800 3,300 5,258 Celltrion 280,500 -1,000 35,174 Medy-tox 752,500 32,200 4,257 Samsung Electronics (P) 37,900 100 34,248 SillaJen 59,200 700 4,118 POSCO 322,000 -500 28,074 NANOS 8,300 340 4,074 LG Chem 391,000 16,000 27,602 ViroMed 207,700 9,400 3,314 Hyundai Motor 124,000 -1,500 27,314 Posco Chemtech 51,900 400 3,066 SAMSUNG BIOLOGICS 392,000 14,000 25,937 PearlAbyss 232,800 4,400 2,998 NHN 731,000 3,000 24,096 Studio Dragon 98,700 0 2,767 SAMSUNG C&T 122,000 1,000 23,142 HLB 68,800 1,100 2,531 Source: Korea Exchange