April 2018 Monthly InsighT A spring cold spell

Wonjae Park Chuljoong Kim +822-3774-1426 +822-3774-1464 [email protected] [email protected]

Young-gun Kim SeungHo Yoo +822-3774-1583 +822-3774-1832 [email protected] [email protected]

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. Contents

I. Investment strategy ...... 3 II. Top picks ...... 8 III. Sector view ...... 10 IV. Think big ...... 15 V. Global IT navigation ...... 22 Spotlight stocks & other notable stocks …………….… 25

2| Monthly InsighT Mirae Asset Daewoo Research I. Investment strategy Strong demand for semiconductors/passive components and home appliances/TVs vs. sluggish smartphone sales, declining panel prices, and won appreciation

II. Top picks

III. Sector view

IV. Think big

V. Global IT navigation

Spotlight stocks & other notable stocks

3| Monthly InsighT Mirae Asset Daewoo Research I. Investment strategy

Mirae Asset Daewoo IT universe share performance

March: -0.7% for spotlight stocks and +7.7% for other notable stocks Monthly InsighT cumulative returns

Cumulative returns Avg. of spotlight stocks -0.7 Avg. of spotlight stocks 106.3 SKC Kolon PI 14.6 Avg. of other notable stocks -31.0 KOSPI 18.2

Samsung SDI 12.6 KOSDAQ 52.8 (%)

-100 0 100 200 LGE 9.6 Note: September 2014 – March 2018

Humax 2.2 -1Y

Avg. of spotlight stocks 14.9 LG Innotek -4.5 Avg. of other notable stocks 14.1

KOSPI 13.2 Innox Advanced Materials -10.2 KOSDAQ 40.7 (%) -20-100 1020304050 LGD -12.4 Note: April 2017-March 2018

SSC -17.0 March

Avg. of spotlight stocks -0.7 Avg. of other notable stocks 7.7 Avg. of other notable stocks 7.7 Hanwha Techwin 1.5 KOSPI 0.8

1.6 SEMCO 13.9 KOSDAQ (%)

-20246810 -20 -15 -10 -5 0 5 10 15 20

4| Monthly InsighT Mirae Asset Daewoo Research I. Investment strategy Strong demand for semiconductors/passive components and home appliances/TVs vs. sluggish smartphone sales, declining panel prices, and won appreciation

■ IT sector update Share performance & OP consensus revision rates for Korean IT large caps - Display: Panel prices remained on the decline in March, but are projected to stabilize (%) gradually in 2Q-3Q; valuation re-ratings are expected for OLED suppliers, given the (%) prospects for earnings recovery in 2H and robust demand for foldables/OLED TVs. 8 Share performance (1M, L) 1Q OP consensus revision rate (R) 25 - Handsets/components: iPhone X shipments have been disappointing; expectations on the Galaxy S9 have been lowered. - Consumption will become increasingly polarized, with the sales mixes of high-priced 4 0 products, including home appliances and TVs, likely to remain on the rise. -  Companies continue to search for new growth drivers. Chipmakers/passive 0 -25 component suppliers should benefit. - F/X trends are viewed as a headwind for 1Q18 earnings (1Q18 average US$/W rate of 1,072.3 vs. 4Q17 average of 1,107.3) -4 -50 ■ Strategy LG SEMCO LGE Hanwha SSC LGD SEC SK Hynix Samsung 1) Semiconductor supply/demand conditions are expected to be more positive than Innotek Techwin SDI expected: The valuation trend is worth tracking amid upward revisions to consensus earnings. 2) Solid OLED TV sales: Relevant supply chain will likely be re-rated. 3) Concerns over iPhone X weakness have already been priced in; we prefer OLED materials suppliers that are likely to post solid 1Q18 earnings. Source: WISEfn, Mirae Asset Daewoo Research 4) We prefer passive components/home appliances/TV suppliers with robust earnings prospects and small/mid-cap stocks with improving earnings. ■ Spotlight stocks - LGE, Samsung SDI, LGD, SEMCO, Innox Advanced Materials, Humax Korean IT large caps (W, %, x) Current Share performance P/E P/B ROE Company Rating TP Upside price (3/30) 1W 1M 17 18F 17 18F 17 18F LGE Buy 147,000 109,500 34.2 2.8 9.6 10.3 8.9 1.3 1.1 13.4 13.3 LGD Buy 40,000 26,150 53.0 -0.4 -12.4 15.0 9.0 0.6 0.6 4.3 6.7 Samsung SDI Buy 270,000 192,500 40.3 -3.5 12.6 15.5 11.7 1.1 1.0 7.5 9.2 SEMCO Buy 134,000 105,500 27.0 4.5 13.9 19.4 16.1 1.7 1.5 9.4 10.2 LG Innotek Buy 167,000 126,000 32.5 5.0 -4.6 11.5 8.9 1.4 1.2 12.5 14.1 SSC Buy 29,100 19,800 47.0 0.8 -17.0 16.0 13.3 1.6 1.5 11.1 11.7 Hanwha Techwin Buy 37,400 29,600 26.4 1.9 1.5 32.4 19.8 0.7 0.7 2.2 3.5 SEC - 2,461,000 -1.0 4.6 7.5 7.4 1.3 1.2 21.0 18.2 SK Hynix - 81,300 -2.2 5.9 4.2 4.6 1.2 1.0 34.6 24.4 Note: 2018 SEC and SK Hynix data are consensus estimates; 2017 Hanwha Techwin data are based on estimates. Source: WISEfn, Mirae Asset Daewoo Research

5| Monthly InsighT Mirae Asset Daewoo Research I. Investment strategy

Earnings forecast revisions for large-cap IT plays (Wbn, %) Previous Revised % chg. Notes 1Q18F 2018F 2019F 1Q18F 2018F 2019F 1Q18F 2018F 2019F LGE Revenue 16,018 68,663 74,877 16,050 69,904 76,451 0.2 1.8 2.1 OP 922 3,473 4,199 1,024 3,672 4,400 11.1 5.7 4.8 Strong OLED TV sales NP 795 2,239 2,736 678 2,381 2,876 -14.7 6.3 5.1 LGD Revenue 6,387 27,287 31,022 6,335 27,043 30,071 -0.8 -0.9 -3.1 OP 95 1,044 2,095 -37 521 1,346 TTR -50.1 -35.8 Declining panel prices NP 54 751 1,534 -60 346 977 TTR -53.9 -36.3 Samsung SDI Revenue 1,939 8,317 9,513 1,939 8,317 9,513 0.0 0.0 0.0 OP 81 491 690 81 491 690 0.0 0.0 0.0 NP 175 946 1,086 175 946 1,086 0.0 0.0 0.0 SEMCO Revenue 1,873 7,948 8,650 1,873 7,948 8,650 0.0 0.0 0.0 OP 132 553 619 132 553 619 0.0 0.0 0.0 NP 71 303 350 71 303 350 0.0 0.0 0.0 LG Innotek Revenue 2,022 8,528 9,033 1,806 8,157 8,655 -10.7 -4.4 -4.2 OP 84 410 424 36 321 390 -57.1 -21.7 -8.0 Sluggish iPhone X shipments NP 55 265 271 18 196 244 -67.3 -26.0 -10.0 SSC Revenue 282 1,270 1,551 282 1,270 1,551 0.0 0.0 0.0 OP 22 109 134 17 104 128 -22.7 -4.6 -4.5 Won appreciation NP 14 71 89 9 66 84 -35.7 -7.0 -5.6 Hanwha Revenue 822 4,283 4,598 822 4,283 4,598 0.0 0.0 0.0 Techwin OP 2.8 69 137 2.8 69 137 0.0 0.0 0.0 NP 0.440950.440950.0 0.0 0.0 SEC Revenue 61,070 260,657 269,979 61,494 261,257 270,723 0.7 0.2 0.3 (Consensus) OP 14,595 63,301 63,774 14,694 63,131 63,924 0.7 -0.3 0.2 NP 10,845 47,898 48,565 10,852 47,850 48,687 0.1 -0.1 0.3 SK Hynix Revenue 8,780 37,632 38,617 8,800 38,001 39,059 0.2 1.0 1.1 (Consensus) OP 4,342 17,702 16,321 4,373 18,138 16,742 0.7 2.5 2.6 NP 3,258 13,651 12,612 3,300 14,011 12,961 1.3 2.6 2.8

Source: Mirae Asset Daewoo Research

6| Monthly InsighT Mirae Asset Daewoo Research I. Investment strategy

Consensus vs. Mirae Asset Daewoo estimates (Wbn, %) Mirae Asset Daewoo Consensus % diff. Notes 1Q18F 2018F 2019F 1Q18F 2018F 2019F 1Q18F 2018F 2019F LGE Revenue 16,050 69,904 76,451 15,322 65,612 69,473 4.8 6.5 10.0 OP 1,024 3,672 4,400 849 3,134 3,493 20.6 17.2 26.0 Solid TV sales NP 678 2,381 2,876 472 1,923 2,215 43.6 23.8 29.8 LGD Revenue 6,335 27,043 30,071 6,128 26,075 27,488 3.4 3.7 9.4 OP -37 521 1,346 70 937 1,533 TTR -44.4 -12.2 Declining panel prices NP -60 346 977 50 625 1,045 TTR -44.6 -6.5 Samsung SDI Revenue 1,939 8,317 9,513 1,882 8,003 9,119 3.0 3.9 4.3 OP 81 491 690 71 425 619 14.1 15.5 11.5 NP 175 946 1,086 158 876 1,154 10.8 8.0 -5.9 SEMCO Revenue 1,873 7,948 8,650 1,910 8,122 8,962 -1.9 -2.1 -3.5 OP 132 553 619 136 645 773 -2.9 -14.3 -19.9 Lackluster Galaxy S9 shipments NP 71 303 350 87 422 509 -18.4 -28.2 -31.2 LG Innotek Revenue 1,806 8,157 8,655 1,915 8,729 9,628 -5.7 -6.6 -10.1 OP 36 321 390 56 401 499 -35.7 -20.0 -21.8 Lackluster iPhone X shipments NP 18 196 244 37 260 334 -51.4 -24.6 -26.9 SSC Revenue 282 1,270 1,551 278 1212 1334 1.4 4.8 16.3 OP 17 104 128 21 108 127 -19.0 -3.7 0.8 NP 9 66 84 15 72 87 -40.0 -8.3 -3.4 Hanwha Revenue 822 4,283 4,598 876 4,377 4,617 -6.2 -2.1 -0.4 Techwin OP 2.8 69 137 3 87 126 -6.7 -20.7 8.7 NP 0.4 40 95 -2 48 79 - -16.7 20.3 SEC Revenue - - - 61,494 261,257 270,723 --- OP - - - 14,694 63,131 63,924 --- NP - - - 10,852 47,850 48,687 --- SK Hynix Revenue - - - 8,800 38,001 39,059 --- OP - - - 4,373 18,138 16,742 --- NP - - - 3,300 14,011 12,961 ---

Source: WISEfn, Mirae Asset Daewoo Research

7| Monthly InsighT Mirae Asset Daewoo Research I. Investment strategy

II. Top picks LGE, LGD, Samsung SDI, SEMCO, Innox Advanced Materials, Humax

III. Sector view

IV. Think big

V. Global IT navigation

Spotlight stocks & other notable stocks

8| Monthly InsighT Mirae Asset Daewoo Research II. Top picks

1Q18F

(W, Wbn, %) 1Q17 4Q17 Mirae Asset Notes Consensus YoY QoQ Daewoo

LGE Revenue 14,657 16,964 16,050 15,322 9.5 -5.4 - 1Q18 preview: Revenue of W16.05tr (+9.5% YoY), OP of W1.02tr (+11.2% YoY) - LGE has made gains in the OLED TV market and should lead growth and profitability in CP: W99,900 OP 922 367 1,024 849 11.2 179.2 OLED TVs for quite some time (1Q18F OP margin of 11.5%). - The company should begin to benefit from peak-season effects in 1Q18. TP: W147,000 OPM 6.3 2.2 6.4 5.5 0.1 4.2 - The cost reduction impact will likely be more significant than positives from smartphone Upside: 34% NP 1,092 208 825 731 -24.4 296.1 sales volume growth. - LGD Revenue 7,062 7,126 6,335 6,128 -10.3 -11.1 1Q18 preview: Revenue of W6.3tr (-11.1% QoQ), OP of-W37bn (TTR QoQ) - Shipments fell on seasonally weak demand, and LCD panel prices remained on the CP: W26,850 OP 1,027 45 -37 71 TTR TTR downtrend. - The accelerated fall in high-margin 65” TV panel prices is anticipated to drive down TP: W40,000 OPM 14.5 0.6 -0.6 1.2 -15.1 -1.2 earnings. - Downward stabilization in LCD prices in 2H, a swing to profit for the large OLED division, Upside: 49% NP 634 37 -60 50 TTR TTR and the potential entry of SEC entry into the OLED TV market should lead to a re-rating. - Samsung SDI Revenue 1,305 1,855 1,939 1,882 48.6 4.6 1Q18 preview: Revenue of W1.94tr (+4.6% QoQ), OP of W80.6bn (-32.0% QoQ) - Small batteries: Revenue growth should be driven by shipments to support SEC’s new CP: W192,500 OP -67 119 81 72 TTB -31.7 smartphone models and continued strong polymer battery volume. - Mid/large-sized batteries: Despite unfavorable seasonality, ESS sales to domestic TP: W270,000 OPM -5.2 6.4 4.2 3.8 9.3 -2.2 customers continued to grow. - In the medium to long term, the stake disposal should help boost Samsung SDI’s value, as Upside: 40% NP 81 238 175 158 116.5 -26.3 proceeds could be used to fund capacity additions at the mid/large-sized battery business. SEMCO Revenue 1,571 1,717 1,873 1,910 19.3 9.1 - 1Q18 preview: revenue of W1.87tr (+19.3% YoY), OP of W131.8bn (+415.9 YoY) CP: W105,500 OP 26 107 132 136 416.8 23.6 - Although the effects of the Galaxy S9 have been weaker than expected, we are encouraged by higher-than-anticipated MLCC prices. TP: W134,000 OPM 1.6 6.2 7.0 7.1 5.4 0.8 - The continued rise in MLCC ASP with the arrival of the high-demand season is positive. Upside: 27% NP 2 54 71 87 3,142.0 30.7 - Innox AMC Revenue 80 83 85 3.0 1Q18 preview: Revenue of W83bn (+3.1% QoQ), OP of W11.6bn (+65.7% QoQ) - As revenue exposure to Apple is estimated at just 7%, the company should see only a CP: W65,800 OP 7.0 12 12 65.5 limited impact from Apple’s sales slowdown. - Positives: 1) To benefit from both large and small/mid-sized OLED markets; 2) PI film price TP: W100,000 OPM 9 14.0 14.1 5.3 concerns are overblown. - The revenue contribution from large- and small/mid-sized OLED materials is expected to Upside: 52% NP 5 9 11 84.7 increase.

Humax Revenue 352 517 449 426 27.5 -13.1 - 1Q18 preview: Revenue of W449.2bn (+27.5% YoY), OP of W10.5bn (+1,897.8% YoY) - The company appears to be shifting its focus to margins, as it recently started to reflect CP: W9,010 OP 1 6 11 6 1,881.1 69.1 higher memory prices in several new products and is also considering discontinuing loss- making products. TP: W12,000 OPM 0.2 1.2 2.3 1.3 2.2 1.1 - The overall market environment looks benign, given product diversification and the near- Upside: 33% NP -4 -24 5 5 TTB TTB completion of industry consolidation.

9| Monthly InsighT Mirae Asset Daewoo Research I. Investment strategy

II. Top picks

III. Sector view • Display: Panel prices continued to decline in March, but should recover in 2H • Handsets/components: Sluggish sales of SEC’s and Apple’s high-end models; Beneficiaries of Fourth Industrial Revolution deserve attention

IV. Think big

V. Global IT navigation

Spotlight stocks & other notable stocks

10| Monthly InsighT Mirae Asset Daewoo Research Display III. Sector view

Panel prices continued to decline in March, but should recover in 2H

■ Key issues 65” TV panel price trend - In March, 65” panel prices fell sharply. (%) - 1) TV panel prices: -1.1% for 55”; -6.8% for 65”; -3.2% to -5.3% for 40-49” panels 4 65”65인치 TV panelTV 패널 price 가격 change 변동률 - 2) IT panel prices: –0.3% for notebook panels; -0.5% for monitor panels Other - February LCD TV shipments: 14mn units (+6.9% YoY) 2 - February OLED TV shipments: 127,000 units (+115.2% YoY)  17% higher than expected in January 0 - BOE’s 10.5G line has come online, supplying 65’’ panels. -2 LG Electronics Growth rate (R) ■ Implications -4 - In March, 65” panel prices fell sharply, due to: 1) oversupply concerns stemming from BOE’s 10.5G line operation; and 2) continued price-cutting pressure arising -6 from TV makers’ 65” price discounts. - Panel prices are expected to steadily recover starting in 2Q18 on the back of the -8 1/16 4/16 7/16 10/16 1/17 4/17 7/17 10/17 1/18 4/18 7/18 World Cup and the upcoming high-demand season. - BOE’s 10.5G panel quality has been sound; production yields need to be Source: Industry data, Mirae Asset Daewoo Research confirmed (post-April). - The combined OLED market share of TV producers excluding LGE is projected to exceed 40% after new product launches in April. OLED TV shipments - We believe it is time for SEC’s IM and VD units to make strategic decisions. (‘000 units) (%) - IM: Foldable smartphone to be released in early 2019 300 Other 60 - VD: QD-OLED TV  Pilot production and investments in commercial production 기타 facilities expected in 2018 and 2019, respectively Skyworth Panasonic Sony 200 Sony 40 LGELG전자 ExcludingLG전자외업체비중 LGE (R) (R)

100 20

Check point

OLED: Launch of QD-OLED TVs and foldable smartphones 0 0 1/15 7/15 1/16 7/16 1/17 7/17 1/18 LCD: BOE’s 10.5G production yields in 2Q and beyond, and TV sell-through in 2Q Source: Industry data, Mirae Asset Daewoo Research

11| Monthly InsighT Mirae Asset Daewoo Research Display III. Sector view

Key charts

LCD panel price trend LCD panel inventory days

(%) (Weeks) 6 Notebook Monitor 5.0 ITIT용패널재고일수 panel inventory TV (Open-cell) TV (4K x 2K) TV 용패널재고일수panel inventory 4 4.5 2

0 4.0

-2 3.5 -4 3.0 -6

-8 2.5 1/14 7/14 1/15 7/15 1/16 7/16 1/17 7/17 1/18 7/18 1/14 7/14 1/15 7/15 1/16 7/16 1/17 7/17 1/18

Source: IHS, Mirae Asset Daewoo Research Source: IHS, Mirae Asset Daewoo Research

Monthly LCD TV shipments Monthly LCD panel shipment area (by application)

(mn units) (%) (km2) TV panel (L) Monitor panel (L) (%) Notebook panel (L) Tablet panel (L) 28 LCDLCD TVTV shipments출하량 (L) (L) YoY growth증감률 (R)(R) 15 18,000 50 Others (L) YoY growth (R) 10 21 5 12,000 25

14 0

-5 6,000 0 7 -10

0 -15 0 -25 1/15 7/15 1/16 7/16 1/17 7/17 1/18 1/15 7/15 1/16 7/16 1/17 7/17 1/18 7/18

Source: WitsView, Mirae Asset Daewoo Research Source: IHS, Mirae Asset Daewoo Research

12| Monthly InsighT Mirae Asset Daewoo Research Handsets/ components III. Sector view

Sluggish sales of SEC’s and Apple’s high-end models; Beneficiaries of Fourth Industrial Revolution deserve attention

■ Key issues SEC smartphone shipments and IM business OP margin - The global smartphone market is maturing. (mn units) Smartphone shipments (L) Galaxy Galaxy Galaxy Galaxy Galaxy (%) - SEC: The Galaxy S9 has delivered lowered-than-expected sales, raising the need for SEC 100 Shipments YoY growth (R) Note 3 Galaxy Note 4 S6E+ Note 7 Note 8 30 to make changes in hardware. S5 Galaxy Note 5 Galaxy Galaxy ASP YoY growth (R) S6/E S7/E S8 - LGE: The G7 is expected to be released in 2Q18; cost-cutting efforts are well underway. IM OP margin (R) - Apple: Demand for the iPhone X slowed primarily due to consumers’ price resistance. 75 15 - Chinese players’ competitiveness continues to improve; however, there are risks of a slowdown in growth. - Memory chip/panel price growth in China is pushing up the prices of components, 50 0 including MLCCs and LEDs.

■ Implications 25 -15 - SEC needs to focus on protecting its brand value and market share; It is difficult to achieve hardware differentiation. - LGE needs to restore its brand value by leveraging unique and differentiated products; 0 -30 the company needs to improve profitability via cost controls in 2018. 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 - Apple will likely introduce new models earlier than expected. Source: Company data, Mirae Asset Daewoo Research - Chinese smartphone makers have begun to show differentiated performances; attention needs to be paid to the possibility of restructuring (risks to domestic component suppliers). Apple iPhone shipments and OP margin - Parts suppliers will likely benefit from price growth and Fourth Industrial Revolution (mn units) iPhone shipments (L) (%) effects. Shipments YoY growth (R) 100 iPhone iPhone 60 Apple M/S (R) 7/7+ 8/8+/X ■ Strategy OP margin (R) iPhone - We advise investors to lower expectations for smartphone market growth; new model SE 75 40 releases will benefit select parts makers; follow closely those that are able to secure new technologies/new markets or have undergone share corrections recently. - SEC’s 2018 strategy deserves attention; high pricing vs. volume; new models (foldable) 50 20 - Parts makers are becoming more differentiated; focus on those that have secured medium/long-term competitiveness and/or new technologies. - Parts makers that stand to benefit from the Fourth Industrial Revolution (e.g. the 25 0 development of autonomous cars and AI technologies) deserve attention. Check point 0 -20 The smartphone industry is facing worse-than-expected conditions. 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 Component stocks related to the Fourth Industrial Revolution merit attention Source: Counterpoint, FactSet, Company data, Mirae Asset Daewoo Research over the medium to long term.

13| Monthly InsighT Mirae Asset Daewoo Research Handsets/ components III. Sector view

Key charts

Smartphone shipment and market value trends Smartphone quarterly M/S trends (%) (bn units) (%) Shipments (L) Shipments YoY (R) Value YoY (R) Apple Samsung Huawei 2.0 90 40 Oppo+Vivo Xiaomi LG

1.5 60 30

1.0 30 20 9.2 6.5 0.5 0 10 1.7 5.0

0.0 -30 0 2006 2009 2012 2015 2018F 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17

Source: IDC, Mirae Asset Daewoo Research Source: IDC, Mirae Asset Daewoo Research

Smartphone shipments by price Smartphone shipments by pixel count (%) Premium (>US$700) High-end (US$400-700) Mid-end (US$150-400) Low-end (12MP) Mid-end(8-12MP) Low-end(<8MP) 100 100

75 75

50 50

25 25

0 0 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16

Source: IDC, Mirae Asset Daewoo Research Source: IDC, Mirae Asset Daewoo Research

14| Monthly InsighT Mirae Asset Daewoo Research I. Investment strategy

II. Top picks

III. Sector view

IV. Think big 1) MLCC overview 2) MLCC market trends 3) MLCC market outlook

V. Global IT navigation

Spotlight stocks & other notable stocks

15| Monthly InsighT Mirae Asset Daewoo Research IV. Think big: 1) MLCC overview

MLCC basics

■ An essential component in the electronics value chain MLCC inner structure - Definition and features - Multilayer ceramic capacitors (MLCCs) are core parts that enable the steady flow of electric current in a circuit. - MLCCs, which are comprised of alternating layers of ceramic and metal, help supply electricity to the circuit. - They prevent electromagnetic interference among parts. - Manufacturing keys 1) A sophisticated way to construct 500-600 alternating ceramic and metal layers is required. 2) The layers need to be as thin as possible and able to withstand a 1,000°C-or- higher sintering process. - Size: 0.3mm x 0.3mm (length x width) - Applications - A variety of IT devices, including smartphones, tablet PCs, and smart TVs. Source: SEMCO, Mirae Asset Daewoo Research - Recently, demand has been increasing on the growth of autonomous driving, IoT, and 5G-related markets. Comparison of automotive and smartphone-use MLCCs - Manufacturers: The top five makers control nearly 90% of the market.  Murata (Japan) boasts the highest market share, followed by SEMCO (Korea), Taiyo Yuden (Japan) , TDK (Japan), and Yageo (Taiwan).  High technological/production barriers have prevented Chinse makers from entering the market. - Value - Of note, MLCC demand has recently been increasing in the EV and ADAS markets. - A smartphone features 600-1,000 MLCCs, while an EV has up to 15,000. - Automotive MLCCs are four times more expensive than smartphone- use MLCCs.

Source: SEMCO, Mirae Asset Daewoo Research

16| Monthly InsighT Mirae Asset Daewoo Research IV. Think big: 2) MLCC market trends

MLCC market remained stagnant amid oversupply through 2016

■ MLCC firms struggled on lower ASP arising from oversupply MLCC M/S breakdown (based on 2017 revenue) - ASP fell sharply on oversupply starting in 2010 (following preemptive facility investments). - The MLCC market remained sluggish amid stagnant demand for high-end IT 11% devices and the absence of new demand through 2016. Murata  During this period, many firms were forced out of the market. 7% 34% SEMCO - Currently, five makers control nearly 90% of the total market. 11% Taiyo Yuden ■ MLCC demand is still driven by smartphones and PCs TDK - Smartphones-use MLCC revenue, which took up the lion’s share (31%) in 2017, will likely continue to account for the highest portion of total MLCC revenue over Yageo 14% the next five years. Other - Demand for smartphone-use MLCCs is expanding, fueled by the adoption of 24% dual cameras and substrate-like PCBs (SLP) in smartphones. - The combined revenue of home appliance- and PC-use MLCCs accounted for 33% in 2017. Source: Bloomberg, Mirae Asset Daewoo Research - Of note, automotive MLCCs should deliver the highest growth of 20% CAGR over the next five years. - In 2017, smartphone-use and automotive MLCC revenues stood at US$2.76bn MLCC revenue breakdown by application and US$1.43bn, respectively.

(%) Smartphones Auto Computers Video Other 100 11 11 10 21 14 12 11 75 11 15 18 16 21 50 20 25 30 16 25 31 37 35 33 0 17 18F 19F 20F Source: Counterpoint, Mirae Asset Daewoo Research

17| Monthly InsighT Mirae Asset Daewoo Research IV. Think big: 2) MLCC market trends

Improving IT device performance to drive up MLCC demand

■ MLCCs for high-spec IT devices began to be developed in 2009 amid growing Average MLCC content for flagship smartphone models smartphone demand (MF) - We are seeing intense technological competition among MLCC makers. 4,000 - For high-end MLCCs, which are more than two times more expensive than low- end MLCCs, companies that have made investments over a long period will be 3,000 3,100 well positioned. 3,000 2,700 2,600 - The high-end MLCC market is currently dominated by a handful of players, i.e., 2,300 Murata, SEMCO, and Taiyo Yuden. 2,000 - For leading smartphone makers’ flagship models, the addition of new features (e.g., biometric scanners, and dual cameras) has been lifting demand for high- end MLCCs (increase in the number of MLCCs required per device). 1,000 - In addition, the demand for ultra-thin MLCCs (for use in thinner smartphones) has also been growing. 0 - Smartphone MLCCs, which remain the largest contributor to the MLCC market Galaxy S7 Galaxy S8 Galaxy S9 iPhone 7 iPhone 8 (in revenue terms), show strong growth potential (10% CAGR expected over the next five years). Source: Industry data, Mirae Asset Daewoo Research - Going forward, advances in the performances of consumer electronics should further drive up high-end MLCC demand. No. of MLCCs per flagship smartphone ■ MLCC content per unit trending upward for flagship models (Units) Total MLCC (%) Total MLCC - For the iPhone 8 and iPhone X, 1,000-1,200 MLCCs are embedded per unit, with (Units) (%) High-end MLCC % High-end MLCC % high-end MLCCs representing 75-80%. 800 40 1,200 80 - For the Galaxy S series, the share of high-end MLCCs is lower, but is expected to rise further for models to be launched down the road. 600 30 - For leading smartphone models, MLCC content per unit has climbed more than 800 75 30% over the past two years. 400 20

400 70 200 10

0 0 0 65 Galaxy Galaxy Galaxy Galaxy Galaxy iPhone iPhone iPhone iPhone iPhone S5 S6 S7 S8 S9 6 6S 7 8 X

Source: Industry data, Mirae Asset Daewoo Research

18| Monthly InsighT Mirae Asset Daewoo Research IV. Think big: 2) MLCC market trends

Out of the top five MLCC players, three are Japanese, and one is Korean

■ Japanese MLCC suppliers performed relatively poorly in 2017 MLCC revenue growth in 2017 by manufacturer - The top five players (Murata, SEMCO, TDK, Taiyo Yuden, and Yageo) represent (%) nearly 90% of global MLCC production. 40 - While the global MLCC market’s total sales grew 19% in 2017, Japanese players posted average top-line growth of 13% (Murata: +15%, SEMCO: +29%) - In 2017, global MLCC market growth was driven mainly by smartphone MLCCs. 30 Thus, Japanese players, which had been reducing their revenue exposure to smartphone MLCCs, posted relatively weak growth for the year. 20 - For Japanese players, the proportion of MLCCs for use in IT devices (e.g., smartphones, PCs, home appliances) out of total MLCC shipments declined from 80% in 2008 to 54% in 2017. 10 - In particular, Murata and TDK have been expanding investments in automotive MLCCs; their revenue contribution from such MLCCs has nearly doubled over the past 10 years. 0 ■ Japanese players proactively investing in automotive MLCCs Global Murata SEMCO TDK Taiyo Yuden Yageo

- Over the past 10 years, the share of IT device-use MLCCs in the global MLCC Source: Industry data, Mirae Asset Daewoo Research market slipped from 82% to 64%, while the share of automotive MLCCs jumped from 18% to 36%. Japanese players have relatively high exposure to automotive MLCCs - Japanese players are dominating the automotive MLCC market, making it difficult for their Korean (SEMCO) or Taiwanese rivals to make entries. (%) Global IT Auto Japan - Following years of restructuring (e.g., sale of non-core businesses), SEMCO appears to have enough capital to invest in automotive MLCCs. 100 18 21 21  Automotive MLCCs require separate manufacturing facilities. 29 36 75 56

50 82 79 79 71 64 25 44

0 '08 '12 '17 '08 '12 '17

Source: Counterpoint, Mirae Asset Daewoo Research

19| Monthly InsighT Mirae Asset Daewoo Research IV. Think big: 3) MLCC market outlook

To enter a new phase of growth

■ Growth of automotive electronics and high value-added IT markets Global MLCC market outlook - The global MLCC market, which had stagnated at US$8bn from 2010 through 2015 amid a slowdown in new product demand, expanded 6% in 2016 and 19% (US$bn) (%) 16 25.0 (US$8.9bn) in 2017. Global MLCC market revenue (L) - Counterpoint projects that the MLCC market will grow 22% in 2019 and 13% in Revenue growth (R) 14 20.0 2020. - 15.0 Sales of automotive and mobile device-use MLCCs are anticipated to increase at 12 CAGRs of 20% and 10%, respectively, over the next five years. 10.0 - Although MLCC producers are operating facilities at full capacity, supply still falls 10 short of demand. Thus, MLCC prices will likely continue trending upward for a 5.0 while. 8 0.0 ■ Murata to scale back low/mid-end MLCC production - According to the Ministry of Economy, Trade and Industry of Japan, MLCC prices 6 -5.0 jumped 32% YoY in January, marking a seventh straight month of gains. 2012 2013 2014 2015 2016 2017 2018F 2019F 2020F - The sharp growth of the EV (including hybrid cars) market has been boosting Source: Counterpoint, Mirae Asset Daewoo Research MLCC demand. - Despite the strong uptrend in demand, Japanese MLCC makers, which have suffered from oversupply for several years, do not appear to be considering MLCC sales growth trend by application (excluding automotive MLCCs) capacity expansion. (US$bn) 2017 (%) - According to the Taiwanese media, Murata raised MLCC prices again in March. 6 2020F 30 The company reportedly plans to shift its focus to automotive-use MLCC going 2017-20F CAGR (R) forward, while scaling back low/mid-end MLCC production. 5 - MLCC producers’ ASP is largely on the rise on the back of increasing mixes of 4 20 high value-added MLCCs. 3 2 2 2 2 10 1

0 0 Smartphones PCs Gaming

Source: Counterpoint, Mirae Asset Daewoo Research

20| Monthly InsighT Mirae Asset Daewoo Research IV. Think big: 3) MLCC market outlook

Automotive MLCCs represent a a blue ocean

■ Producers are aggressively expanding automotive MLCC capacity MLCCs used for vehicles - MLCC producers are aggressively expanding automotive MLCC capacity, as cars use at least 3,000 MLCCs while smartphones use 600-1,000 MLCCs. In addition, automotive MLCCs are four times more expensive than smartphone-use MLCCs. - Murata slashed the production of low/mid-end MLCC by more than half, and is shifting its focus to automotive-use ultra-small MLCCs. - Taiyo Yuden expanded its ultra-small capacity by 1.6 times by investing JPY10bn in its Niigata plant in an effort to increase automotive MLCC production. - SEMCO plans to increase the proportion of automotive MLCCs in its total MLCC capacity to 10% by 2020 (monthly automotive MLCC production: 600mn units in 2017  2bn in 2018  6bn in 2020). ■ To benefit from EV market growth - The powertrain system accounts for the lion’s share (about 50%) of total automotive MLCC demand. - Of note, an EV’s powertrain system requires two to three times more MLCCs Source: Counterpoint, Mirae Asset Daewoo Research than those of conventional vehicles. MLCC demand is projected to grow sharply through 2020 in line with the spread of EVs. ■ Automotive MLCC use breakdown (total MLCC use: 2,850-6,500 units) No. of powertrain MLCCs by vehicle type - Powertrain: 450-3,100 (Units) - Safety system: 1,000-1,400 - Driving system: 500-800 4,000 Min. Max. - Infotainment: 400-700 - Other: 500 3,000

2,000

1,000

0 Conventional Mild hybrid Hybrid EV

Source: Counterpoint, Mirae Asset Daewoo Research

21| Monthly InsighT Mirae Asset Daewoo Research I. Investment strategy

II. Top picks

III. Sector view

IV. Think big

V. Global IT navigation

Spotlight stocks & other notable stocks

22| Monthly InsighT Mirae Asset Daewoo Research V. Global IT navigation

Handset-related IT stocks faring well

■ Global industry performance Global IT index performance table (3/30) - The global stock market largely retreated in March, weighed down by economic concerns amid an escalation in protectionism. Performance (%) Index - Tech stocks generally declined globally as the Facebook scandal sparked concerns 1W 1M 3M 6M 12M about tech stocks overall (MSCI World IT: -2.8%, MSCI US IT: -3.8%). Dow Jones 24,103 0.6 -3.7 -2.5 7.6 16.3 ■ Sector performance NASDAQ 7,063 -1.4 -2.9 2.3 8.7 19.4 - Semiconductor (+4.9%): SEC (+4.6%), SK Hynix (+5.9%), and Micron (+6.8%) pushed KOSPI 2,446 1.2 1.8 -1.4 2.1 13.2 up the overall sector’s performance on the back of forecasts that: 1) China’s imports of US semiconductors would have a limited impact on earnings; and 2) KOSDAQ 871 5.0 1.3 7.2 33.4 40.7 DRAM prices would remain on the rise for a while. World 228 1.3 -2.8 1.9 11.4 26.1 - Display (-7.9%): The decline in LCD panel prices in March added to earnings US 262 -1.2 -3.8 3.5 12.5 26.3 concerns. Furthermore, the operation of BOE’s 10.5G large LCD panel plant was Korea 1,251 -0.6 6.2 -2.8 -2.6 23.2 anticipated to expand supply (LGD: -12.4%; Sharp: -15.2%). MSCI IT Japan 160 2.2 -0.3 -4.2 2.9 25.4 ■ Company performance - SEMCO (+13.9%): The brisk MLCC market boosted expectations for 1Q earnings. Taiwan 210 0.9 3.1 3.5 2.9 15.7 The full-scale production of the Galaxy S9 starting in 1Q will likely push up SLP China 704 -1.6 -4.3 1.9 11.6 65.0 and dual camera sales. Source: Bloomberg, Mirae Asset Daewoo Research

March sector performance (MoM) March share performance (MoM) (%) (%) 10 20 5 10 0 -5 0

-10 -10 PCs LED Memory Foundry -20 Materials Handsets EMS/ODM Appliances Distribution Automation Components ICD Non-memory parts Display Display glass Display LGE BYD SSC HTC UDC Cree AMD Display equip. Display Touchscreens Display panels Display Sharp Nanya Micron Epistar Semicon. equip. Semicon. Lumens SEMCO Seagate Mediatek Tech Data Tech Samsung SDI Samsung Tera Semicon Tera Sunny Optical Sunny Rechargeable batteries Rechargeable

Source: Bloomberg, Mirae Asset Daewoo Research Source: Bloomberg, Mirae Asset Daewoo Research

23| Monthly InsighT Mirae Asset Daewoo Research V. Global IT navigation

Key charts

MSCI World and MSCI World IT MSCI IT performance by country

(1/1/12=100) (1/1/12=100) 320 MSCI World 280 MSCI US IT MSCI World IT 280 MSCI Korea IT 230 MSCI Japan IT 240 MSCI Taiwan IT 200 180

160 130 120

80 80 2/12 2/13 2/14 2/15 2/16 2/17 2/18 2/12 2/13 2/14 2/15 2/16 2/17 2/18 Source: Bloomberg, Mirae Asset Daewoo Research Source: Bloomberg, Mirae Asset Daewoo Research

P/E comparison by country (2018F) IT sector P/B-ROE comparison (2018F)

(x) P/B (x) 8 40

30.9 6 China 30 US 21.0 18.7 4 World 20 18.4 14.1 Japan 2 Taiwan 10 7.2 Korea ROE (%) 0 0 0 5 10 15 20 25 30 35 China Japan World US Taiwan Korea Source: Bloomberg, Mirae Asset Daewoo Research Source: Bloomberg, Mirae Asset Daewoo Research

24| Monthly InsighT Mirae Asset Daewoo Research I. Investment strategy

II. Top picks

III. Sector view

IV. Think big

V. Global IT navigation

Spotlight stocks LGE, Samsung SDI, LGD, SEMCO, Innox Advanced Materials, Humax

25| Monthly InsighT Mirae Asset Daewoo Research Spotlight stocks LG Electronics (066570 KS)

Reminiscent of 2009 ■ Confidence in TV and home appliances (Maintain) Buy - Home Entertainment (HE): Very good • LGE has gained the lead in the OLED TV market and should lead growth and profitability in OLED TVs for quite Target Price (12M, W) ▲ 147,000 some time (1Q18F OP margin of 11.5%). - Home Appliance & Air Solution (H&A; home appliances): Good Share price (3/30/18, W) 109,500 • The H&A unit is enjoying stability, and is also creating new markets with its A9 cleaners, Styler clothing care systems, and beauty devices (Pra.L). Expected Return 34% - Mobile Communications (MC; smartphones): Risks • The MC business is continuing to make losses, but continuous cost cut efforts are expected to boost earnings OP (18F, Wbn) 3,672 in 2H. - Consensus OP (18F, Wbn) 3,134 Vehicle Components (VC; automotive electronics): Opportunities • Synergies with group affiliates like LG Chem and LG Innotek are expected. We are positive about the company’s EPS Growth (18F, %) 38.0 potential acquisition of ZKW. Market EPS Growth (18F, %) 6.7 ■ 1Q18F OP of W1tr P/E (18F, x) 8.3 - For 1Q18, we expect LGE to report revenue of W16.05tr (+9.5% YoY) and OP of W1.02tr (+11.2% YoY). Market P/E (18F, x) 9.3 ■ Reaffirm Buy and raise TP to W147,000 KOSPI 2,445.85 - The company should begin to benefit from peak-season effects in 1Q18. - Market Cap (Wbn) 17,919 We derived the target price by applying a P/B of 1.58x (a 30% premium to five-year average) to 12-month forward BPS of W93,446. Shares Outstanding (mn) 181

Free Float (%) 65.6 FY (Dec.) 12/14 12/15 12/16 12/17 12/18F 12/19F

Foreign Ownership (%) 34.6 180 LGELG전자 KOSPI Revenue (Wbn) 59,041 56,509 55,367 61,396 69,904 76,451 Beta (12M) 0.96 160 OP (Wbn) 1,829 1,192 1,338 2,468 3,672 4,400 52-Week Low 66,500 140 OP margin (%) 3.1 2.1 2.4 4.0 5.3 5.8

52-Week High 113,500 120 NP (Wbn) 399 124 77 1,726 2,381 2,876 EPS (W) 2,208 688 425 9,544 13,166 15,902 100 (%) 1M 6M 12M ROE (%) 3.4 1.1 0.7 13.5 16.1 16.6 80 Absolute 9.6 32.9 60.8 3/17 7/17 11/17 3/18 P/E (x) 26.8 78.2 121.4 11.1 8.3 6.9 Relative 8.8 30.1 42.3 P/B (x) 0.9 0.8 0.8 1.4 1.2 1.1

Notes: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Wonjae Park Source: Mirae Asset Daewoo Research estimates +822-3774-1426 [email protected]

26| Monthly InsighT Mirae Asset Daewoo Research Spotlight stocks LG Electronics (066570 KS)

Earnings table

2017 2018F 1Q18F (Wbn, %, ‘000 units) 2017 2018F 1Q 2Q 3Q 4Q 1QF 2QF 3QF 4QF YoY QoQ Prev. Diff. MC Revenue 3,091.7 2,701.4 2,807.7 3,065.5 3,089.9 3,277.7 3,370.7 3,195.6 11,666.3 12,933.8 -0.1 0.8 3,089.9 0.0 (Mobile OP 3.7 -132.4 -375.3 -213.2 -92.7 -131.1 -118.0 -111.8 -717.2 -453.6 TTR RR -92.7 0.0 Communications) OPM 0.1 -4.9 -13.4 -7.0 -3.0 -4.0 -3.5 -3.5 -6.1 -3.5 TTR RR -3.0 0.0 HE Revenue 4,326.1 4,234.9 4,637.6 5,475.1 5,320.1 5,212.3 5,821.8 7,395.0 18,673.7 23,749.2 23.0 -2.8 5,071.5 4.9 (Home OP 382.2 343.0 458.0 383.5 611.8 495.2 545.8 525.4 1,566.7 2,178.2 60.1 59.5 502.1 21.9 Entertainment) OPM 8.8 8.1 9.9 7.0 11.5 9.5 9.4 7.1 8.4 9.2 2.7 4.5 9.9 1.6 H&A Revenue 4,647.7 5,264.6 4,984.4 4,329.4 4,949.8 5,635.1 5,393.5 4,476.1 19,226.1 20,454.5 6.5 14.3 4,949.8 0.0 (Home Appliance OP 519.1 464.3 424.9 80.7 485.1 495.9 449.0 173.0 1,489.0 1,602.9 -6.6 501.1 445.5 8.9 & Air Solution) OPM 11.2 8.8 8.5 1.9 9.8 8.8 8.3 3.9 7.7 7.8 -1.4 7.9 9.0 0.8 VC Revenue 876.4 882.6 873.4 856.7 873.8 935.0 1,028.5 1,079.9 3,489.1 3,917.3 -0.3 2.0 873.8 0.0 (Vehicle OP -14.5 -16.4 -29.0 -41.1 -26.2 -18.7 8.2 18.4 -101.0 -18.3 RR RR -26.2 0.0 Components) OPM -1.7 -1.9 -3.3 -4.8 -3.0 -2.0 0.8 1.7 -2.9 -0.5 RR RR -3.0 0.0 Revenue 609.4 679.1 1,088.6 970.5 737.0 790.9 1,137.3 1,095.2 3,347.6 3,760.4 20.9 -24.1 737.0 0.0 Internal OP -32.4 -4.4 31.6 26.5 12.9 20.1 38.4 26.7 21.3 98.1 -139.8 -51.3 12.9 0.0 & other OPM -5.3 -0.6 2.9 2.7 1.8 2.5 3.4 2.4 0.6 2.6 7.1 -1.0 1.8 0.0 LG Innotek Revenue 1,644.7 1,339.6 1,787.2 2,869.8 1,805.8 1,430.3 1,923.3 2,997.6 7,641.3 8,157.0 9.8 -37.1 2,022.4 -10.7 OP 66.8 32.5 55.9 141.2 35.6 15.7 92.0 177.4 296.5 320.8 -46.7 -74.8 83.5 -57.3 Total Revenue 14,657.2 14,551.4 15,224.1 16,963.6 16,050.4 16,587.7 17,745.1 19,520.4 61,396.3 69,903.5 9.5 -5.4 16,018 0.2 OP 921.5 664.0 516.1 366.8 1,024.3 864.9 981.1 802.0 2,468.5 3,672.3 11.2 179.3 922.9 11.0 OPM 6.3 4.6 3.4 2.2 6.4 5.2 5.5 4.1 4.0 5.3 0.1 4.2 5.8 0.6 LGE Revenue 13,012.5 13,211.8 13,436.9 14,093.8 14,244.6 15,157.4 15,821.8 16,522.7 53,755.0 61,746.5 9.5 1.1 13,996.0 1.8 (excluding LG Innotek) OP 854.7 631.5 460.2 225.6 988.7 849.2 889.1 624.6 2,172.0 3,351.5 15.7 338.2 839.4 17.8 OPM 6.6 4.8 3.4 1.6 6.9 5.6 5.6 3.8 4.0 5.4 0.4 5.3 6.0 0.9 Pretax profit 1,091.9 742.3 515.7 208.3 926.7 787.1 938.4 764.3 2,558.1 3,416.4 -15.1 344.9 825.0 12.3 Pretax margin 7.4 5.1 3.4 1.2 5.8 4.7 5.3 3.9 4.2 4.9 -1.7 4.5 5.2 0.6 Net profit 795.3 497.5 318.1 114.9 677.9 538.4 641.8 522.7 1,725.8 2,380.9 -14.8 490.1 603.5 12.3 Net margin 5.4 3.4 2.1 0.7 4.2 3.2 3.6 2.7 2.8 3.4 -1.2 3.5 3.8 0.5 Handset sales volume 16,200 14,700 15,600 15,200 14,995 15,570 16,348 16,315 61,700 63,227 -7.4 -1.4 14,995 0.0 -Smartphones 14,800 13,300 13,700 13,900 13,734 14,347 15,186 15,211 55,700 58,477 -7.2 -1.2 13,734 0.0 TV sales volume 6,100 6,100 6,800 8,400 6,498 6,232 6,824 8,498 27,400 28,052 6.5 -22.6 6,498 0.0 -OLEDTVsalesvolume 188 200 255 545 409 450 495 643 1,188 1,996 117.4 -25.0 409 0.0 Source: Company data, Mirae Asset Daewoo Research

27| Monthly InsighT Mirae Asset Daewoo Research Spotlight stocks LG Display (034220 KS)

The worst has passed

■ 1Q18 preview: Revenue of W6.3tr (-11.1% QoQ) and operating loss of W37bn (TTR QoQ) (Maintain) Buy - Shipments decreased on seasonally weak demand, and LCD panel prices remained on the downtrend. - Target price (12M, W) ▼ 40,000 In particular, the accelerated fall in high-margin 65” TV panel prices is anticipated to drive down earnings. ■ Catalysts: Large-sized OLED panel prices to rise  To turn a profit in 2018 Share price (3/30/18, W) 26,850 - Large-sized OLED panel prices could rise thanks to expected customer additions after April. - Expected Return 49% As SEC considers investing in QD-OLED, this could lead to valuation re-rating for all OLED TV market participants. - OP (18F, Wbn) 521 LGD’s large-sized OLED unit is forecast to turn a profit in 3Q. Consensus OP (18F, Wbn) 937 ■ Valuation: Lower TP to W40,000; Market concerns already priced in - EPS Growth (18F, %) -80.8 We lowered our target price to W40,000 based on downward adjustments to earnings estimates (based on 1.0x 2018F BPS). Market EPS Growth (18F, %) 6.7 - Downward stabilization in LCD prices in 2H, a swing to profit for the large OLED division, and the potential P/E (18F, x) 27.1 entry of SEC into the OLED TV market should lead to a re-rating for LGD shares. Market P/E (18F, x) 9.3 - The stock is currently trading at a P/B of 0.65x and below, which we view as attractive. KOSPI 2,445.85 Market cap (Wbn) 9,357 Shares outstanding (mn) 358

Free float (%) 62.1 FY (Dec.) 12/14 12/15 12/16 12/17 12/18F 12/19F 140 Foreign ownership (%) 26.7 LGLGD디스플레이 KOSPI Revenue (Wbn) 26,456 28,384 26,504 27,790 27,043 30,071 130 Beta (12M) 0.71 OP (Wbn) 1,357 1,626 1,311 2,462 521 1,346 120 52-week low 25,700 OP margin (%) 5.1 5.7 4.9 8.9 1.9 4.5 110 NP (Wbn) 904 967 907 1,803 346 977 52-week high 38,900 100

90 EPS (W) 2,527 2,701 2,534 5,038 966 2,731 (%) 1M 6M 12M 80 ROE (%) 8.2 8.2 7.2 13.2 2.4 6.5 Absolute -12.4 -14.4 -13.1 70 P/E (x) 13.3 9.1 12.4 5.9 27.1 9.6 3/17 7/17 11/17 3/18 Relative -13.1 -16.2 -23.1 P/B (x) 1.1 0.7 0.9 0.7 0.6 0.6 Notes: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Chuljoong Kim Source: Mirae Asset Daewoo Research estimates +822-3774-1464 [email protected]

28| Monthly InsighT Mirae Asset Daewoo Research Spotlight stocks LG Display (034220 KS)

Earnings table

(Wbn, %) 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18F 2Q18F 3Q18F 4Q18F 2016 2017 2018F

Shipment area ('000 m2) 9,483 9,961 10,860 10,770 10,071 10,195 10,321 11,037 10,255 10,631 11,098 11,021 41,074 41,624 43,005

Notebook 711 685 741 719 590 501 544 565 526 521 531 536 2,856 2,200 2,114

Monitor 1,266 1,367 1,490 1,400 1,290 1,380 1,352 1,204 1,228 1,216 1,228 1,228 5,523 5,226 4,899

TV 6,971 7,347 8,066 7,990 7,631 7,860 7,820 8,657 7,964 8,363 8,781 8,693 30,375 31,967 33,801

Small/mid-sized panels 536 561 563 660 561 454 604 610 537 532 558 564 2,320 2,230 2,191

ASP (US$/m2) 525 504 554 642 608 574 600 589 564 558 583 599 556 593 576

Revenue 5,989 5,855 6,724 7,936 7,063 6,629 6,973 7,126 6,335 6,467 7,017 7,224 26,505 27,791 27,043

Notebook 1,437 1,054 1,210 1,349 1,130 991 1,176 1,297 1,187 1,181 1,224 1,253 5,051 4,594 4,845

Monitor 898 937 1,076 1,111 1,059 1,125 1,117 1,016 1,020 1,015 1,041 1,056 4,022 4,317 4,131

TV 2,276 2,284 2,622 3,016 3,037 3,058 2,787 2,823 2,465 2,615 2,815 2,841 10,198 11,705 10,736

Small/mid-sized panels 1,378 1,581 1,816 2,460 1,836 1,454 1,893 1,991 1,663 1,655 1,938 2,074 7,234 7,175 7,330

COGS 5,363 5,245 5,784 6,362 5,343 5,115 5,717 6,249 5,623 5,657 5,963 6,227 22,754 22,424 23,470

SG&A 587 566 616 669 692 710 670 832 749 760 768 775 2,438 2,904 3,052

Operating profit 40 45 324 904 1,027 804 586 45 -37 50 286 222 1,312 2,463 521

OP margin 0.7 0.8 4.8 11.4 14.5 12.1 8.4 0.6 -0.6 0.8 4.1 3.1 5.0 8.9 1.9

Source: Mirae Asset Daewoo Research estimates

29| Monthly InsighT Mirae Asset Daewoo Research Other Spotlight notable stocks stocks Samsung SDI (006400 KS)

Mid/large-sized battery business to turn a profit in 2H

■ 1Q18 preview: Revenue of W1.94tr (+4.6% QoQ) and OP of W80.6bn (-32.0% QoQ) (Maintain) Buy - Small batteries: Revenue growth should be driven by shipments to support SEC’s new smartphone models and Target price (12M, W) 270,000 continued strong polymer battery volume. - Mid/large-sized batteries: Despite unfavorable seasonality, ESS sales to domestic customers continued to grow. Share price (3/30/18, W) 192,500 ■ Catalyst: Mid/large-sized battery business to swing to profit in 3Q Expected Return 40% - For 2Q18, Samsung SDI’s ESS business is forecast to deliver its strongest quarterly profit of the year. In addition, additional orders are expected in 2H, thanks to deregulation in the US. OP (18F, Wbn) 491 - EV battery losses are anticipated to decrease sharply on supply of 3G batteries starting in 2Q. Consensus OP (18F, Wbn) 426 - We think worries over a potential decline in polymer battery shipments to Apple are somewhat overdone, as EPS Growth (18F, %) 39.3 Apple represents a small proportion of total small battery revenue. Market EPS Growth (18F, %) 6.7 ■ Valuation: Maintain Buy and TP of W270,000 P/E (18F, x) 14.3 - Concerns over subsidiary Samsung Display’s 1H earnings are fully priced into shares of Samsung SDI. Market P/E (18F, x) 9.3 - In the medium to long term, the sale of the stake should help boost Samsung SDI’s corporate value, as proceeds could be used to fund capacity additions at the mid/large-sized battery business. KOSPI 2,445.85 - We believe conditions are ripe for a re-rating of the mid/large-sized battery division, given its growing Market cap (Wbn) 13,237 contribution to company-wide revenue. Shares outstanding (mn) 70 Free float (%) 74.6 Foreign ownership (%) 41.1 FY (Dec.) 12/14 12/15 12/16 12/17 12/18F 12/19F Beta (12M) 2.22 200 Samsung삼성SDI SDI KOSPI Revenue (Wbn) 5,474 4,955 5,201 6,322 8,317 9,513 52-week low 133,000 170 OP (Wbn) 71 -267 -926 117 491 690 52-week high 232,500 OP margin (%) 1.3 -5.4 -17.8 1.9 5.9 7.3 (%) 1M 6M 12M 140 NP (Wbn) -84 54 219 679 946 1,086 Absolute 12.6 -3.0 41.0 110 EPS (W) -1,426 765 3,117 9,646 13,438 15,425 Relative 11.7 -5.1 24.8 ROE (%) -0.9 0.5 2.0 6.2 8.1 8.7 80 Chuljoong Kim 3/17 7/17 11/17 3/18 P/E (x) - 149.0 35.0 21.2 14.3 12.5 +822-3774-1464 P/B (x) 0.7 0.7 0.7 1.2 1.1 1.0 [email protected] Notes: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Source: Mirae Asset Daewoo Research estimates

30| Monthly InsighT Mirae Asset Daewoo Research Other Spotlight notable stocks stocks Samsung SDI (006400 KS)

Earnings table

(Wbn, %) 1Q17 2Q17 3Q17 4Q17 1Q18F 2Q18F 3Q18F 4Q18F 2016 2017 2018F

Revenue 1,305 1,454 1,707 1,854 1,939 2,078 2,127 2,174 5,203 6,321 8,317

LIB 823 987 1,169 1,321 1,400 1,503 1,523 1,550 3,425 4,300 5,977

Small-sized (IT) 551 690 814 824 865 889 893 868 2,488 2,879 3,516

Mid/large-sized (EV, ESS) 272 298 355 497 535 614 629 682 937 1,421 2,461

Electronic materials 482 467 538 534 539 574 604 623 1,773 2,021 2,341

Operating profit -67 6 60 119 81 123 131 156 -926 117 491

LIB -114 -48 3 37 23 64 69 92 -349 -122 248

Small-sized (IT) -23 15 49 67 63 65 58 53 -28 107 240

Mid-large-sized (EV, ESS) -90 -63 -45 -31 -40 -1 10 39 -321 -229 8

Electronic materials 46 54 57 62 57 59 62 64 167 219 242

Other 20 -744 20 0

OP margin -5.2 0.4 3.5 6.4 4.2 5.9 6.1 7.2 -17.8 1.9 5.9

LIB -13.8 -4.9 0.3 2.8 1.7 4.3 4.5 5.9 -10.2 -2.8 4.2

Electronic materials 9.6 11.5 10.5 11.6 10.7 10.2 10.2 10.3 9.4 10.8 10.3

Source: Mirae Asset Daewoo Research estimates

31| Monthly InsighT Mirae Asset Daewoo Research Spotlight stocks Samsung Electro-Mechanics (009150 KS)

Higher-than-anticipated MLCC prices ■ Galaxy S9 effect expected in 1Q18 (Maintain) Buy - For 1Q18, revenue and OP are estimated at W1.87tr (+19.3% YoY, +9.1% QoQ) and W131.8bn (+415.9 YoY, +23.3% QoQ), respectively. Target Price (12M, W) 134,000 - Although the effects of the Galaxy S9 have been weaker than expected, we are encouraged by higher-than- Share price (3/30/18, W) 105,500 anticipated MLCC prices. - SEMCO’s monthly OP declines by W1bn for every drop of 10 in the US$/W rate. (In 4Q17, the average US$/W Expected Return 27% rate was 1,107.3.)

OP (18F, Wbn) 553 ■ Beginning of peak season; Favorable MLCC conditions Consensus OP (18F, Wbn) 645 - The continued rise in MLCC ASP with the arrival of the high-demand season is positive. EPS Growth (18F, %) 87.3 - Sales of high-end IT-use MLCC products are growing. - Market EPS Growth (18F, %) 6.7 The MLCC market for automotive/industrial electronics is booming, fueled by autonomous/electric vehicles and industrial equipment. P/E (18F, x) 27.0 Market P/E (18F, x) 9.3 ■ Maintain Buy and 12-month forward TP of W134,000 - KOSPI 2,445.85 Our target price is based on 2.15x (40% premium to the five-year average) our 12-month forward BPS of W62,493. Market Cap (Wbn) 7,880 Shares Outstanding (mn) 78

Free Float (%) 73.4 FY (Dec.) 12/14 12/15 12/16 12/17 12/18F 12/19F

Foreign Ownership (%) 21.8 180 SEMCO삼성전기 KOSPI Revenue (Wbn) 6,100 6,176 6,033 6,838 7,948 8,650 Beta (12M) 1.43 160 OP (Wbn) 65 301 24 306 553 619

52-Week Low 67,000 140 OP margin (%) 1.1 4.9 0.4 4.5 7.0 7.2

52-Week High 112,000 120 NP (Wbn) 503 11 15 162 303 350 EPS (W) 6,478 144 190 2,083 3,902 4,506 100 (%) 1M 6M 12M ROE (%) 11.5 0.3 0.3 3.7 6.7 7.3 80 Absolute 13.9 3.4 52.5 3/17 7/17 11/17 3/18 P/E (x) 8.4 436.3 268.0 48.0 27.0 23.4 Relative 13.1 1.3 34.9 P/B (x) 0.9 1.1 0.9 1.7 1.7 1.6

Notes: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Wonjae Park Source: Mirae Asset Daewoo Research estimates +822-3774-1426 [email protected]

32| Monthly InsighT Mirae Asset Daewoo Research Spotlight stocks Samsung Electro-Mechanics (009150 KS)

Earnings table

2017 2018F (Wbn, %) 2016 2017 2018F 1Q 2Q 3Q 4Q 1QF 2QF 3QF 4QF

Revenue Module solutions 773.0 835.5 822.0 580.8 773.6 854.3 859.1 751.3 2,658.2 3,011.3 3,238.3

Component solutions 490.4 542.4 608.0 696.7 725.2 770.5 824.8 809.6 1,929.2 2,337.5 3,130.2

Substrate solutions 292.5 319.5 399.6 434.5 365.7 329.2 387.8 463.5 1,316.0 1,446.1 1,546.2

Other 14.6 12.5 11.5 5.0 8.8 10.1 8.1 6.6 129.7 43.5 33.5

Total 1,570.5 1,709.9 1,841.1 1,717.0 1,873.2 1,964.1 2,079.7 2,031.1 6,033.1 6,838.4 7,948.2

Module solutions Operating 18.9 39.7 32.7 4.3 37.6 40.7 40.3 9.1 28.8 95.6 127.7 profit Component solutions 45.6 60.5 86.0 100.5 105.2 116.8 120.8 89.1 132.9 292.6 431.8

Substrate solutions -39.0 -29.5 -15.5 2.0 -11.0 -3.3 9.7 -2.3 -137.3 -82.0 -6.9

Total 25.5 70.7 103.2 106.8 131.8 154.2 170.8 95.9 24.4 306.2 552.6

OP margin Module solutions 2.4 4.7 4.0 0.7 4.9 4.8 4.7 1.2 1.1 3.2 3.9

Component solutions 9.3 11.2 14.1 14.4 14.5 15.2 14.6 11.0 6.9 12.5 13.8

Substrate solutions -13.3 -9.2 -3.9 0.5 -3.0 -1.0 2.5 -0.5 -10.4 -5.7 -0.4

Total 1.6 4.1 5.6 6.2 7.0 7.9 8.2 4.7 0.4 4.5 7.0

Pretax profit 11.5 64.0 98.5 79.6 109.3 133.9 148.9 67.4 32.1 253.6 459.5

Net profit 2.2 33.3 71.9 54.3 70.6 88.8 98.7 44.7 14.7 161.7 302.8

Pretax margin 0.7 3.7 5.4 4.6 5.8 6.8 7.2 3.3 0.5 3.7 5.8

Net margin 0.1 2.0 3.9 3.2 3.8 4.5 4.7 2.2 0.2 2.4 3.8

Source: Company data, Mirae Asset Daewoo Research estimates

33| Monthly InsighT Mirae Asset Daewoo Research Spotlight stocks Innox Advanced Materials (272290 KQ)

Solid 1Q earnings to dispel concerns ■ 1Q18 preview: Revenue of W83bn (+3.1% QoQ) and OP of W11.6bn (+65.7% QoQ) (Maintain) Buy - As Innox Advanced Materials’ revenue exposure to Apple is estimated at just 7%, the company should see only a limited impact from Apple’s sales slowdown. Target Price (12M, W) 100,000 - Large-sized OLED materials profitability is expected to normalize in 1Q. Share price (3/30/18, W) 65,800 - The profitability of SmartFLEX, which depressed the company’s earnings in 4Q, is recovering. - OP margin is projected to rebound to 14%, the level recorded in 3Q17. Expected Return 52% ■ To benefit from both large and small/mid-sized OLED markets; PI film price concerns are overblown OP (18F, Wbn) 60 - The revenue contribution from large- and small/mid-sized OLED materials is expected to increase from 19.8% Consensus OP (18F, Wbn) 61 in 2017 to 37.9% in 2018. EPS Growth (18F, %) 44.1 - As the revenue contributions of OLED and semiconductor materials that do not use PI films are rising, the company should be able to remain largely immune from the recent uptrend in PI film prices. Market EPS Growth (18F, %) 6.7 P/E (18F, x) 12.3 ■ Valuation: Maintain Buy and TP of W100,000 Market P/E (18F, x) 9.3 - The stock is trading at a P/E of 11.6x, lower than OLED materials producers’ average of 18x. KOSDAQ 871.09 - As OLED materials’ OP contribution is anticipated to sharply increase to 14% in 2018 from 1% in 2017, the stock deserves a re-rating as an OLED materials producer, in our view. Market Cap (Wbn) 573 Shares Outstanding (mn) 9

Free Float (%) 65.6 FY (Dec.) 12/14 12/15 12/16 12/17 12/18F 12/19F 150 Foreign Ownership (%) 11.7 Innox이녹스첨단소재 AMC KOSDAQ Revenue (Wbn) - - - 193 423 491 Beta (12M) OP (Wbn) - - - 22 60 78 0.85 130 52-Week Low 62,858 OP margin (%) - - - 11.4 14.2 15.9 110 52-Week High 94,627 NP (Wbn) - - - 17 48 62 EPS (W) - - - 3,724 5,364 6,956 90 (%) 1M 6M 12M ROE (%) - - - 13.4 32.6 30.8 Absolute -10.2 -14.2 0.0 70 P/E (x) - - - 23.0 12.3 9.5 3/17 7/17 11/17 3/18 Relative -11.7 -35.7 0.0 P/B (x) - - - 6.2 3.4 2.5

Notes: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Wonjae Park Source: Mirae Asset Daewoo Research estimates +822-3774-1426 [email protected]

34| Monthly InsighT Mirae Asset Daewoo Research Spotlight stocks Innox Advanced Materials (272290 KQ)

Earnings table

1Q17 2Q17 3Q17 4Q17 1Q18F 2Q18F 3Q18F 4Q18F 2016 2017 2018F

Revenue 64.1 76.2 86.5 80.3 82.8 94.9 125.4 119.6 179.2 307.1 422.7

FPCB 21.2 23.1 33.7 29.4 30.9 28.8 31.3 28.7 80.3 107.3 119.6

Semiconductor 10.3 10.4 11.4 10.3 10.7 11.7 13.3 12.6 36.5 42.5 48.3

SmartFLEX 22.5 28.3 22.5 23.1 24.7 25.3 22.4 22.1 29.6 96.4 94.4

OLED 10.1 14.4 18.9 17.5 16.6 29.2 58.4 56.3 32.9 60.9 160.4

Operating profit 5.0 7.9 12.6 7.0 11.6 13.2 19.4 15.4 17.8 32.5 59.7

Pretax profit 3.4 8.0 12.8 5.5 11.9 13.5 19.7 15.7 8.2 29.7 60.9

Net profit 2.6 6.4 10.1 4.3 9.4 10.6 15.6 12.4 5.1 23.4 48.1

OP margin 7.8 10.3 14.5 8.7 14.0 13.9 15.5 12.9 9.9 10.6 14.1

Pretax margin 5.3 10.6 14.8 6.9 14.4 14.2 15.7 13.2 4.6 9.7 14.4

Net margin 4.1 8.4 11.7 5.4 11.4 11.2 12.4 10.4 2.9 7.6 11.4

Source: Company data, Mirae Asset Daewoo Research estimates

35| Monthly InsighT Mirae Asset Daewoo Research Other Spotlight notable stocks stocks Humax (115160 KQ)

Shifting focus to profit margins

■ 2017: A year of both record revenue and unprecedented net loss (Maintain) Buy - Even though full-year revenue grew 19.3% YoY to W1.61tr, OP tumbled 60.2% YoY to W8bn. - Target Price (12M, W) 12,000 In our view, this was largely due to the company’s focus on top-line growth. - Cost pressures increased as a result of a surge in memory prices since 4Q16. Share price (3/30/18, W) 9,010  Memory chip purchasing costs rose to W50bn.

Expected Return 33% ■ Reflection of higher memory prices in several new products points to strategic shift - Contrary to our expectations, Humax did not pass on the increase in memory prices during 2H17. OP (18F, Wbn) 28 - However, we think the situation is beginning to turn around Consensus OP (18F, Wbn) 21  The company appears to be shifting its focus to profit margins, as it recently started to reflect higher EPS Growth (18F, %) - memory prices in several new products and is also considering discontinuing loss-making products. Market EPS Growth (18F, %) 6.7 - 1Q18 earnings outlook: Revenue of W449.2bn (+27.5% YoY) and OP of W10.5bn (+1,897.8% YoY) P/E (18F, x) 24.2 ■ Maintain Buy and TP of W12,000 Market P/E (18F, x) 9.3 - The overall market environment looks benign, given product diversification and the near-completion of KOSDAQ 871.09 industry consolidation. Market Cap (Wbn) 215 Shares Outstanding (mn) 24 Free Float (%) 64.3 FY (Dec.) 12/14 12/15 12/16 12/17 12/18F 12/19F 160 Foreign Ownership (%) 16.8 Humax휴맥스 KOSDAQ Revenue (Wbn) 1,444 1,427 1,351 1,612 1,588 1,631 Beta (12M) 0.47 140 OP (Wbn) 33 49 20 8 28 44 52-Week Low 7,940 120 OP margin (%) 2.3 3.4 1.5 0.5 1.8 2.7 NP (Wbn) 21 31 6 -32 9 22 52-Week High 12,000 100 EPS (W) 919 1,299 263 -1,324 372 903 (%) 1M 6M 12M 80 ROE (%) 4.9 6.8 1.3 -7.0 2.0 4.8 Absolute 2.2 -3.0 -24.0 60 3/17 7/17 11/17 3/18 P/E (x) 15.1 13.1 52.3 - 24.2 10.0 Relative 0.5 -27.3 -46.3 P/B (x) 0.7 0.8 0.7 0.5 0.5 0.5

Notes: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Wonjae Park Source: Mirae Asset Daewoo Research estimates +822-3774-1426 [email protected]

36| Monthly InsighT Mirae Asset Daewoo Research Other Spotlight notable stocks stocks Humax (115160 KQ)

Earnings table

2017 2018F 1Q18F (Wbn, W, %) 2016 2017 2018F 1Q 2Q 3Q 4Q 1QF 2QF 3QF 4QF YoY QoQ Prev. Diff.

Revenue 352.2 346.6 395.7 517.1 449.2 404.8 343.6 390.3 1,350.5 1,611.6 1,588.0 27.5 -13.1 352.2 346.6

Operating profit 0.5 0.6 0.7 6.2 10.5 7.6 3.4 6.2 20.1 8.0 27.7 1,897.8 69.5 0.5 0.6

Pretax profit -7.1 2.1 -2.6 -24.5 6.1 4.4 -1.2 1.9 14.0 -32.0 11.2 TTB TTB -7.1 2.1

Net profit -3.8 1.8 -5.4 -24.1 4.8 3.5 -0.9 1.5 6.3 -31.7 8.9 TTB TTB -3.8 1.8

EPS -161 73 -228 -1,009 202 147 -39 62 263.1 -1,324.4 372 TTB TTB -161 73

OP margin 0.1 0.2 0.2 1.2 2.3 1.9 1.0 1.6 1.7 -0.5 0.2 2.2 1.1 0.1 0.2

Pretax margin -2.0 0.6 -0.7 -4.7 1.4 1.1 -0.3 0.5 0.5 -0.3 -0.1 3.4 6.1 -2.0 0.6

Net margin -1.1 0.5 -1.4 -4.7 1.1 0.9 -0.3 0.4 0.4 -0.2 -0.1 2.2 5.7 -1.1 0.5

Source: Company data, Mirae Asset Daewoo Research estimates

37| Monthly InsighT Mirae Asset Daewoo Research Other notable stocks LG Innotek (011070 KS)

One step backward, two steps forward

■ Earnings expectations being lowered (downward revisions to 1H18 earnings forecasts ) (Maintain) Buy - For 1Q18, we lowered our revenue and OP forecasts to W1. 81bn (+9.8% YoY, -37.1% QoQ) and W35.6bn (-46.7% YoY, -104.7% QoQ), respectively. Target Price (12M, W) ▼ 167,000 - The optical solution division is likely to report tepid earnings amid concerns over disappointing iPhone X Share price (3/30/18, W) 126,000 shipments. • LG Innotek is likely to be affected, given its high revenue exposure to Apple. • We are positive on the company’s strong dual-camera sales to Chinese smartphone makers. Expected Return 27% ■ 2Q18 to mark quarterly earnings bottom; Better positioned than rivals OP (18F, Wbn) 321 - We believe 2Q18 will mark a trough in terms of quarterly earnings and expect earnings to begin improving in Consensus OP (18F, Wbn) 401 3Q18. EPS Growth (18F, %) 11.9 - Apple is expected to roll out three new models in 2H18, all of which are likely to feature 3D sensing modules. Market EPS Growth (18F, %) 6.7 • Such features could even be extended to the iPad, and we believe LG Innotek has a healthy market share P/E (18F, x) 15.2 within Apple supply. Market P/E (18F, x) 9.3 ■ Maintain Buy and lower TP to W167,000 (P/B of 1.79x); Stock to bottom sometime in 2Q18 KOSDAQ 2,445.85 - While worries over the iPhone X remain, we believe such concerns have been fully reflected in current share Market Cap (Wbn) 2,982 prices. Shares Outstanding (mn) 24 Free Float (%) 59.2 FY (Dec.) 12/14 12/15 12/16 12/17 12/18F 12/19F

Foreign Ownership (%) 16.0 140 LGLG이노텍 Innotek KOSPI Revenue (Wbn) 6,466 6,138 5,755 7,641 8,157 8,655 130 Beta (12M) 0.81 OP (Wbn) 314 224 105 296 321 390 120 OP margin (%) 4.9 3.6 1.8 3.9 3.9 4.5 52-Week Low 120,000 110 NP (Wbn) 113 95 5 175 196 244 52-Week High 184,500 100 90 EPS (W) 5,020 4,018 209 7,387 8,262 10,309 (%) 1M 6M 12M 80 ROE (%) 7.5 5.5 0.3 9.4 9.6 10.8 Absolute -4.5 -18.2 -9.4 70 3/17 7/17 11/17 3/18 P/E (x) 22.4 24.5 422.4 19.5 15.2 12.2 Relative -5.3 -19.9 -19.8 P/B (x) 1.6 1.3 1.2 1.7 1.4 1.3 Wonjae Park Notes: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests +822-3774-1426 Source: Mirae Asset Daewoo Research estimates [email protected]

38| Monthly InsighT Mirae Asset Daewoo Research Other notable stocks LG Innotek (011070 KS)

Earnings table

2017 2018F 1Q18F (Wbn, %) 2017 2018F 1Q 2Q 3Q 4Q 1QF 2QF 3QF 4QF YoY QoQ Prev. Diff.

Revenue Optical solutions 924.2 634.9 1,035.7 2,083.7 1,067.5 698.4 1,105.1 2,078.5 4,678.5 4,949.4 15.5 -48.8 1,270.8 -16.0

Substrates & materials 264.0 271.4 283.3 324.5 286.3 287.3 328.1 380.5 1,143.2 1,282.2 8.5 -11.8 299.6 -4.4

LED 167.6 176.8 170.7 136.7 122.4 111.0 99.3 79.5 651.8 412.2 -27.0 -10.5 122.4 0.0 Automotive 307.3 271.4 313.6 342.6 346.4 350.0 407.5 476.0 1,234.9 1,580.0 12.7 1.1 346.4 0.0 components Other -18.4 -14.9 -16.1 -17.7 -16.8 -16.4 -16.7 -16.9 -67.1 -66.8 RR RR -16.8 0.0

Total 1,644.7 1,339.6 1,787.2 2,869.8 1,805.8 1,430.3 1,923.3 2,997.6 7,641.3 8,157.0 9.8 -37.1 2,022.4 -10.7

OP Optical solutions 74.9 12.1 32.1 135.4 21.3 -7.0 55.3 155.9 254.5 225.5 -71.5 -84.2 69.9 -69.5

Substrates & materials 8.6 24.1 29.0 29.1 20.1 24.9 34.7 26.4 90.7 106.1 132.9 -31.0 19.4 3.4

LED -15.1 -4.4 -4.8 -16.4 -6.1 -3.3 1.4 -2.4 -40.7 -10.4 RR RR -6.1 0.0 Automotive -1.6 0.8 -0.4 -6.9 0.3 1.1 0.7 -2.5 -8.0 -0.4 TTB TTB 0.3 0.0 components Total 66.8 32.5 55.9 141.2 35.6 15.7 92.0 177.4 296.5 320.8 -46.7 -74.8 83.5 -57.3

OP margin Optical solutions 8.1 1.9 3.1 6.5 2.0 -1.0 5.0 7.5 5.4 4.6 -6.1 -4.5 5.5 -3.5

Substrates & materials 3.3 8.9 10.2 9.0 7.0 8.7 10.6 6.9 7.9 8.3 3.7 -1.9 6.5 0.5

LED -9.0 -2.5 -2.8 -12.0 -5.0 -3.0 1.4 -3.0 -6.2 -2.5 RR RR -5.0 0.0 Automotive -0.5 0.3 -0.1 -2.0 0.1 0.3 0.2 -0.5 -0.7 0.0 TTB TTB 0.1 0.0 components Total 4.1 2.4 3.1 4.9 2.0 1.1 4.8 5.9 3.9 3.9 -2.1 -2.9 4.1 -2.2

Pretax profit 53.2 23.6 42.3 119.6 24.3 3.9 77.0 152.0 238.7 257.3 -54.3 -79.7 72.5 -66.5

Net profit 36.6 17.0 34.8 86.4 18.5 3.0 58.5 115.5 174.8 195.5 -49.5 -78.6 55.1 -66.5

Pretax margin 3.2 1.8 2.4 4.2 1.3 0.3 4.0 5.1 3.1 3.2 -1.9 -2.8 3.6 -2.2

Net margin 2.2 1.3 1.9 3.0 1.0 0.2 3.0 3.9 2.3 2.4 -1.2 -2.0 2.7 -1.7

Source: Company data, Mirae Asset Daewoo Research estimates

39| Monthly InsighT Mirae Asset Daewoo Research Other notable stocks Seoul Semiconductor (046890 KS)

Vietnam plant effects to kick in from 2H

■ We lower our 1Q18 OP margin forecast to reflect won appreciation (Maintain) Buy - For 1Q18, we forecast revenue of W281.9bn (+10.0% YoY) and OP of W17bn (-27.4% YoY).  We lowered our OP margin forecast to 6.1% (from 7.1%), due to F/X rate concerns. Target Price (12M, W) ▼ 29,100 ■ Vietnam plant to support top-line growth in 2018; Focus on patent competitiveness Share price (3/30/18, W) 19,800 - The Vietnam plant, which is due to be completed in March 2018, should start to have a meaningful impact on revenue in 2H18. Expected Return 47% - The market environment looks mixed: OP (18F, Wbn) 104 • Industry restructuring has stabilized LED prices, but this, in turn, has led to capacity expansions at competitors. Consensus OP (18F, Wbn) 108 • The expansion of the OLED TV market is negatively affecting the LED BLU industry, but the growth potential EPS Growth (18F, %) 40.9 of the MicroLED TV market remains a bright spot. Market EPS Growth (18F, %) 6.7 ■ Maintain Buy and lower TP to W29,100 P/E (18F, x) 17.6 - Our target price is based on 2.93x (3.0x previously) our 12-month forward BPS. Market P/E (18F, x) 9.3 KOSPI 871.09 Market Cap (Wbn) 1,154 Shares Outstanding (mn) 58 Free Float (%) 64.2 FY (Dec.) 12/14 12/15 12/16 12/17 12/18F 12/19F 220 Foreign Ownership (%) 10.1 SSC서울반도체 KOSDAQ Revenue (Wbn) 939 1,011 954 1,110 1,270 1,551 200 Beta (12M) 0.72 OP (Wbn) 3 46 58 98 104 128 180 OP margin (%) 0.3 4.5 6.1 8.8 8.2 8.3 52-Week Low 16,550 160 NP (Wbn) -71736476684 52-Week High 33,150 140 120 EPS (W) -118 291 621 800 1,127 1,445 (%) 1M 6M 12M 100 ROE (%) -1.2 3.0 6.1 7.6 9.9 11.6 Absolute -17.0 -21.1 13.8 80 3/17 7/17 11/17 3/18 P/E (x) - 54.0 25.1 34.8 17.6 13.7 Relative -18.3 -40.9 -19.7 P/B (x) 2.1 1.6 1.5 2.5 1.6 1.5 Wonjae Park Notes: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests +822-3774-1426 Source: Mirae Asset Daewoo Research estimates [email protected]

40| Monthly InsighT Mirae Asset Daewoo Research Other notable stocks Seoul Semiconductor (046890 KS)

Earnings table

2017 2018F 1Q18F (Wbn, W, %) 2016 2017 2018F 1Q 2Q 3Q 4Q 1QF 2QF 3QF 4QF YoY QoQ Prev. Diff.

Revenue 256.2 267.0 304.5 282.7 281.9 304.6 349.8 333.4 1,110.4 1,269.6 10.0 -0.3 281.9 0.0 256.2

Operating profit 23.4 24.1 30.6 20.0 17.0 27.5 35.4 23.9 98.1 103.8 -27.4 -15.2 21.6 -21.6 23.4

Pretax profit 10.5 29.7 30.4 0.0 13.0 26.7 34.6 23.0 70.6 97.3 24.1 TTB 20.7 -37.1 10.5

Net profit 6.8 21.4 17.9 0.6 8.8 18.0 23.4 15.5 46.6 65.7 29.8 1,489.7 14.0 -37.1 6.8

EPS 116 366 308 9 151 309 400 266 800 1,127 29.8 1,489.7 240 -37.1 116

OP margin 9.1 9.0 10.1 7.1 6.0 9.0 10.1 7.2 8.8 8.2 -3.1 -1.1 7.7 -1.7 9.1

Pretax margin 4.1 11.1 10.0 0.0 4.6 8.8 9.9 6.9 6.4 7.7 0.5 4.6 7.3 -2.7 4.1

Net margin 2.6 8.0 5.9 0.2 3.1 5.9 6.7 4.7 4.2 5.2 0.5 2.9 5.0 -1.8 2.6

Source: Company data, Mirae Asset Daewoo Research estimates

41| Monthly InsighT Mirae Asset Daewoo Research Other notable stocks Hanwha Techwin (012450 KS)

Earnings recovery to take some time

■ Cheap valuation, but earnings/business structure uncertainties loom (Maintain) Buy - The company’s valuation is low at a 2018F P/B of just 0.8x. 1) Uncertainty surrounding earnings Target Price (12M, W) 37,400 - Aircraft engines/parts ㆍHanwha Techwin signed a risk and revenue sharing program (RSP) deal with Pratt & Whitney to jointly Share price (3/30/18, W) 29,650 develop geared turbofan (GTF) engines; while the program has promising long-term potential, in the short term, it only incurs costs. Expected Return 26% - Security cameras ㆍOP margin, which was once around 20%, has slipped into negative territory (-6.4% in 2017). OP (18F, Wbn) 69 2) Uncertainty over business structure - A lot of uncertainties remain over how the situation will unfold. Consensus OP (18F, Wbn) 87 - After spinning off its existing businesses into five separate entities in April 2017, the firm announced plans to EPS Growth (18F, %) - spin off its security camera business in February 2018. Market EPS Growth (18F, %) 6.7 ■ Limited prospects for earnings improvement; Security camera recovery is key P/E (18F, x) 38.3 - For 1Q18, we forecast Hanwha Techwin to post revenue of W822.2bn (+6.2% YoY) and OP of W2.8bn (-75.2% Market P/E (18F, x) 9.3 YoY). KOSPI 2,445.85 ■ Maintain Buy with TP of W37,400 Market Cap (Wbn) 1,557 - We believe a recovery in security camera earnings and more visibility on RSP/business structure is needed. Shares Outstanding (mn) 53 Free Float (%) 66.6 FY (Dec.) 12/14 12/15 12/16 12/17 12/18F 12/19F Foreign Ownership (%) 13.0 Revenue (Wbn) 2,616 2,613 3,519 4,215 4,283 4,598 130 Hanwha한화테크윈 Techwin KOSPI Beta (12M) 1.03 120 OP (Wbn) 8 -60 151 83 69 137 110 OP margin (%) 0.3 -2.3 4.3 2.0 1.6 3.0 52-Week Low 27,250 100 NP (Wbn) -119 6 345 -48 40 95 52-Week High 53,100 90 80 EPS (W) -2,236 108 6,498 -913 773 1,824 (%) 1M 6M 12M 70 ROE (%) -7.1 0.3 15.1 -2.1 1.9 4.2 60 Absolute 1.5 -10.8 -36.7 50 P/E (x) - 329.2 6.7 - 38.3 16.2 3/17 7/17 11/17 3/18 Relative 0.8 -12.7 -44.0 P/B (x) 0.8 0.8 1.0 0.9 0.7 0.7 Wonjae Park Notes: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests +822-3774-1426 Source: Mirae Asset Daewoo Research estimates [email protected]

42| Monthly InsighT Mirae Asset Daewoo Research Other notable stocks Hanwha Techwin (012450 KS)

Earnings table

2017 2018F (Wbn, %, %p) 2016 2017 2018F 1Q 2Q 3Q 4Q 1QF 2QF 3QF 4QF

Revenue CCTV 136.7 168.1 143.5 136.2 123.0 142.9 157.9 147.1 637.8 584.5 570.9

Engine/energy equip. 221.2 234.6 213.3 271.2 199.1 210.0 266.6 217.0 1,050.7 940.3 892.6

Hanwha Power Systems 23.5 67.7 36.6 72.0 47.0 47.4 54.9 68.4 197.1 199.8 217.7

Hanwha Precision Machinery 55.9 73.1 56.3 68.1 64.7 71.2 81.8 77.7 169.3 253.4 295.4

Hanwha Systems 134.6 153.0 150.3 385.5 154.2 185.0 203.5 285.0 217.3 823.4 827.7

Hanwha Land Systems 110.5 187.7 149.8 323.4 129.4 168.2 201.8 282.5 714.4 771.4 781.9

Hanwha Defense 92.0 152.1 129.5 296.7 118.7 188.6 207.4 238.5 532.0 670.3 753.2

Total 774.3 1,036.3 868.6 1,536.2 822.2 999.4 1,160.2 1,301.6 3,518.8 4,215.4 4,283.4

CCTV -0.1 -3.7 -10.3 -23.2 -12.3 -14.3 -12.6 -7.4 33.7 -37.3 -46.6 Operating profit Engine/energy equip. 12.6 5.2 -1.3 -20.5 -2.0 -4.2 7.5 -6.5 58.0 -4.0 -5.2

Hanwha Power Systems -7.1 -2.2 -0.7 6.5 1.4 1.4 1.1 3.1 -12.8 -3.5 7.0

Hanwha Precision Machinery 3.7 10.0 4.1 3.3 3.3 4.6 5.9 4.4 -15.4 21.2 18.2

Hanwha Systems -1.5 -1.8 2.2 25.4 2.3 2.8 5.1 10.0 13.5 24.3 20.2

Hanwha Land Systems 1.3 9.9 2.6 44.9 10.3 14.3 16.1 15.5 38.6 58.7 56.3

Hanwha Defense 2.3 5.8 9.4 14.4 3.9 9.3 10.4 12.5 35.1 31.9 36.1

Total 11.2 23.2 2.2 46.3 2.8 9.8 29.3 27.4 150.7 82.9 69.2

OP margin 1.4 2.2 0.3 3.0 0.3 1.0 2.5 2.1 4.3 2.0 1.6

Pretax profit 5.9 19.1 -10.1 3.0 0.4 3.2 24.2 19.7 418.5 17.8 47.5

Net profit 9.9 17.1 -17.6 -57.7 0.4 2.7 20.6 16.8 345.2 -48.2 40.4

Pretax margin 0.8 1.8 -1.2 0.2 0.1 0.3 2.1 1.5 11.9 0.4 1.1

Net margin 1.3 1.7 -2.0 -3.8 0.0 0.3 1.8 1.3 9.8 -1.1 0.9

Source: Company data, Mirae Asset Daewoo Research estimates

43| Monthly InsighT Mirae Asset Daewoo Research APPENDIX 1

Important Disclosures & Disclaimers 2-Year Rating and Target Price History

Company (Code) Date Rating Target Price Company (Code) Date Rating Target Price LG Electronics(066570) 04/01/2018 Buy 147,000 Samsung SDI(006400) 10/31/2017 Buy 270,000 02/18/2018 Buy 131,000 09/01/2017 Buy 240,000 01/01/2018 Buy 129,000 07/27/2017 Buy 210,000 10/26/2017 Buy 113,000 07/03/2017 Trading Buy 180,000 08/30/2017 Buy 100,000 01/01/2017 Hold 07/10/2017 Buy 95,000 12/31/2016 No Coverage 04/09/2017 Buy 96,000 10/28/2016 Trading Buy 107,000 03/13/2017 Buy 87,700 09/11/2016 Trading Buy 120,000 03/01/2017 Buy 79,000 04/29/2016 Trading Buy 129,000 01/26/2017 Buy 65,600 01/25/2016 Buy 138,000 10/28/2016 Buy 64,000 Samsung Electro-Mechanics(009150) 01/31/2018 Buy 134,000 10/03/2016 Buy 67,000 07/23/2017 Buy 131,000 07/28/2016 Buy 75,000 07/03/2017 Buy 123,000 03/01/2016 Buy 78,000 05/31/2017 Buy 100,000 LG Display(034220) 04/01/2018 Buy 40,000 05/01/2017 Buy 93,000 10/25/2017 Buy 42,000 04/02/2017 Buy 85,000 07/03/2017 Buy 50,000 02/20/2017 Buy 76,000 04/26/2017 Buy 40,000 01/26/2017 Buy 68,000 01/01/2017 Buy 38,000 10/03/2016 Buy 65,300 12/31/2016 No Coverage 08/31/2016 Buy 72,200 07/27/2016 Buy 37,000 04/26/2016 Buy 73,700 04/01/2016 Buy 32,000 01/31/2016 Buy 74,600

(W) LG Electronics (W) LG Display (W) Samsung SDI (W) Samsung Electro-Mechanics

200,000 60,000 300,000 150,000

50,000 250,000 150,000 40,000 200,000 100,000

100,000 30,000 150,000

20,000 100,000 50,000 50,000 10,000 50,000

0 0 0 0 Apr 16 Apr 17Apr Apr 16 18 Apr 17Apr Apr 16 18 Apr 17Apr Apr 16 18 Apr 17 Apr 18

44| Monthly InsighT Mirae Asset Daewoo Research 2-Year Rating and Target Price History

Company (Code) Date Rating Target Price Company (Code) Date Rating Target Price Innox Advanced Materials(272290) 02/20/2018 Buy 100,000 11/30/2017 Buy 37,800 Humax(115160) 02/01/2018 Buy 12,000 10/25/2017 Buy 34,300 11/12/2017 Buy 13,600 10/10/2017 Buy 31,000 05/14/2017 Buy 14,200 09/01/2017 Buy 28,000 02/21/2017 Trading Buy 14,200 07/03/2017 Buy 26,900 05/12/2016 Buy 18,100 04/02/2017 Buy 23,400 02/17/2016 Buy 17,900 02/02/2017 Buy 20,300 LG Innotek(011070) 04/02/2018 Buy 167,000 10/03/2016 Buy 19,900 01/24/2018 Buy 180,000 07/31/2016 Buy 21,500 01/01/2018 Buy 210,000 02/01/2016 Buy 19,500 10/25/2017 Buy 232,000 Hanwha Techwin(012450) 02/25/2018 Buy 37,400 09/01/2017 Buy 230,000 02/01/2018 Buy 44,000 07/03/2017 Buy 199,000 01/02/2018 Buy 45,400 04/02/2017 Buy 171,000 11/05/2017 Buy 54,000 03/01/2017 Buy 156,000 10/10/2017 Buy 47,000 01/25/2017 Buy 130,000 07/18/2017 Buy 57,000 01/01/2017 Buy 119,000 05/01/2017 Buy 69,000 11/29/2016 Buy 115,000 04/23/2017 Buy 61,000 10/03/2016 Buy 105,000 01/31/2017 Buy 62,000 07/27/2016 Buy 117,000 11/02/2016 Buy 71,000 06/01/2016 Buy 107,000 10/03/2016 Buy 80,000 04/27/2016 Buy 96,000 07/31/2016 Buy 77,000 04/01/2016 Buy 102,000 06/08/2016 Buy 61,000 Seoul Semiconductor(046890) 04/02/2018 Buy 29,100 05/01/2016 Buy 59,000 01/30/2018 Buy 36,200 10/28/2015 Buy 49,000

(W) Innox Advanced Materials(W) Humax (W) LG Innotek (W) Seoul Semiconductor(W) Hanwha Techwin

120,000 20,000 250,000 40,000 100,000

100,000 200,000 80,000 15,000 30,000 80,000 150,000 60,000 60,000 10,000 20,000 100,000 40,000 40,000 5,000 10,000 20,000 50,000 20,000

0 0 0 0 0 Apr 16 Apr 17Apr Apr 16 18 Apr 17Apr Apr 16 18 Apr 17Apr Apr 16 18 Apr 17Apr Apr 16 18 Apr 17 Apr 18

45| Monthly InsighT Mirae Asset Daewoo Research 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 75.50% 16.00% 8.50% 0.00% Investment Banking Services 62.50% 33.33% 4.17% 0.00% * Based on recommendations in the last 12-months (as of December 31, 2017)

Disclosures As of the publication date, Mirae Asset Daewoo Co., Ltd. has acted as a liquidity provider for equity-linked warrants backed by shares of Samsung SDI, LG Display, LG Electronics Inc., Samsung Electro-Mechanics, LG Innotek, Hanwha Techwin as an underlying asset, and other than this, Mirae Asset Daewoo has no other special interests in the covered companies.

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.

46| Monthly InsighT Mirae Asset Daewoo Research 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 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 document has been approved for distribution in Hong Kong by Mirae Asset Securities (HK) Ltd., 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.

47| Monthly InsighT Mirae Asset Daewoo Research Mirae Asset Daewoo International Network

Mirae Asset Daewoo Co., Ltd. (Seoul) Mirae Asset Securities (HK) Ltd. Mirae Asset Securities (UK) Ltd. Global Equity Sales Team Suites 1109-1114, 11th Floor 41st Floor, Tower 42 Mirae Asset Center 1 Building Two International Finance Centre 25 Old Broad Street, 26 Eulji-ro 5-gil, Jung-gu, Seoul 04539 8 Finance Street, Central London EC2N 1HQ Korea Hong Kong United Kingdom China Tel: 82-2-3774-2124 Tel: 852-2845-6332 Tel: 44-20-7982-8000

Mirae Asset Securities (USA) Inc. Mirae Asset Wealth Management (USA) Inc. Mirae Asset Wealth Management (Brazil) CCTVM 810 Seventh Avenue, 37th Floor 555 S. Flower Street, Suite 4410, Rua Funchal, 418, 18th Floor, E-Tower Building Vila Olimpia New York, NY 10019 Los Angeles, California 90071 Sao Paulo - SP USA USA 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 12190 Republic of Singapore District 1, Ben Nghe Ward, Ho Chi Minh City Indonesia Vietnam

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 Beijing 100022 B12 Jianguomenwai Avenue, Chaoyang District Beijing Ulaanbaatar 14240 China 100022 Mongolia 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 200120 91 Pasteur St. China District 1, Ben Nghe Ward, Ho Chi Minh City Vietnam

Tel: 86-21-5013-6392 Tel: 84-8-3910-7715

48| Monthly InsighT Mirae Asset Daewoo Research