Cheil Worldwide

(030000 KS ) Watch for China recovery and growth in India

Advertising 1Q18 preview: Likely to report strongest performance among domestic ad firms Company Update Among major domestic ad-related firms, we expect Cheil Worldwide to deliver the April 10, 2018 strongest results for 1Q18. At the domestic parent business, earnings in the typically weak month s of January/February were likely supported by work related to Electronics’ (SEC; 005930 KS/CP: W2,460,000) PyeongChang Winter Games sponsorship, as well as for the games’ Organizing Committee. In March, (Maintain) Buy the company likely benefited from robust marketing activities by non-affiliate advertisers. Target Price (12M, W) 25,000 On the overseas front, we believe growth continued to b e driven by affiliate business, including marketing for SEC’s new S9 smartphone. The company likely saw new Share Price (04/09/18, W) 18,850 business from SEC affiliate Harman and DuPont in the Americas, while continuing steady growth in Europe.

Expected Return 33% China to recover this year

One potential catalyst this year is the recovery of China earnings. China’s earnings contribution hit a high in 2015, when 27% of revenue and 41% of net profit OP (18F, Wbn) 177 (consolidated) came from the country. As a result, the market began to recognize the Consensus OP (18F, Wbn) 180 stock as a China play. In 2017, however, China’s contribution fell to 24% of revenue and 8% of net profit, as revenue and net profit declined 8% and 65% YoY, respectively. This EPS Growth (18F, %) 2.5 was largely because of changes in Samsung’s marketing strategy and dwindling local Market EPS Growth (18F, %) 16.8 business from non-aff iliate Korean firms, which led to a decline in the company’s China P/E (18F, x) 16.6 digital media ad operations. Market P/E (18F, x) 9.3 KOSPI 2,444.08 Domestic stocks related to China’s consumption have been rebounding this year. Korea-China relations are beginning to show signs of recovering from the THA AD Market Cap (Wbn) 2,169 fallout, with a bilateral economic committee meeting set to take place this month for Shares Outstanding (mn) 115 the first time in two years. In response to the unfavorable environment in China last Free Float (%) 59.6 year, Cheil Worldwide focused on expanding its e-commerce operations rather than its digital media ads. If digital media ad operations in China recover this year on Foreign Ownership (%) 32.0 improving business conditions, we could see a material improvement in China profits. Beta (12M) 0.61 52-Week Low 17,750 Watch for earnings growth in India 52-Week High 21,800 Among the company’s overseas operations, India has emerged as a standout. In 2017, India overtook China to generate the highest profit among overseas subsidiaries. (%) 1M 6M 12M Revenue and net profit from India expanded 40% and 31% YoY, respectively, Absolute -2.8 3.6 3.6 accounting for 5% and 13% of consolidated revenue and net profit, respectively. India Relative -2.2 1.5 -8.8 is one of the most important emerging markets for SEC, which controls the largest smartphone market share (25%) in the country. Recently, competition with Chinese 130 Cheil Worldwide KOSPI brands such as Xiaomi has been intensifying in India, highlighting the n eed for SEC to 120 ramp up marketing to defend market share. This should prove beneficial to Cheil 110 Worldwide.

100 Reaffirm Buy and TP of W25,000 90 We reaffirm our Buy call on Cheil Worldwide with a target price of W25,000. We expect 80 3.17 7.17 11.17 3.18 stable near-term earnings and look for visible growth in India earnings and a recovery in China earnings this year. Following the company’s decision late last year to double its dividend payout to 60%, dividend yield also looks attractive at around 4%. Mirae Asset Daewoo Co., Ltd.

[ Internet/Game/Advertising ] FY (Dec.) 12/15 12/16 12/17 12/18F 12/19F 12/20F Revenue (Wbn) 2,807 3,233 3,375 3,643 3,782 3,932 Jee -hyun Moon +822 -3774 -1640 OP (Wbn) 127 150 157 177 189 201 [email protected] OP Margin (%) 4.5 4.6 4.7 4.9 5.0 5.1

NP (Wbn) 80 88 127 130 139 147 EPS (W) 691 767 1,105 1,133 1,206 1,282 ROE (%) 9.6 11.4 15.8 14.5 14.2 14.2

P/E (x) 29.9 20.5 19.2 16.6 15.6 14.7 P/B (x) 2.2 1.7 2.2 1.8 1.7 1.6 Dividend Yield (%) 1.4 1.9 3.6 4.1 4.4 4.7 Note: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Source: Company data, Mirae Asset Daewoo Research estimates

April 10, 2018 Cheil Worldwide

Recovery of China earnings

Cheil Worldwide to join the rebound of China plays, albeit with a lag

One potential catalyst this year is the recovery of China earnings. In 2017, revenue and net profit from China declined 8% and 65% YoY, respectively, as changes in Samsung’s marketing strategy and dwindling local business from non-affiliate Korean firms led to a decline in the company’s China digital media ad operations.

Domestic stocks related to China’s consumption have been rebounding this year. Korea- China relations are beginning to show signs of recovering from the THAAD fallout, with a bilateral economic committee meeting set to take place this month for the first time in two years. In response to the unfavorable environment in China last year, Cheil Worldwide focused on expanding its e-commerce operations rather than its digital media ads. We think digital media ad operations could recover YoY in 2018, spurred by the resumption of local marketing by Korean non-affiliate advertisers and a pickup in business from local advertisers.

Figure 2. Cheil Worldwide to join the rebound of China plays Figure 1. China plays were hit hard by THAAD headwinds with a time lag

(1/16=100) Cheil Worldwide Lotte Shopping (1/18=100) Cheil Worldwide Hotel Shilla Lotte Shopping 175 AmorePacific Cosmax Orion 160 AmorePacific Cosmax Orion Studio Dragon 150 145

125 130

100 115

75 100

2/16 4/17 9/17 50 Announcement of THAAD Additional 85 THAAD deployment in THAAD deployment Seongju deployment 25 70 1/16 7/16 1/17 7/17 1/18 1/18 2/18 3/18 4/18

Note: For Orion and Studio Dragon, 100 refers to listing dates Source: Thomson Reuters, Mirae Asset Daewoo Research Source: Thomson Reuters , Mirae Asset Daewoo Research

Figure 3. Major Chinese subsidiaries saw revenue decline in Figure 4. Chinese net profit began to decline in 2016 and

2017 deteriorated further in 2017

(Wbn) (Wbn) Cheil China (L) (%) PengTai e-Commerce (L) 1,000 Cheil China 40 48 PengTai Interactive Advertising (L) 40.6 PengTai e-Commerce Chinese contributions to consolidated net profit (R) 800 PengTai Interactive Advertising 30 36

600 20 24

400 10 12 7.5

200 0 0

0 -10 -12 07 08 09 10 11 12 13 14 15 16 17 07 08 09 10 11 12 13 14 15 16 17

Source: Company data, Mirae Asset Daewoo Research Note: Chinese contributions to consolidated net profit are based on the combined net profits of three Chinese subsidiaries Source: Company data, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 2 April 10, 2018 Cheil Worldwide

Growth in India

India overtakes China as top overseas subsidiary

With China moving to the sidelines last year, India emerged as a standout. In 2017, India generated the highest profit among the company’s overseas subsidiaries, overtaking China. Revenue and net profit from India expanded 40% and 31% YoY, respectively, accounting for 5% and 13% of consolidated revenue and net profit, respectively.

India is one of the most important emerging markets for SEC, which controls the largest smartphone market share (25%) in the country. Recently, competition with Chinese brands such as Xiaomi and Vivo has been intensifying in India. While SEC has failed to maintain its market share in China, we believe the smartphone company sees India as a strategic market and will defend its market share there by ramping up marketing. This should prove beneficial to Cheil Worldwide’s India subsidiary.

Figure 5. In 2017, India subsidiary generated the highest profit among overseas subsidiaries, overtaking its Chinese counterpart

(Wbn) (Wbn) 200 Revenue from Cheil India (L) 40 Net profit from Cheil India (R) Overall net profits from Chinese subsidiaries (R) 150 30

100 20

50 10

0 0 07 08 09 10 11 12 13 14 15 16 17

Note: Overall net profits from Chinese subsidiaries are based on the combined net profits of three subsidiaries (Cheil China, PengTai e -Commerce , PengTai Interactive Advertising ); Source: Company data, Mirae Asset Daewoo Research

Figure 6. SEC faces growing competition from Chinese brands in India, which could benefit Cheil Worldwide

(%) 100

80 Other Micromax 60 Oppo Lenovo

40 Vivo Xiaomi SEC 20

0 2013 2014 2015 2016 2017

Source: IDC, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 3 April 10, 2018 Cheil Worldwide

Earnings forecasts

Earnings growth to be geared towards 2H18

Looking at the domestic parent business, we believe earnings in the typically weak months of January/February were supported by work related to SEC’s PyeongChang Winter Games sponsorship, as well as advertising for the games’ Organizing Committee. In March, the company likely saw robust marketing activities by non-affiliate advertisers.

On the overseas front, we believe growth will continue to be driven by SEC-related business. Given seasonality and the anticipated recovery in China, we believe 2H18 will be stronger than 1H18. In India, we expect double-digit growth on the back of increased marketing for affiliates. In the Americas, the company is benefiting from new business from SEC affiliate Harman and DuPont. In Europe, growth is likely to remain steady.

Table 1. Quarterly and annual earnings (Wbn, %) 1Q17 2Q17 3Q17 4Q17 1Q18F 2Q18F 3Q18F 4Q18F 2016 2017 2018F Revenue 675 825 876 999 708 891 920 1,124 3,233 3,375 3,643 Gross profit 213 256 248 295 234 276 258 325 998 1,013 1,093 Parent 54 72 71 83 55 74 71 86 285 281 287 Overseas 159 184 177 212 178 202 187 240 712 732 806 China 44 53 47 73 49 57 52 82 238 218 240 Europe 57 64 61 67 63 69 66 71 227 249 268 Americas 8 10 11 12 9 10 12 13 52 41 44 India 13 15 16 16 17 20 20 22 45 60 80 Operating profit 23 52 35 46 25 54 38 61 150 157 177 OP margin 3.5 6.3 4.0 4.6 3.5 6.1 4.1 5.4 4.6 4.6 4.9 Net profit 16 39 42 32 17 37 30 48 91 128 132 Net margin 2.4 4.7 4.8 3.2 2.4 4.2 3.2 4.2 2.8 3.8 3.6 YoY Revenue 2.3 0.6 12.2 2.7 5.0 8.0 5.0 12.5 15.2 4.4 8.0 Gross profit -5.6 0.0 4.8 5.9 9.5 7.9 4.0 10.1 5.1 1.5 7.9 Parent -1.5 -6.9 6.2 -2.3 2.0 3.0 0.0 2.8 8.4 -1.4 2.0 Overseas -7.0 3.0 4.3 9.5 12.1 9.8 5.6 13.0 3.9 2.7 10.2 China -21.4 -4.0 -17.0 6.1 10.0 7.0 10.0 12.2 5.3 -8.3 10.0 Europe 9.0 2.8 15.3 12.3 11.0 9.0 7.0 5.4 5.1 9.7 8.0 Americas -51.2 -31.5 -7.2 30.5 10.0 10.0 4.0 2.1 -27.5 -20.9 6.0 India 18.2 39.1 39.5 30.0 30.0 30.0 30.0 41.8 13.8 31.8 33.1 Operating profit 3.9 19.4 22.0 -16.0 5.7 3.7 7.0 32.3 17.6 4.7 13.1 Net profit 14.0 35.1 63.8 42.8 5.1 -3.9 -29.0 51.0 10.8 41.7 2.6 Notes: All figures are based on consolidated K-IFRS; net profit is attributable to controlling and non-controlling interests; for advertising firms like Cheil Worldwide, gross profit represents top line ; Source: Company data, Mirae Asset Daewoo Research estimates

Table 2. Earnings forecast revisions (Wbn, W, %) Previous Revised % chg. Notes 18F 19F 18F 19F 18F 19F

Revenue 3,620 3,725 3,643 3,782 0.6 1.5 Gross profit 1,086 1,118 1,093 1,134 0.6 1.5 Revised up estimates for subsidiaries Operating profit 176 189 177 189 0.6 0.1 Net profit 131 140 132 140 0.5 0.2 Revised up net profit attributable to EPS 1,115 1,187 1,133 1,206 1.6 1.6 controlling interests estimates OP margin 4.9 5.1 4.9 5.0

Net margin 3.6 3.8 3.6 3.7

Notes: All figures are based on consolidated K-IFRS; net profit is attributable to controlling and non-controlling interests; EPS is based on controlling interests Source: Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 4 April 10, 2018 Cheil Worldwide

Cheil Worldwide (030000 KS/Buy/TP: W25,000)

Comprehensive Income Statement (Summarized) Statement of Financial Condition (Summarized) (Wbn) 12/17 12/18F 12/19F 12/20F (Wbn) 12/17 12/18F 12/19F 12/20F Revenue 3,375 3,643 3,782 3,932 Current Assets 1,889 2,190 2,333 2,479 Cost of Sales 2,362 2,550 2,648 2,753 Cash and Cash Equivalents 328 433 510 583 Gross Profit 1,013 1,093 1,134 1,179 AR & Other Receivables 1,271 1,431 1,485 1,544 SG&A Expenses 856 916 945 978 Inventories 0 0 0 0 Operating Profit (Adj) 157 177 189 201 Other Current Assets 290 326 338 352 Operating Profit 157 177 189 201 Non-Current Assets 349 321 297 280 Non-Operating Profit 8 8 9 9 Investments in Associates 5 5 6 6 Net Financial Income 4 4 6 7 Property, Plant and Equipment 95 80 68 59 Net Gain from Inv in Associates 2 0 0 0 Intangible Assets 161 142 127 117 Pretax Profit 165 185 198 210 Total Assets 2,238 2,511 2,630 2,759 Income Tax 37 54 58 61 Current Liabilities 1,281 1,440 1,494 1,553 Profit from Continuing Operations 128 132 140 149 AP & Other Payables 744 837 869 904 Profit from Discontinued Operations 0 0 0 0 Short-Term Financial Liabilities 13 13 13 13 Net Profit 128 132 140 149 Other Current Liabilities 524 590 612 636 Controlling Interests 127 130 139 147 Non-Current Liabilities 101 114 118 123 Non-Controlling Interests 1 1 1 1 Long-Term Financial Liabilities 0 0 0 0 Total Comprehensive Profit 102 132 140 149 Other Non-Current Liabilities 101 114 118 123 Controlling Interests 102 114 122 129 Total Liabilities 1,382 1,554 1,612 1,675 Non-Controlling Interests -1 17 18 20 Controlling Interests 846 946 1,006 1,069 EBITDA 193 212 215 221 Capital Stock 23 23 23 23 FCF (Free Cash Flow) 18 148 163 165 Capital Surplus 124 124 124 124 EBITDA Margin (%) 5.7 5.8 5.7 5.6 Retained Earnings 1,093 1,193 1,253 1,317 Operating Profit Margin (%) 4.7 4.9 5.0 5.1 Non-Controlling Interests 10 11 13 14 Net Profit Margin (%) 3.8 3.6 3.7 3.7 Stockholders' Equity 856 957 1,019 1,083

Cash Flows (Summarized) Forecasts/Valuations (Summarized) (Wbn) 12/17 12/18F 12/19F 12/20F 12/17 12/18F 12/19F 12/20F Cash Flows from Op Activities 39 148 163 165 P/E (x) 19.2 16.6 15.6 14.7 Net Profit 128 132 140 149 P/CF (x) 11.9 10.0 9.8 9.6 Non-Cash Income and Expense 77 85 81 77 P/B (x) 2.2 1.8 1.7 1.6 Depreciation 17 15 12 9 EV/EBITDA (x) 10.8 8.1 7.6 7.0 Amortization 19 19 14 11 EPS (W) 1,105 1,133 1,206 1,282 Others 41 51 55 57 CFPS (W) 1,783 1,880 1,923 1,964 Chg in Working Capital -122 -18 -6 -7 BPS (W) 9,812 10,681 11,200 11,752 Chg in AR & Other Receivables -77 -158 -54 -59 DPS (W) 760 780 830 880 Chg in Inventories 0 0 0 0 Payout ratio (%) 60.0 59.9 60.0 59.8 Chg in AP & Other Payables 18 86 30 32 Dividend Yield (%) 3.6 4.1 4.4 4.7 Income Tax Paid -48 -54 -58 -61 Revenue Growth (%) 4.4 7.9 3.8 4.0 Cash Flows from Inv Activities -15 -12 -7 -7 EBITDA Growth (%) 2.7 9.8 1.4 2.8 Chg in PP&E -19 0 0 0 Operating Profit Growth (%) 4.7 12.7 6.8 6.3 Chg in Intangible Assets -4 0 0 0 EPS Growth (%) 44.1 2.5 6.4 6.3 Chg in Financial Assets 9 -12 -4 -4 Accounts Receivable Turnover (x) 2.8 2.7 2.6 2.6 Others -1 0 -3 -3 Inventory Turnover (x) 0.0 0.0 0.0 0.0 Cash Flows from Fin Activities -53 -30 -79 -84 Accounts Payable Turnover (x) 3.5 3.5 3.3 3.3 Chg in Financial Liabilities -6 0 0 0 ROA (%) 5.8 5.5 5.5 5.5 Chg in Equity 0 0 0 0 ROE (%) 15.8 14.5 14.2 14.2 Dividends Paid -34 -30 -79 -84 ROIC (%) 26.4 25.5 27.3 29.8 Others -13 0 0 0 Liability to Equity Ratio (%) 161.5 162.3 158.3 154.6 Increase (Decrease) in Cash -45 105 77 73 Current Ratio (%) 147.4 152.1 156.2 159.6 Beginning Balance 373 328 433 510 Net Debt to Equity Ratio (%) -42.2 -49.4 -54.2 -57.9 Ending Balance 328 433 510 583 Interest Coverage Ratio (x) 52.7 52.0 56.5 61.0 Source: Company data, Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 5 April 10, 2018 Cheil Worldwide

APPENDIX 1

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

Company (Code) Date Rating Target Price (W) Cheil Worldwide Cheil Worldwide (030000) 12/18/2017 Buy 25,000 30,000 10/30/2017 Buy 24,000 25,000 07/30/2017 Trading Buy 22,000 20,000 04/28/2017 Trading Buy 21,000 01/30/2017 Buy 21,000 15,000 11/28/2016 Buy 19,000 10,000 04/22/2016 Trading Buy 19,000 5,000

02/21/2016 Trading Buy 20,000 0 Apr 16 Apr 17 Apr 18

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. and/or its affiliates do not have any special interest with the subject compan y and do not own 1% or more of the subject company's shares outstanding.

Analyst Certification The research analysts who prepared this report (the “Analysts”) are registered with the Korea Financial Investment Association and are subject to Korean securities regulations. They are neither registered as research analysts in any other jurisdiction nor subject to the laws or regulations thereof. Each Analyst responsible for the preparation of this report certifies that (i) all views expressed in this report accurately reflect the personal views of the Analyst about any and all of the issuers and securities named in this report and (ii) no part of the compensation of the Analyst was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report. Mirae Asset Daewoo Co., Ltd. (“Mirae Asset Daewoo”) policy prohibits its Analysts and members of their households from owning securities of any company in the Analyst’s area of coverage, and the Analysts do not serve as an officer, director or advisory board member of the subject companies. Except as otherwise specified herein, the Analysts have not received any compensation or any other benefits from the subject companies in the past 12 months and have not been promised the same in connection with this report. Like all employees of Mirae Asset Daewoo, the Analysts receive compensation that is determined by overall firm profitability, which includes revenues from, among other business units, the institutional equities, investment banking, proprietary trading and private client division. At the time of publication of this report, the Analysts do not know or have reason to know of any actual, material conflict of interest of the Analyst or Mirae Asset Daewoo except as otherwise stated herein.

Disclaimers This report was prepared by Mirae Asset Daewoo, a broker-dealer registered in the Republic of Korea and a member of the Korea Exchange. Information and opinions contained herein have been compiled in good faith and from sources believed to be reliable, but such information has not been independently verified and Mirae Asset Daewoo makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy, completeness or correctness of the information and opinions contained herein or of any translation into English from the Korean language. In case of an English translation of a report prepared in the Korean language, the original Korean language report may have been made available to investors in advance of this report. The intended recipients of this report are sophisticated institutional investors who have substantial knowledge of the local business environment, its common practices, laws and accounting principles and no person whose receipt or use of this report would violate any laws or regulations or subject Mirae Asset Daewoo or any of its affiliates to registration or licensing requirements in any jurisdiction shall receive or make any use hereof. This report is for general information purposes only and it is not and shall not be construed as an offer or a solicitation of an offer to effect transactions in any securities or other financial instruments. The report does not constitute investment advice to any person and such person shall not be treated as a client of Mirae Asset Daewoo by virtue of receiving this report. This report does not take into account the particular investment objectives, financial

Mirae Asset Daewoo Research 6 April 10, 2018 Cheil Worldwide

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 (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.

Mirae Asset Daewoo Research 7 April 10, 2018 Cheil Worldwide

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