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Home , Hanmi Pharmaceutical, Hyundai Steel, Samsung

November 30, 2015

KOREA

Sector News & Analysis Major Indices Close Chg Chg (%) Food & Beverage (Overweight) KOSPI 1,991.97 -37.02 -1.82 Impact of soju price hike KOSPI 200 244.24 -4.83 -1.94 KOSDAQ 688.38 -5.83 -0.84 Healthcare (Overweight) Healthcare Weekly Briefing Turnover ('000 shares, Wbn) Volume Value KOSPI 446,112 6,410 Economy & Strategy Update KOSPI 200 115,702 4,940 Fixed Income Monthly KOSDAQ 627,230 3,447 Prepare for a yield decline Market Cap (Wbn) Value KOSPI 1,263,673 KOSDAQ 199,424

KOSPI Turnover (Wbn) Buy Sell Net Foreign 3,090 3,638 -548 Institutional 825 788 37 2,364 1,998 366

KOSDAQ Turnover (Wbn) Buy Sell Net Foreign 375 381 -5 Institutional 109 199 -90 Retail 2,952 2,860 92

Program Buy / Sell (Wbn) Buy Sell Net KOSPI 2,547 3,238 -690 KOSDAQ 229 243 -14

Advances & Declines Advances Declines Unchanged KOSPI 205 626 49 KOSDAQ 305 751 62

KOSPI Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Electronics 1,284,000 -43,000 677 KODEX LEVERAGE 10,015 -395 250 Hanmi Pharm 794,000 -32,000 200 Hyundai Motor 147,500 -3,500 154 KODEX INVERSE 8,215 160 151

KOSDAQ Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Daum Communications 120,600 4,500 363 BARUN 3,460 795 153 CJ E&M 84,400 1,400 146 86,300 -1,200 101 Timo Technology 4,960 -660 89 Note: As of November 30, 2015

This document is a summary of a report prepared by Securities Co., Ltd. (“Daewoo”) and published on our website. Please review the compliance notices contained in the original report. Information and opinions contained herein have been compiled in good faith from sources deemed to be reliable. However, the information has not been independently verified. Daewoo makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy or completeness of the information and opinions contained in this document. Daewoo accepts no responsibility or liability whatsoever for any loss arising from the use of this document or its contents or otherwise arising in connection therewith. Information and opinions contained herein are subject to change without notice. This document is for informational purposes only. It is not and should not be construed as an offer or solicitation of an offer to purchase or sell any securities or other financial instruments. This document may not be reproduced, further distributed or published in whole or in part for any purpose.

Food & Beverage (Overweight/Maintain)

Impact of soju price hike

¢ Hite Jinro, Korea’s largest soju maker, raises soju prices by 5.6% due to rising costs and government’s planned increase in empty bottle deposits and handling fees News Comment ¢ Price hike to lift Hite Jinro’s soju revenue by W40-45bn, assuming demand is November 30, 2015 unaffected ¢ Beer prices also likely to be raised, albeit with some time lag

Daewoo Securities CCo.,o., Ltd. Hite Jinro raises soju prices by 5.6% [F&B/Tobacco] On November 27 th , Hite Jinro announced that it will raise the ex-factory price of its soju Woon-mok Baek +822-768-4158 (Chamisul Fresh and Chamisul Classic 360ml) by 5.6% (W54) to W1,015.7 per bottle (from [email protected] W961.7 currently).

As a result of the ex-factory price hike (which is the first in three years), retail prices at convenience stores and hypermarkets are expected to rise by around W70-W100. It is not yet clear whether restaurants and bars will also raise prices.

Other soju makers, such as Lotte Chilsung, Muhak, and Bohae Brewery, are likely to follow Hite Jinro’s lead and increase prices.

The markup had already been anticipated since October due to the government’s decision to increase handling fees and refundable deposits of empty bottles. Handling fees refer to wholesalers’ and retailers’ cost of storing and transporting empty bottles recovered from purchasers, while deposits are the refunds consumers receive when returning empty bottles to retailers.

The Ministry of Environment unveiled plans to raise handling fees and deposits of empty bottles starting January 21 st , 2016. For soju, handling fees will increase by W17 (to W33 from W16) and deposits by W60 (to W100 from W40). For beer, handling fees will increase by W14 (to W33 from W19) and deposits by W80 (to W130 from W50).

Altogether, handling fees and deposits will surge 137.5% (W77) to W133 (from W56) for soju and 136.2% (W94) to W163 (from W69) for beer.

Table 111.1. Soju price comparison Previous Revised Increase Price Composition PricePricePrice Composition (%)(%)(%) (W)(W)(W) (%)(%)(%) (W)(W)(W) (%)(%)(%) FFFactoryFactory price 451.6 37.1 476.9 37.1 5.65.65.6 Liquor tax 325.1 26.7 343.4 26.7 5.6 Education tax 97.5 8.0 103.0 8.0 5.6 Supply price 874.3 71.9 923.3 71.9 5.6 Value-added tax 87.4 7.2 92.3 7.2 5.6 Total taxes 510.1 41.9 538.7 41.9 5.6 ExExEx-Ex ---factoryfactory price 961.7 79.1 1,015.7 79.1 5.65.65.6 Tax burden (%) - 53.0 - 53.0 - Distribution margin 96.2 7.9 101.6 7.9 5.6 Retail margin 158.7 13.0 167.6 13.0 5.6 Consumer price 1,216.6 100.0 1,284.8 100.0 5.6 Notes: Based on a 360ml bottle of Chamisul Fresh; Consumer prices are estimates Source: KDB Daewoo Securities Research

Beer prices are also likely to be raised, possibly three to six months after the soju price hikes. But given fiercer market competition, it may take longer for beer price increases to materialize.

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

Healthcare (Overweight/Maintain)

Healthcare Weekly Briefing

1. Major issues Sector Update November 27, 2015 Hanmi signs out-licensing deal with ZAI Lab (November 23 rd ) announced that it signed a US$92mn out-licensing deal with ZAI Lab of for HM61713, an EGFR-targeted therapy for the treatment of lung cancer. Under the Daewoo Securities CCo.,o., Ltd. agreement, Hanmi will receive an upfront payment of $7 million plus running royalties, and

[Healthcare] ZAI Lab, the licensee, will gain the exclusive rights to jointly develop and commercialize the drug in China (including Hong Kong and Macau). Hyun-tae Kim +822-768-3251 The out-licensing agreement provides further proof of Hanmi’s advanced R&D capabilities. [email protected] Looking ahead, progress in HM61713 clinical trials should help strengthen the firm’s

Seung-min Kim medium/long-term fundamentals and future enterprise value. +822-768-4157 [email protected] Hanmi is also seeking partnerships with several other overseas counterparts, which should boost investor confidence in the pharmaceutical/biotechnology sector.

Table 111.1. Summary of Hanmi PharmaceuticalPharmaceutical’’’’ss deal with ZAI Lab Detail

Type of agreement - Out-licensing Licensee - ZAI Lab (China) Drug - HM61713, a targeted therapy for the treatment of EGFR mutation positive lung cancer - Under the agreement, ZAI Lab has the exclusive rights for the development, approval, production, and commercialization of HM61713 in China Agreement detail (including Hong Kong an d Macao) - Hanmi will receive an upfront payment of US$7mn and is entitled to potential milestone payments of US$85mn. Date of signing November 20, 2015 BOD resolution November 20, 2015

- Hanmi is also entitled to tiered royalties on future sales in addition to the aforementioned Other major details payments. that could affect investment decision - Hanmi will disclose any major changes to the agreement or other events related to the agreement in a prompt manner. Source: Dart, KDB Daewoo Securities Research

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

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

Fixed Income Monthly Prepare for a yield decline

1. Domestic economy peaked in 3Q; Skepticism over progress of recovery Considering current global economic conditions and the monetary policy environment, we expect bond yields to decline after the December FOMC meeting.

On the domestic front, economic fundamentals and monetary policy should be particularly favorable for the bond market around the January MPC meeting, when 4Q Fixed Income Report economic data are set to be released. And the currently tight short-term funding market November 30, 2015 should loosen up in December with loan demand peaking in the month. Thus, we advise investors to view current yield levels as a buying opportunity despite the fact that w e

Daewoo Securities CCo.,o., Ltd. could see fluctuations until the next FOMC meeting.

[Fixed Income] At end-October, the bond market looked likely to become overheated due to long-term investors’ buying of long-term bonds. However, healthy 3Q GDP growth numbers and Yeo-sam Yoon the US rate hike possibility led to a cooldown. In addition, household debt has continued +822-768-4022 to snowball, and real estate presales have been robust. CPI growth , which began to fall [email protected] in 4Q14, picked up YoY on a low base effect.

Nevertheless, we expect the base rate to be cut once again t o 1.25% in late 1Q16 in light of the Korean economy’s vulnerability to macro conditions. Korea’s quarterly GDP growth is unlikely to average 0.7% between 4Q15 through 2016 (after reaching 1.2% in

3Q15).

KDB Daewoo Securities forecasts 2016 GDP and CPI gro wth at 2.8% and 1.4%, respectively. And estimates by major economic research institutes are similar. Excluding government agencies, only a few institutes expect 2016 GDP growth of more than 3%. And, according to a media survey, ordinary Koreans are even mo re conservative than institutions.

Of note, concerns over the domestic econom ic outlook for 2016 have remained intact since the start of 4Q15. First of all, Statistics Korea's household survey data for 3Q was not positive despite solid GDP growth in the quarter. In particular, household spending contracted YoY despite increased retail sales, stripping away volatile items such as cars . Furthermore, household income growth slowed during the quarter.

Figure 111.1. Average 2016 GDP growth forecast for Korea: 2.86% Figure 222.2. Average 2016 CPI growth forecast for Korea: 1.585%

(%) Real GDP (%) CPI Average Average Average 3.4 3.20% 2.84% 2.74% 2.4 Average Average Average 3.2 2.2 1.60% 1.38% 1.70%

3.0 2.0 1.8 2.8 2.8 1.6 2.6 1.4 2.4 1.4 1.2 2.2 1.0 2.0 0.8 G o v ' t BOK IMF K D I HRI KEI B a r c l a y s N o m u ra K D B D a e w o o OECD LGERI KIF GS JPM BoA DB BNP C i t i UBS MS IMF KIF GS JPM Citi MS G o v ' t BOK OECD K D I LGERI HRI KEI BoA B a r c l a y s DB N o m u ra BNP UBS K D B D a e w o o

Source: Forecasts of key institutions Source: Forecasts of key institutions

Key Universe Valuations November 30, 2015

※All data as of close November 27, 2015, unless otherwise noted.

16F Earnings growth Mkt Cap Price P/E (x) P/B (x) ROE (%) Ticker Company Div Yield OP EPS (Wbn) (W) (%) 16F 17F 16F 17F 16F 17F 16F 17F 16F 17F 005930 189,132 1,284,000 2.1 2.2 5.1 5.3 7.6 10.0 9.3 1.1 1.0 11.7 11.4 005380 Hyundai Motor 32,491 147,500 3.4 15.6 -1.2 12.6 1.1 5.6 5.5 0.6 0.5 11.4 10.5 015760 KEPCO 31,424 48,950 3.1 8.3 0.5 -46.9 -1.5 4.7 4.7 0.4 0.4 9.8 8.9 012330 24,287 249,500 1.4 15.0 7.2 22.5 5.8 6.5 6.1 0.8 0.7 13.4 12.6 090430 AmorePacific 23,588 403,500 0.3 33.4 31.0 25.2 31.7 35.9 27.3 6.8 5.5 20.6 22.3 000660 SK Hynix 23,005 31,600 1.3 -21.9 10.7 -22.9 11.3 6.9 6.2 0.9 0.8 14.1 13.8 000270 Motors 21,282 52,500 2.6 27.7 14.0 25.8 10.9 5.7 5.1 0.8 0.7 14.2 13.9 051910 LG Chem 21,074 318,000 1.3 17.6 33.5 35.9 34.2 13.5 10.0 1.6 1.4 12.6 15.0 035420 NAVER 20,799 631,000 0.2 33.3 22.4 35.7 21.6 28.1 23.1 5.3 4.3 27.7 26.0 032830 Samsung Life 20,600 103,000 - - - - 0.0 0.0 018260 Samsung SDS 20,196 261,000 0.2 12.2 1381.5 8.3 1338.7 42.1 2.9 4.1 1.7 10.1 82.3 055550 19,656 41,450 - - - - 0.0 0.0 034730 SK Holdings 18,997 270,000 0.7 9.0 13.4 4.3 -49.4 22.3 44.0 3.4 3.2 19.8 8.9 017670 SK Telecom 18,894 234,000 4.3 4.8 1.4 0.4 1.8 11.4 11.2 1.0 1.0 10.1 9.7 051900 LG Household & 15,743 1,008,000 0.5 21.6 16.8 22.7 18.6 30.3 25.5 6.8 5.5 25.7 24.4 005490 POSCO 14,735 169,000 4.7 10.9 11.3 593.2 33.2 10.0 7.5 0.3 0.3 3.5 4.6 033780 KT&G 14,690 107,000 3.4 -4.9 0.7 -9.4 2.0 15.4 15.1 2.1 1.9 14.7 13.9 000810 Samsung F&M 14,520 306,500 - - - - 0.0 0.0 105560 KB Financial Group 13,619 35,250 - - - - 0.0 0.0 003550 LG Corp. 12,700 73,600 1.4 8.3 0.0 5.2 2.1 11.6 11.4 0.9 0.9 8.2 7.8 096770 SK Innovation 11,789 127,500 2.0 -34.7 48.8 -29.1 58.6 15.4 9.7 0.7 0.7 4.7 7.2 034220 LG Display 9,089 25,400 2.0 -40.9 85.2 -43.9 110.7 14.7 7.0 0.7 0.6 4.9 9.7 066570 LG Electronics 8,870 54,200 1.5 63.8 18.6 153.4 21.4 10.4 8.6 0.8 0.7 7.6 8.5 010130 Korea Zinc 8,586 455,000 1.4 22.0 16.2 23.5 17.4 12.9 11.0 1.5 1.3 12.4 13.0 010950 S-Oil 8,354 74,200 3.7 -8.9 15.1 0.0 15.1 11.2 9.7 1.4 1.3 13.2 13.8 006400 Samsung SDI 8,252 120,000 0.8 468.2 5.0 385.4 -81.4 5.4 29.1 0.6 0.6 12.3 2.2 011170 Lotte Chemical 8,243 240,500 0.4 7.6 12.6 19.0 16.8 6.4 5.5 0.9 0.8 15.8 15.8 047810 Korea Industries 8,178 83,900 0.3 27.7 23.5 42.2 26.2 27.1 21.5 5.4 4.4 22.1 22.7 035250 8,173 38,200 3.4 11.5 5.2 14.7 9.5 15.9 14.5 2.4 2.2 16.4 16.4 128940 Hanmi Pharmaceutical 8,123 794,000 63.1 28.5 73.0 36.4 127.9 93.7 14.6 12.6 12.1 14.5 030200 KT 7,820 29,950 2.7 1.1 0.3 -13.4 4.2 10.5 10.0 0.6 0.6 6.5 6.4 086790 7,548 25,500 - - - - 0.0 0.0 023530 Lotte Shopping 7,400 235,000 0.9 12.1 12.9 57.4 14.1 15.1 13.2 0.4 0.4 2.8 3.2 024110 7,400 13,300 - - - - 0.0 0.0 035720 7,240 120,600 0.1 92.2 38.3 76.3 40.8 46.0 32.7 2.7 2.5 6.0 7.9 086280 7,163 191,000 1.0 9.5 8.4 57.8 2.4 12.3 12.0 2.0 1.8 17.6 15.6 009540 6,886 90,600 - 123.3 - 724.4 126.7 15.4 0.4 0.4 0.4 3.1 001800 Orion 6,819 1,141,000 0.6 14.8 8.2 23.0 13.5 32.5 28.7 4.2 3.8 14.1 14.2 004020 6,779 50,800 1.5 6.8 9.9 7.6 31.6 7.7 5.9 0.4 0.4 5.6 6.9 088350 Hanwha Life 6,636 7,640 - - - - 0.0 0.0 021240 Coway 6,517 84,500 4.3 11.8 21.2 9.6 21.3 17.8 14.7 4.3 3.9 28.1 30.2 139480 Emart 5,965 214,000 0.7 21.2 13.5 -24.0 12.3 13.6 12.1 0.8 0.7 6.0 6.3 161390 5,717 46,150 1.0 7.1 14.0 7.7 14.9 8.0 7.0 1.0 0.9 12.8 13.0 009240 Hanssem 5,566 236,500 0.4 44.2 27.9 41.7 32.7 33.9 25.5 8.7 6.6 32.1 31.7 009150 Samsung Electro-Mechanics 5,169 69,200 0.9 25.4 29.0 240.2 32.7 19.8 14.9 1.1 1.0 6.0 7.5 036570 NCSOFT 4,879 222,500 1.7 29.6 21.8 34.4 24.9 18.8 15.0 2.8 2.4 16.5 18.1 002380 KCC 4,834 459,500 2.0 1.2 5.1 56.3 4.6 21.3 20.4 0.8 0.7 3.7 3.8 097950 CJ CheilJedang 4,744 360,500 0.6 8.6 9.5 28.5 33.2 17.8 13.4 1.5 1.3 8.9 10.8 078930 GS Holdings 4,692 50,500 2.7 -8.4 17.6 15.9 28.9 8.4 6.5 0.5 0.5 5.9 7.3 032640 LG Uplus 4,650 10,650 2.7 2.0 1.8 5.4 4.8 10.8 10.3 1.0 0.9 9.2 9.0 Source: KDB Daewoo Securities Research

Market Data November 30, 2015

※All data as of close November 30, 2015, unless otherwise noted.

Other Major Indices Economic Indicators Close Net Chg 1D (%) YTD (%) Close 1D ago 1M ago 1Y ago MSCI Korea* 375.86 -2.53 -0.67 -2.80 USD/KRW 1,150.40 1,145.70 1,142.30 1,101.10 KOSPI 1,991.97 -37.02 -1.82 3.40 JPY100/KRW 936.73 934.39 944.09 933.85 KOSDAQ 688.38 -5.83 -0.84 24.32 EUR/KRW 1,218.33 1,215.19 1,254.76 1,372.19 Dow Jones* 17,798.49 -14.90 -0.08 -0.19 3Y Treasury 1.79 1.80 1.66 2.07 S&P 500* 2,090.11 1.24 0.06 1.55 3Y Corporate 2.17 2.18 2.00 2.39 NASDAQ* 5,127.52 11.38 0.22 8.48 DDR2 1Gb* 1.10 1.11 1.12 1.38 Philadelphia Semicon* 670.51 4.42 0.66 -2.36 NAND 16Gb* 1.48 1.48 1.52 2.30 FTSE 100* 6,375.15 -17.98 -0.28 -2.64 Oil (Dubai)* 41.07 40.70 43.78 72.15 Nikkei 225 19,775.85 -108.09 -0.54 13.60 Gold* 1,056.20 1,070.00 1,166.80 1,196.60 Hang Seng* 22,068.32 -420.62 -1.87 -7.50 Customer deposits (Wbn)* 20,845 20,846 20,732 16,716 Taiwan (Weighted) 8,320.61 -77.79 -0.93 -10.28 Equity type BC (Wbn)(Nov. 26) 80,570 80,381 81,083 79,246 Note: * as of November 27, 2015 Source: KSDA, Wisefn, DRAMeXchange, MSCI

KOSPI Top 10 Foreign Net Buy / Net Sell (Wbn) KOSPI Top 10 Institutional Net Buy / Net Sell (Wbn) Net Buy Net Sell Net Buy Net Sell KT 18.08 Samsung Electronics 194.80 Samsung Electronics 88.54 KODEX LEVERAGE 82.26 Ottogi Corp. 10.59 Samsung Electronics (P) 43.76 KODEX INVERSE 51.37 KT 23.77 BGF Retail 7.57 Hyundai Motor 40.92 Samsung F&M Insurance 15.30 Shinhan Financial Group 12.80 GS Retail 7.29 Hynix 22.82 LG Insdustrial Systems 8.16 NHN 11.97 LCD 6.47 17.37 Samsung Life Insurance 6.93 KODEX 200 11.65 Hyundai Development E&C 5.48 Samsung F&M Insurance 16.95 Kia Motors 6.59 GS Retail 10.28 LG Electronics 4.60 Hyundai Mobis 13.46 Hyundai Motor 6.28 Ottogi Corp. 9.79 KODEX 200 4.33 Kia Motors 13.20 Doosan Infracore 5.85 SK Telecom 8.50 KT&G 4.25 POSCO 12.84 Kangwon Land 5.70 Hanmi Pharm 8.33 LG Display 4.16 11.80 Hana Financial Group 5.27 SAMSUNG SDS 7.64 Source: KSDA, Wisefn

KOSDAQ Top 10 Foreign Net Buy / Net Sell (Wbn) KOSDAQ Top 10 Institutional Net Buy / Net Sell (Wbn) Net Buy Net Sell Net Buy Net Sell CJ E&M 31.56 Daum Communications 27.89 GS Home Shopping 3.10 Daum Communications 47.60 Interpark 3.91 Celltrion 16.59 Paradise 2.95 CJ E&M 16.86 Bio Space 3.19 Sansung P&C 3.19 Kolon Life Science 2.49 Interpark 4.64 Amotech 2.65 Komipharm 2.27 KBH 2.40 Interpark 4.09 CrucialTec 2.49 GS Home Shopping 2.21 KICA 1.71 HARIM 2.51 Huons 2.22 Paradise 2.04 OCI Materials 1.64 KREIT 2.07 SETI 2.02 ViroMed 1.35 COSON 1.15 The Leadcorp.Inc. 1.51 Crosscert 1.97 KBH 1.32 Webzen 1.12 i-SENS 1.46 1.90 Tovis 1.27 Medipost 1.04 KH Vatec 1.36 ASTK 1.70 YG Entertainment 1.21 CJ FW 0.83 ATGen 1.34 Source: KSDA, Wisefn

KOSPI Top 10 by Market Cap (Wbn) KOSDAQ Top 10 by Market Cap (Wbn) Close (W) Chg (W) Mkt Cap Close (W) Chg (W) Mkt Cap Samsung Electronics 1,284,000 -43,000 189,132 Celltrion 86,300 -1,200 9,668 Hyundai Motor 147,500 -3,500 32,491 Daum Communications 120,600 4,500 7,240 KEPCO 48,950 -800 31,424 Dongsuh 36,900 500 3,679 SAMSUNG C&T 146,000 -6,000 27,695 CJ E&M 84,400 1,400 3,269 Samsung Electronics (P) 1,096,000 -45,000 25,025 Medy-tox 470,000 -10,600 2,659 Hyundai Mobis 249,500 -2,500 24,287 Komipharm 48,950 -2,050 2,649 Amore Pacific 403,500 -9,000 23,588 ViroMed 181,000 -700 2,570 Hynix 31,600 -400 23,005 LOEN 79,600 2,300 2,013 Kia Motors 52,500 -1,200 21,282 Paradise 20,100 100 1,828 LG Chem 318,000 -3,000 21,074 Kolon Life Science 246,000 3,400 1,646 Source: