November 3, 2015

KOREA

Company News & Analysis Major Indices Close Chg Chg (%) Transportation (002320/Buy/TP: W60,000) Initiate coverage KOSPI 2,048.40 13.16 0.65 Parcel delivery and stevedoring to lead the way KOSPI 200 252.12 1.52 0.61 KOSDAQ 682.13 2.12 0.31 SK Telecom (017670/Buy/TP: W350,000) Seeking growth in media to offset slowdown in telecom Turnover ('000 shares, Wbn) Volume Value Emart (139480/Buy/TP: W306,000) KOSPI 582,904 5,731 3Q profit improves despite external headwinds KOSPI 200 90,900 4,219 KOSDAQ 719,371 3,481

Market Cap (Wbn) Sector News & Analysis Value Auto (Overweight) KOSPI 1,296,503 October global production - The beginning of an upcycle KOSDAQ 193,838 KOSPI Turnover (Wbn) Healthcare (Overweight) Buy Sell Net Healthcare Weekly Briefing Foreign 1,557 1,528 30 Institutional 1,269 1,165 104 Economy & Strategy Update Retail 2,679 2,988 -310 November Model Portfolio KOSDAQ Turnover (Wbn) Buy Sell Net Focus on earnings, dividends, and share buybacks Foreign 164 162 2 Institutional 102 136 -33 Retail 3,207 3,175 33

Program Buy / Sell (Wbn) Buy Sell Net KOSPI 1,246 1,129 117 KOSDAQ 41 48 -7

Advances & Declines Advances Declines Unchanged KOSPI 501 319 49 KOSDAQ 505 524 75

KOSPI Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Electronics 1,352,000 -31,000 407 SK C&C 254,000 -15,000 387 SK Telecom 230,000 -8,500 242 KODEX LEVERAGE 10,680 195 231 DSME 7,030 500 176

KOSDAQ Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Solco Biomedical 2,110 195 178 NaturalendoTech 27,150 4,200 148 Good People 3,415 25 140 New Pride 12,600 -1,450 126 SHINHOO 7,340 -1,850 98 Note: As of November 3, 2015

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Hanjin Transportation (002320 KS) Parcel delivery and stevedoring to lead the way

Logistics An asset-based logistics provider oriented toward parcel delivery Hanjin Transportation, the logistics arm of the Hanjin Group (established in 1958), Initiation Report mainly engages in ground transport, stevedoring, shipping, and parcel delivery October 28, 2015 operations. As of 2014, parcel delivery accounted for 27.3% of revenue, ground transport 27.2%, and stevedoring 15.8%. Among the company’s business divisions, we

believe investors should pay particular attention to parcel delivery, which generates (Initiate) Buy more than 27% of revenue and 47% of operating profit. Investment points: Urban logistics complex and container terminals Target Price (12M, W) 60,000 1) Parcel delivery reinforced by the new Integrated Freight Terminal : Major Share Price (10/28/15, W) 45,100 retailers and manufacturers (cargo owners) are increasingly coming to realize the importance of delivery service competitiveness. The new Seoul Integrated Freight Expected Return 33% Terminal commenced operations in September, boosting Hanjin Transportation’s terminal capacity by 30%. Given rapid market growth, as well as the favorable location

and state-of-the-art facilities of the new complex, we expect terminal utilization ratio to OP (15F, Wbn) 46 reach the mid-80% level in 4Q15 . Volume growth should lead to operating leverage Consensus OP (15F, Wbn) 47 effects, further lifting margins.

EPS Growth (15F, %) 149.3 2) Opportunities from container terminals: We believe stevedoring will grow into a Market EPS Growth (15F, %) 20.6 major business that contributes 10-13% of the company’s operating profit (vs. 3.2% in P/E (15F, x) 5.0 2014), driven by the Pyeongtaek Container Terminal (which was acquired in 2Q15) and Market P/E (15F, x) 11.9 Incheon New Port Terminal A (which is set to open in early 2016). There are also talks of KOSPI 2,042.51 the company potentially acquiring Hanjin Newport (Pusan Newport International Market Cap (Wbn) 540 Terminal) from Hanjin Shipping. If the deal goes through, this could boost our 2016 Shares Outstanding (mn) 12 operating profit estimate by 38.3%. Free Float (%) 65.3 3) Non-operating assets: In July, Hanjin Transportation sold its stake (5.79mn shares) in Foreign Ownership (%) 9.5 Korean Air for W217bn. The company also has holdings in Seoul Express Bus Terminal Beta (12M) 1.69 52-Week Low 40,500 valued at roughly W160bn. We believe the company will use the proceeds from its 52-Week High 69,200 Korean Air stake sale to pay down its debt. As such, debt-to-equity ratio and interest expenses should decline, which should in turn drive up ROE. (%)(%)(%) 1M1M1M 6M6M6M 12M12M12M Absolute -6.0 -25.0 -14.4 Initiate coverage with Buy and TP of W60,000 Relative -10.6 -21.1 -19.3 We initiate our coverage on Hanjin Transportation with a Buy recommendation and target price of W60,000. We derived our target price using a sum-of-the-parts 150 HanjinTrnspt KOSPI methodology. With the Korean Air stake sale now complete and earnings set to 130 meaningfully improve, we only reflected non-operating assets that are readily disposable 110 into our valuation. Our target price implies a 2016F P/B of 0.8x , which we believe is

90 highly achievable, given the expected pace of earnings growth led by parcel delivery.

70 Furthermore, if the Hanjin Newport acquisition comes to pass, this would boost 10.14 2.15 6.15 10.15 earnings, potentially leading to multiple expansion.

Daewoo Securities CCo.,o., Ltd. FY (Dec.) 12/12 12/13 12/14 12/15F 12/16F 12/17F Revenue (Wbn) 1,437 1,500 1,533 1,646 1,778 1,831 [Transportation/Energyy] OP (Wbn) 38 40 53 46 64 69

Choong-hyun Kim OP margin (%) 2.6 2.7 3.5 2.8 3.6 3.8 +822-768-4126 NP (Wbn) -10 -7 44 108 49 54 [email protected] EPS (W) -842 -577 3,634 9,059 4,090 4,476 ROE (%) -1.3 -1.0 5.9 13.4 5.6 5.9

Jay JH Ryu P/E (x) - - 14.9 5.0 11.0 10.1 +822-768-4175 P/B (x) 0.3 0.3 0.8 0.6 0.6 0.6 jay.ryu @dwsec.com Notes: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Source: Company data, KDB Daewoo Securities Research estimates

Analysts who prepared this report are registered as research analysts in Ko rea 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.

SK Telecom (017670 KS) Seeking growth in media to offset slowdown in telecom

Telecom Service CJ HelloVision acquisition is official On November 2 nd , SK Telecom (SKT) officially disclosed its decision to acquire CJ Company Update HelloVision. The all-cash deal will cost a total of W1tr, with SKT to initially spend W500bn on April 1, 2016, and another W500bn if the company decides to exercise a call November 3, 2015 option within the subsequent five years. The acquisition will take place in the following three stages:

(Maintain) Buy 1) SKT will purchase a 30% stake in CJ HelloVision from CJ O Shopping. 2) CJ HelloVision will then merge with SK Broadband, after which SKT will own a 75. 29% Target Price (12M, W) 350,000 stake in the combined company.

Share Price (11/02/15, W) 238,500 3) SKT will have the call option to purchase CJ O Shopping’s remaining 23.92% stake in CJ HelloVision (8.44% in the merged company) within five years from the closing of th e first transaction. Expected Return 47% We believe the deal will help SKT establish a dominant position in the pay-TV and fixed- line communications markets. OP (15F, Wbn) 1,814 Consensus OP (15F, Wbn) 1,857 3Q15 review: Telecom business slowing down The same day as the announcement, SKT reported its 3Q earnings results, which fell EPS Growth (15F, %) -8.2 short of both our expectations and the consensus. Parent wireless revenue declined Market EPS Growth (15F, %) 20.5 YoY, weighed by lower interconnection fees, the elimination of sign-up fees, and a P/E (15F, x) 11.6 higher number of subscribers opting for discounted rates. The LTE subscriber Market P/E (15F, x) 11.8 percentage stood at 65%, entering late-cycle levels, while ARPU (based on billings) KOSPI 2,035.24 remained largely flat YoY and QoQ.

Market Cap (Wbn) 19,258 Marketing spend continued to trend lower, falling 10% YoY. Depreciation expenses, Shares Outstanding (mn) 81 however, were la rger than anticipated, increasing at a steeper rate YoY than in 1H. Free Float (%) 63.8 Operating profit slipped YoY due to top-line contraction, while net profit also declined Foreign Ownership (%) 41.3 as a result of weaker equity-method profits from SK Hynix. Beta (12M) 0.15 Retain Buy and TP of W350,000; Scale effects and media to support growth 52-Week Low 237,000 52-Week High 301,000 The 3Q earnings reports of d omestic mobile carriers, including SKT, have generally shown a slowdown in the telecom business . Three years into deployment, LTE is (%)(%)(%) 1M1M1M 6M6M6M 12M12M12M reaching saturation. And as population (quantity) stagnates, ARPU (i.e., price) is also Absolute -7.0 -16.9 -10.7 flattening out. The outlook for growth is becoming increasingly challenging. Relative -10.0 -13.1 -13.8 Acquiring CJ HelloVision, the current leader of the domestic cable and MVNO market s,

120 SK Telecom KOSPI should enable SKT to build up its relatively weak pay-TV and fixed-line subscriber base. 110 The resulting economy of scale should improve the telco’s returns on infrastructure investments, while the sheer number of subscribers should give the telco more leverage 100 over content providers and home shopping channel operators. We also see strong 90 potential in the media business, given the fact that ’s pay-TV ARPU is one of the 80 lowest in the world and that telcos are broadening their household-based services to IoT 70 (such as SKT’s “Smart Home”). We maintain our Buy rating on SKT with a target price of 10.14 2.15 6.15 10.15 W350,000.

Daewoo Securities CCo.,o., Ltd. FY (Dec.) 12/12 12/13 12/14 12/15F 12/16F 12/17F Revenue (Wbn) 16,141 16,602 17,164 17,076 17,290 17,639 [Telecom Service / Media] OP (Wbn) 1,730 2,011 1,825 1,814 1,901 1,928

Jee-hyun Moon OP margin (%) 10.7 12.1 10.6 10.6 11.0 10.9 +822-768-3615 NP (Wbn) 1,152 1,639 1,801 1,654 1,661 1,691 [email protected] EPS (W) 14,263 20,298 22,307 20,488 20,571 20,945 ROE (%) 9.8 13.0 12.9 10.9 10.1 9.7 Nu-ri Ha +822-768-4130 P/E (x) 10.7 11.3 12.0 11.6 11.6 11.4 [email protected] P/B (x) 0.9 1.2 1.3 1.1 1.0 1.0 Notes: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Source: Company data, KDB Daewoo Securities Research estimates

Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including t he U.S. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.

Emart (139480 KS) 3Q profit improves despite external headwinds

Retail Meaningful OP growth (+2.3% YoY) In 3Q, Emart’s non-consolidated and consolidated operating profit both grew YoY , Results Comment slightly above market expectations. Consolidated revenue and operating profit November 3, 2015 expanded 4.0% and 2.3% YoY to W3.68tr and W193.4bn, respectively, while non- consolidated operating profit rose 4.5% YoY to W214.3bn. While the latest results are

certainly a welcome development , we believe the company would have delivered an even better earnings performance if it weren’t for the MERS impact. (Maintain) Buy We highlight three investment points for Emart: 1) margin expansion and modest same- Target Price (12M, W) 306,000 store sales (SSS) growth in hypermarkets, driven by the increasing competitiveness of private labels, 2) growth of new businesses, and 3) the turnaround of consolidated Share Price (11/02/15, W) 213,000 subsidiaries. We view the 3Q earnings report as meaningful, as the company met our expectations in all areas except for hypermarket SSS growth. Expected Return 44% Key takeaways from 3Q earnings results

1) Hypermarket SSS slipped 0.8% YoY, but operating profit fell only 0.4% YoY thanks to OP (15F, Wbn) 560 gross margin improvements. Gross margin has expanded YoY every quarter since 2012 , Consensus OP (15F, Wbn) 565 but the main driver of margin gains since 2014 has been the increasing mix of private EPS Growth (15F, %) 100.1 labels, which is reflective of their growing appeal. Compared to national brands, we Market EPS Growth (15F, %) 20.5 believe private labels generate a 7%p higher margin on average. In particular, we P/E (15F, x) 10.2 estimate the brand Peacock has an 8-9%p higher margin. Market P/E (15F, x) 11.8 2) One of the biggest positives in 3Q was the growth and profitability of Emart Mall and KOSPI 2,035.24 Emart Traders. In 3Q, Emart Mall posted a 25.5% YoY increase in revenue and anot her Market Cap (Wbn) 5,938 sharp improvement in OP margin . More impressive was Emart Traders, which recorded Shares Outstanding (mn) 28 SSS growth of 11.9% YoY and OP margin of 2.9% (vs. 1.8% in 3Q14). Free Float (%) 72.8 3) C onsolidated subsidiaries are beginning to show signs of improvement. In 3Q, the Foreign Ownership (%) 47.3 combined operat ing loss of consolidated subsidiaries expanded W4.8bn YoY, but the Beta (12M) 0.45 supermarket business narrowed its losses, and more importantly, the Chinese business 52-Week Low 197,500 reduced its losses by W7.4bn thanks to the liquidation of the Tianjin subsidiary. With Me 52-Week High 253,000 should continue to see margin improvements and post modestly smaller losses in 2016. (%)(%)(%) 1M1M1M 6M6M6M 12M12M12M For 2016, we expect the combined operating loss of consolidated subsidiaries to narrow Absolute -6.8 -3.8 7.6 W15.1bn to W102bn. Relative -9.8 0.5 3.8 Maintain Buy and TP of W306,000 130 Emart KOSPI We reiterate our Buy rating and target price of W306,000 on Emart. While an earnings 120 recovery has yet to get fully underway, we believe the 3Q profit growth is noteworthy , 110 given that almost all of it was achieved through internal factors against an unsupportive 100 environment. Looking ahead to 2016, we expect operating earnings to improve 90 materially, given the unfavorable comparison caused by the MERS outbreak. But base 80 effects aside, we believe the company’s gradually increasing competitiveness deserves 10.14 2.15 6.15 10.15 attention.

Daewoo Securities CCo.,o., Ltd. FY (Dec.) 12/11 12/12 12/13 12/14 12/15F 12/16F Revenue (Wbn) 7,995 12,685 13,035 13,154 14,093 15,535 [Retail] OP (Wbn) 554 735 735 583 560 682

Aiden Lee OP margin (%) 6.9 5.8 5.6 4.4 4.0 4.4 +822-768-3297 NP (Wbn) 306 424 467 290 580 446 [email protected] EPS (W) 11,062 15,213 16,762 10,404 20,820 15,997 ROE (%) 5.6 7.4 7.4 4.3 8.3 6.1

P/E (x) 25.2 15.6 15.9 19.5 10.2 13.3 P/B (x) 1.4 1.1 1.1 0.8 0.8 0.8 Notes: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Source: Company data, KDB Daewoo Securities Research estimates

Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including t he U.S. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.

Auto (Overweight/Maintain)

October global production – The beginning of an upcycle ¢ Domestic sales boosted by 1) strong sales of SUVs and new models, 2) tax cuts, and 3) Sector Update normalized utilization November 3, 2015 ¢ Exports and overseas production rebound ¢ In 4Q, positive momentum to come from 1) increased production of new models, 2) policy stimulus, and 3) a weaker won Daewoo Securities CCo.,o., Ltd.Ltd.Ltd.

[Auto/Auto Parts/Tire] 1. Robust domestic sales

Michael Yun +822-768-4169 In October, domestic sales of the five major automakers expanded 26.7% YoY. Hyundai [email protected] Motor’s (HMC) October domestic sales rose 30.5% YoY, with sales of the new Elantra up 46.2% YoY to 12,838 units. Tucson sales climbed 47.1% YoY, as capacity was boosted by the Young-ho Park +822-768-3033 model’s simultaneous production at two plants in Ulsan. Other flagship models, including the [email protected] Sonata, Genesis, and Santa Fe, also sold well in the domestic market.

Kia Motors’ () October domestic sales grew 25.9% YoY, helped by the new Sportage, which sold over 7,000 units. Sales of the Carnival and Sorento remained strong, but supply shortages are a potential concern. Overall, we believe domestic auto sales were robust, driven by 1) the strength of compact SUVs, 2) new releases, 3) a temporary consumption tax cut, and 4) the normalized utilization.

2. Exports and overseas production rebound

HMC’s and Kia’s exports and overseas production also rebounded strongly in October. Exports were up 39.8% MoM at HMC and 32.4% MoM at Kia thanks to the normalization of domestic utilization. In particular, Kia’s exports climbed 39.7% on a YoY basis, boosted by a favorable comparison resulting from last year’s utilization decline.

HMC’s overseas production increased 8.5% YoY and 6.9% MoM. In China, we believe production growth returned to positive territory YoY, fueled by the newly refreshed Tucson and the government’s tax cuts. Kia’s overseas production showed strong improvements, up 13% MoM and down only 1.5% YoY. We believe Kia’s China plant, which was the largest factor behind the previous decline in overseas production, has nearly recovered full operation.

Overall, the two companies’ global production is running slightly ahead of our 4Q forecasts.

Table 111.1. October production vs. 444Q154Q15 forecasts (HMC & Kia) (units, %) October production (A) 444Q154Q15 forecast (B) (A)/(B)*100 HMC Domestic 67,807 191,311 35.4 Exports 99,735 309,945 32.2

Korea total 167,542 501,256 33.4

Overseas total 290,833 788,020 36.9

Global total 458,375 1,289,276 35.6

Global retail N/A 1,272,620 Kia Domestic 46,605 142,983 32.6 Exports 103,600 305,010 34.0

Korea total 150,205 447,993 33.5

Overseas total 118,749 323,453 36.7

Global total 268,954 771,446 34.9

Global retail N/A 762,970 Source: Company data, KDB Daewoo Securities Research

Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including tthehe U.S. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.

Healthcare (Overweight/Maintain)

Healthcare Weekly Briefing

1. Major issues Sector Update October 30, 2015 releases 3Q earnings (October 27 th ) On October 27th , Hanmi Pharmaceutical announced its preliminary earnings for 3Q, with revenue of W268.4bn (+49.7% YoY), operating profit of W35.7bn (+2,802.6% YoY), net loss Daewoo Securities CCo.,o., Ltd. of W25bn (turned to red), and net loss attributable to controlling interest of W26.7bn

[Healthcare] (turned to red).

Hyun-tae Kim Revenue and operating profit far exceeded the market consensus of W230.2bn and W13.7bn, +822-768-3251 respectively, and net loss fell sharply below the consensus (W9.8bn for net loss, and W5.6bn [email protected] for net profit attributable to controlling interest).

Seung-min Kim Robust revenue and operating profit are attributable to: 1) the out-licensing of HM61713, an +822-768-4157 [email protected] epidermal growth factor receptor (EGFR) mutant selective inhibitor (US$50mn), 2) the sale of new product Gugu (a generic version of erectile dysfunction treatment Cialis), and 3)

reduction in R&D expenses.

As for the out-licensing contract, Hanmi Pharmaceutical is entitled to receive 70% of the royalties (US$50mn), and Hanmi Science the remaining 30% (based on independent appraisal).

Meanwhile, the firm reported a net loss due to the payment of unpaid back taxes following a tax investigation. Since the payment is a one-off expense, the tax rate will return to normal levels.

Hanmi is seeking overseas partnerships for its new drug candidates in the pipeline, including the Quantum Project. If successful, overseas partnerships should significantly boost the firm’s medium/long-term fundamentals.

Hanmi’s stock has a strong influence on the overall performance of the pharmaceutical/bio sector. Thus, its solid share performance should positively affect investor sentiment.

Recently, pharmaceutical/bio names have shown sluggish performances due to macro- economic factors, such as the anticipated rate hike in the US and China’s economic slowdown. Thus, we believe that companies that deliver solid earnings and gain overseas momentum will outperform their rivals.

TableTableTable 111.1. Hanmi PharmaceuticalPharmaceutical’’’’ss 333Q15P3Q15P results (Wbn, %, %p) 3Q15P Growth Diff. (%) 3Q143Q143Q14 2Q152Q152Q15 Preliminary (A)(A)(A) Consensus (B)(B)(B) YoYYoYYoY QoQQoQQoQ A vs. BA B Revenue 179.3 244.5 268.4 230.2 49.7 9.8 16.6 Operating profit 1.2 2.4 35.7 13.7 2,802.6 1,359.3 160.5 OP margin 0.7 1.0 13.3 6.0 12.6 12.3 7.4 Pretax profit -0.3 1.9 33.7 7.6 TTB 1,658.7 345.5 Net profit 3.2 12.6 -25.0 -9.8 TTR TTR Net profit attributable to 1.1 11.3 -26.7 -5.6 TTR TTR controlling interest Notes: Our earnings estimates for Hanmi Pharmaceutical were last updated on November 2014. Source: Company data, KDB Daewoo Securities Research estimates

Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including tthehe U.S.

PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.

November Model Portfolio Focus on earnings, dividends, and share buybacks

Earnings: Surprises and 4Q forecast revisions

The 3Q15 earnings season for listed Korean firms is well underway. In terms of market Quant Report cap, 57% of listed firms have announced their preliminary 3Q earnings results thus far. November 2, 2015 Early on in the season, there were concerns over 3Q15 earnings due to shocks from shipbuilding and construction players. However, we note that the combined operating profit of firms that have already released earnings is up 19.8% YoY

. Even Daewoo SecuriSecuritiesties Cties Co.,C o., Ltd. stripping away the low base of comparison arising from the shipbuilding sector’s massive

[Quantitative Analysis] earnings shock in 3Q14, operating profit expanded by 8.2% YoY.

Sang-ho Kim, CFA Furthermore, it is also positive that earnings grew across the board, as opposed to in the +822-768-4122 past, when only a small number of companies delivered robust results. [email protected] Of note, among KOSPI 200 firms, the percentage of companies seeing YoY growth in quarterly operating profit averaged only 51.6% between 1Q12 to 3Q14. Since 4Q14, the percentage has been around 60%. For 3Q15, out of 79 KOSPI 200 firms that have announced results, 50 (63.3%) delivered YoY operating profit growth

.

Figure 222.2... Percentage of KOSPI 200200200 firmsfirmsfirms displaying YoYYoYYoY growth in Figure 111.1. EEEarningsEarnings growth of firms that havehavehave released 3Q153Q153Q15 results quarterly operating profit

(%) YoY performance (%) 25 YoY performance (ex-shipbuilding) 70 63.8 19.8 19.6 65 62.5 63.3 20 59.4 60 58.5 56.6 15 54.9 55 52.6 51.0 10.9 49.5 10 50 48.7 48.5 8.2 46.6 45 43.2 43.8 5 40 0 35 -1.7 -1.1 -5 30 Revenue Operating profit Net profit 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15P

Source: WISEfn, KDB Daewoo Securities Research Source: WISEfn, KDB Daewoo Securities Research

Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including t he U.S. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURESDISCLOSURES & DISCLAIMDISCLAIMERSERS IN APPENDIX 1 AT THE END OF REPORT.

Key Universe Valuations November 3, 2015

※All data as of close November 2, 2015, unless otherwise noted.

15F Earnings growth Mkt Cap Price P/E (x) P/B (x) ROE (%) Ticker Company Div Yield OP EPS (Wbn) (W) (%) 15F 16F 15F 16F 15F 16F 15F 16F 15F 16F 005930 199,149 1,352,000 1.8 8.6 2.2 -10.0 5.3 11.1 10.5 1.2 1.1 12.2 11.7 005380 Hyundai Motor 35,795 162,500 2.5 -9.7 15.6 -9.1 12.6 6.9 6.2 0.7 0.7 11.1 11.4 015760 KEPCO 33,382 52,000 2.1 65.7 1.4 324.4 -52.4 2.9 6.2 0.5 0.5 19.3 8.1 012330 24,044 247,000 1.3 -5.9 15.0 -10.3 22.5 7.8 6.4 0.9 0.8 12.4 13.4 000270 Kia Motors 23,633 58,300 2.0 3.2 27.7 -0.5 25.8 7.9 6.3 0.9 0.8 12.6 14.2 090430 AmorePacific 23,354 399,500 0.3 41.3 33.4 63.3 25.2 44.5 35.6 8.1 6.7 19.7 20.6 000660 SK Hynix 23,223 31,900 1.3 7.6 -21.9 1.9 -22.9 5.4 6.9 1.0 0.9 21.5 14.1 032830 Samsung Life 22,300 111,500 - - - - 0.0 0.0 051910 LG Chem 21,140 319,000 1.3 45.9 17.6 47.8 35.9 18.4 13.5 1.8 1.6 10.1 12.6 055550 20,960 44,200 - - - - 0.0 0.0 035420 NAVER 20,404 619,000 0.2 5.6 20.4 20.6 25.8 37.2 29.6 6.4 5.3 26.6 26.0 018260 Samsung SDS 19,770 255,500 0.2 4.4 12.2 7.3 8.3 44.6 41.2 4.4 4.0 10.3 10.1 017670 SK Telecom 18,572 230,000 4.3 -0.6 4.8 -8.2 0.4 11.2 11.2 1.0 1.0 10.9 10.1 034730 SK Holdings 17,872 254,000 0.8 23.2 9.0 356.4 4.3 21.9 21.0 3.7 3.2 22.7 19.8 005490 POSCO 16,391 188,000 3.2 -13.9 10.9 -66.1 593.2 77.3 11.2 0.4 0.4 0.5 3.5 033780 KT&G 15,995 116,500 3.1 16.7 -4.9 27.6 -9.4 15.2 16.8 2.4 2.3 17.7 14.7 000810 Samsung F&M 15,539 328,000 - - - - 0.0 0.0 051900 LG Household & Health Care 14,462 926,000 0.5 37.0 21.6 37.7 22.7 34.1 27.8 7.8 6.2 26.2 25.7 105560 KB Financial Group 14,179 36,700 - - - - 0.0 0.0 003550 LG Corp. 12,010 69,600 1.4 23.9 10.0 22.8 7.3 11.8 11.0 1.0 0.9 8.3 8.3 096770 SK Innovation 10,865 117,500 2.1 - -14.7 - -25.1 8.6 11.5 0.7 0.6 8.2 5.7 035250 9,242 43,200 2.5 16.8 12.2 25.3 14.2 20.5 18.0 2.9 2.7 15.8 16.4 010130 Korea Zinc 9,105 482,500 1.3 3.9 22.0 7.6 23.5 16.9 13.7 1.8 1.6 11.1 12.4 047810 Korea Aerospace Industries 8,870 91,000 0.3 93.4 27.7 91.2 42.2 41.7 29.4 7.2 5.9 18.8 22.1 086790 8,288 28,000 - - - - 0.0 0.0 066570 LG Electronics 8,281 50,600 1.2 -38.2 63.8 -7.0 153.4 24.6 9.7 0.8 0.7 3.1 7.6 011170 Lotte Chemical 8,243 240,500 0.4 366.0 7.6 639.9 19.0 7.6 6.4 1.1 0.9 15.5 15.8 034220 LG Display 7,944 22,200 2.3 30.9 -40.9 22.0 -43.9 7.2 12.8 0.6 0.6 9.2 4.9 010950 S-Oil 7,847 69,700 3.3 - -13.7 - 4.2 11.8 11.3 1.5 1.4 13.3 12.6 024110 7,845 14,100 - - - - 0.0 0.0 030200 KT 7,638 29,250 1.7 - 1.1 - -13.4 8.8 10.2 0.6 0.6 8.0 6.5 006400 Samsung SDI 7,564 110,000 0.9 -69.7 468.2 - 385.4 24.1 5.0 0.7 0.6 2.7 12.3 023530 Lotte Shopping 7,511 238,500 0.6 11.3 12.6 37.8 13.4 9.9 8.8 0.4 0.4 4.4 4.8 009540 7,494 98,600 - - - - - 30.6 0.5 0.5 - 1.7 086280 7,463 199,000 1.0 7.4 9.5 -31.2 57.8 20.2 12.8 2.4 2.1 12.6 17.6 088350 Hanwha Life 7,426 8,550 - - - - 0.0 0.0 004020 7,273 54,500 1.4 10.8 4.8 44.4 -4.6 5.8 6.0 0.4 0.4 7.8 7.0 021240 Coway 6,941 90,000 3.0 19.7 15.4 29.5 11.6 21.5 19.2 5.2 4.6 28.7 27.8 035720 Corp. 6,674 111,200 0.2 -45.9 109.1 -76.5 85.0 77.3 41.8 2.6 2.5 3.4 6.1 139480 Emart 6,161 221,000 0.7 -3.9 21.7 100.1 -23.2 10.6 13.8 0.9 0.8 8.3 6.1 001800 Orion 5,952 996,000 0.6 8.1 8.2 14.2 11.9 31.9 28.5 4.1 3.7 14.0 13.9 161390 5,841 47,150 0.8 -21.0 13.2 -12.4 12.7 9.5 8.4 1.2 1.0 12.9 13.0 009240 Hanssem 5,636 239,500 0.4 35.5 44.2 33.9 41.7 48.6 34.3 11.5 8.8 29.9 32.1 128940 Hanmi Pharmaceutical 5,300 518,000 54.1 63.1 42.6 73.0 144.3 83.4 10.7 9.5 7.8 12.1 002380 KCC 4,997 475,000 1.9 2.5 6.3 -34.2 4.5 23.3 22.3 0.8 0.7 3.4 3.4 19814. 009150 Samsung Electro-Mechanics 4,915 65,800 0.8 25.4 -84.2 240.2 64.1 18.8 1.1 1.1 1.8 6.0 5 051600 KEPCO KPS 4,905 109,000 - - - - 0.0 0.0 005830 Dongbu Insurance 4,779 67,500 - - - - 0.0 0.0 097950 CJ CheilJedang 4,717 358,500 0.6 40.7 11.6 178.6 20.6 20.2 16.7 1.6 1.4 8.3 9.3 078930 GS Holdings 4,683 50,400 2.7 - -8.0 - -12.8 9.0 10.3 0.5 0.5 6.9 4.8 Source: KDB Daewoo Securities Research

Market Data November 3, 2015

※All data as of close November 3, 2015, unless otherwise noted.

Other Major Indices Economic Indicators Close Net Chg 1D (%) YTD (%) Close 1D ago 1M ago 1Y ago MSCI Korea* 383.30 3.58 0.94 -0.88 USD/KRW 1,140.10 1,138.60 1,179.00 1,058.80 KOSPI 2,048.40 13.16 0.65 6.33 JPY100/KRW 944.30 944.47 983.89 937.61 KOSDAQ 682.13 2.12 0.31 23.19 EUR/KRW 1,255.99 1,255.65 1,319.60 1,324.56 Dow Jones* 17,828.76 165.22 0.94 -0.02 3Y Treasury 1.67 1.66 1.58 2.12 S&P 500* 2,104.05 24.69 1.19 2.23 3Y Corporate 2.02 2.01 1.91 2.47 NASDAQ* 5,127.14 73.39 1.45 8.47 DDR2 1Gb* 1.12 1.12 1.13 1.40 Philadelphia Semicon* 668.53 6.01 0.91 -2.65 NAND 16Gb* 1.51 1.52 1.51 2.35 FTSE 100* 6,361.80 0.71 0.01 -2.84 Oil (Dubai)* 46.23 45.61 45.70 83.24 Nikkei 225 18683.24 -399.86 -2.10 7.32 Gold* 1,135.90 1,141.40 1,137.10 1,171.60 Hang Seng* 22,370.04 -270.00 -1.19 -6.24 Customer deposits (Wbn)* 20,966 21,064 20,702 15,705 Taiwan (Weighted) 8,713.19 98.42 1.14 -6.05 Equity type BC (Wbn)(Oct. 30) 81,119 81,219 80,686 78,561 Note: * as of November 2, 2015 Source: KSDA, Wisefn, DRAMeXchange, MSCI

KOSPI Top 10 Foreign Net Buy / Net Sell (Wbn) KOSPI Top 10 Institutional Net Buy / Net Sell (Wbn) Net Buy Net Sell Net Buy Net Sell Kia Motors 30.08 SK Telecom 96.15 KODEX LEVERAGE 78.93 KODEX INVERSE 36.97 NHN 24.74 Samsung Electronics 69.88 Kia Motors 24.15 SK C&C 29.99 Amore Pacific 24.68 Samsung Electronics (P) 35.14 POSCO 21.63 Samsung Electronics 8.48 SK Energy 20.54 SK C&C 30.60 Hyundai Motor 18.77 Sungshin Cement 6.82 KOREA AEROSPACE 19.66 Hynix 18.08 Hyundai Heavy Industries 17.67 Samsung SDI 6.76 LG Chem 17.39 Honam Petrochemical 15.78 KODEX 200 15.71 6.48 TIGER SYNTH-CHINA A Hyundai Motor 12.02 KODEX 200 9.75 LG Corp. 14.40 5.72 LEVERAGE 11.10 Shinhan Financial Group 6.84 Amore Pacific 12.64 5.56 KCC 10.69 LG Electronics 6.77 HYUNDAI WIA 11.47 CJ Corp. 5.51 LG Household & Health Care 10.63 TIGER200 6.01 Hyundai Mobis 11.22 LG Household & Health Care 5.37 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 Paradise 3.85 CJ O Shopping 3.63 Paradise 4.55 CJ E&M 2.77 Bio Space 3.75 Celltrion 3.38 CJ O Shopping 4.18 ATGen 2.39 Easy Bio System 2.07 Nowcom 2.83 Seoul Semiconductor 3.32 PRP 2.06 Solco Biomedical 1.59 GS Home Shopping 2.72 FT EnE 1.94 ANP 1.97 Com2us 1.46 NaturalendoTech 1.99 iNtRON Bio 1.26 ISPLUS 1.69 KREIT 1.39 ViroMed 1.66 ATTO 1.22 AT semicon 1.60 Sung Woo HiTech 1.32 YONWOO 1.54 Webzen 1.22 Celltrion 1.50 Gamevil 1.27 i-SENS 1.16 KREIT 1.19 Emerson Pacific 1.35 SEEGENE 1.09 Toptec 1.12 NEOWIZ Games 1.05 Gamevil 1.26 GemVax 0.98 Komipharm 1.12 Huons 1.01 From30 1.21 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 1,352,000 -31,000 199,149 Celltrion 75,800 200 8,492 Hyundai Motor 162,500 4,000 35,795 Daum Communications 111,200 -100 6,674 KEPCO 52,000 1,300 33,382 Dongsuh 34,600 1,300 3,450 SAMSUNG C&T 156,000 500 29,592 CJ E&M 83,900 -1,500 3,250 Samsung Electronics (P) 1,151,000 -27,000 26,281 Medy-tox 473,400 -300 2,678 Hyundai Mobis 247,000 7,000 24,044 ViroMed 160,200 1,400 2,274 Kia Motors 58,300 2,600 23,633 Paradise 22,800 1,050 2,073 Amore Pacific 399,500 7,000 23,354 LOEN 79,900 1,200 2,021 Hynix 31,900 -250 23,223 Komipharm 28,850 0 1,538 111,500 -2,500 22,300 Com2us 116,500 1,300 1,499 Source: