November 22, 2017

KOREA Morning Focus

Company News & Analysis Major Indices Close Chg Chg (%) NCsoft (036570/Buy/TP: W640,000) KOSPI 2,530.70 3.03 0.12 Lineage M's Taiwan launch on December 11th confirmed KOSPI 200 333.51 0.59 0.18 KOSDAQ 789.38 4.06 0.52

Turnover ('000 shares, Wbn) Volume Value KOSPI 456,780 6,540 KOSPI 200 99,751 4,869 KOSDAQ 800,667 9,937

Market Cap (Wbn) Value KOSPI 1,642,523 KOSDAQ 277,388

KOSPI Turnover (Wbn) Buy Sell Net Foreign 1,738 1,682 56 Institutional 1,245 1,025 219 Retail 3,513 3,807 -294

KOSDAQ Turnover (Wbn) Buy Sell Net Foreign 556 579 -23 Institutional 373 418 -45 Retail 8,995 8,884 111

Program Buy / Sell (Wbn) Buy Sell Net KOSPI 1,456 1,416 41 KOSDAQ 317 262 56

Advances & Declines Advances Declines Unchanged KOSPI 302 499 73 KOSDAQ 421 748 64

KOSPI Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Samsung Electronics 2,764,000 4,000 551 Hynix 85,000 2,900 465 KODEX KOSDAQ150 LEVERAGE 20,495 120 404 LG Display 31,700 1,800 289 NCsoft 465,000 23,000 210

KOSDAQ Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value SillaJen 131,000 3,600 2,037 TissueGene(Reg.S) 68,600 8,800 1,168 Celltrion 222,700 6,000 515 Celltrion Healthcare 87,000 6,300 392 TELCON 9,900 -300 262 Note: As of November 21, 2017

Mirae Asset Daewoo Research

NCSOFT (036570 KS /Buy )

Lineage M’s Taiwan launch on December 11th Game confirmed ¢ Taiwanese game publisher Gamania confirmed its release of Lineage M on December 11th Issue Comment ¢ With time spent on Lineage M remaining stable in Korea, NCsoft is scheduled to begin November 21, 2017 Castle Siege update on November 5th and add new character class and server for the game on November 29th

¢ NCsoft to launch three new mobile titles in 2018; maintain Buy and target price of W640,000 Mirae Asset Daewoo Co., Ltd.

[Internet/Game/Advertising ] 1. Lineage M set for release in Taiwan on December 11 th

Jee -hyun Moon +822 -3774 -1640 Gamania, NCsoft’s Taiwanese publishing partner for the Lineage series, confirmed its local th [email protected] release of Lineage M on December 11 . The game has so far recorded pre-registrations of 2.51mn in Taiwan.

Gamania has been publishing the original Lineage game since 2000, which currently boasts

up to 9mn cumulative subscribers. The publisher has been carrying out targeted marketing,

based on the information of existing Lineage players, as well as a mass marketing campaign (including a commercial featuring famed baseball player Chin-Feng Chen). On November

20 th , shares of Gamania advanced 4.79%, rallying by over 300% YTD.

NCsoft is expected to recognize its Lineage M revenue from Taiwan as royalty income, which we think should translate into its margin pickup going forward. The game is also set for release in Hong Kong and Macau, on December 11 th , with details regarding the game’s upcoming release in other countries to be announced later on. We believe that improving margins, backed by higher royalty revenue, and revenue contribution from overseas release of new mobile titles should provide a boost to shares of NCsoft going forward. We maintain our Buy rating and target price of W640,000 on NCsoft.

Figure 1. Gamania, Taiwanese partner of NCsoft: Lineage M set for release on December 11 th , share price has tripled since year-start

Note: Assuming share price of NCsoft and Gamania at year-start as 100 Source: Gamania, Thomson Reuters, Mirae Asset Daewoo Research

FY (12) 12/14 12/15 12/16 12/17F 12/18F 12/19F Revenue (Wbn) 839 838 984 1,832 2,616 2,631 OP (Wbn) 278 237 329 629 957 972 OP margin (%) 33.1 28.3 33.4 34.3 36.6 36.9 NP (Wbn) 230 165 272 504 723 735 EPS (W) 10,486 7,542 12,416 22,968 32,975 33,482 ROE (%) 18.4 10.6 14.9 22.5 25.2 21.4 P/E (x) 17.4 28.2 19.9 19.2 13.4 13.2 P/B (x) 2.7 2.6 2.7 3.5 2.9 2.5 Dividend yield (%) 1.9 1.3 1.5 1.6 2.0 2.0 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

Mirae Asset Daewoo Research Key Universe Valuations November 22, 2017

※All data as of close November 20, 2017, unless otherwise noted.

17F Earnings growth Mkt Cap Price P/E (x) P/B (x) ROE (%) Ticker Company Div Yield OP EPS (Wbn) (W) (%) 17F 18F 17F 18F 17F 18F 17F 18F 17F 18F 005930 Samsung Electronics 356,828 2,764,000 1.2 87.4 19.7 101.3 27.5 10.0 7.9 1.9 1.5 21.0 21.9 000660 SK Hynix 61,880 85,000 0.7 309.1 11.3 260.3 6.7 5.8 5.5 1.8 1.4 36.9 29.0 005380 Hyundai Motor 34,583 157,000 2.5 0.5 17.2 -20.0 31.5 10.4 7.9 0.6 0.6 6.3 7.8 051910 LG Chem 29,155 413,000 1.5 53.1 8.0 61.3 14.8 14.8 12.9 2.0 1.7 14.5 14.6 068270 Celltrion 27,318 222,700 - - - - 0.0 0.0 005490 POSCO 27,202 312,000 3.0 67.8 8.8 124.4 7.7 8.9 8.3 0.6 0.6 7.1 7.2 035420 NAVER 26,634 808,000 0.1 13.7 26.5 12.2 32.6 31.7 23.9 4.4 3.8 19.9 20.7 032830 Samsung Life 26,300 131,500 - - - - 0.0 0.0 207940 Samsung Biologics 25,937 392,000 - 1031.1 - - - 601.7 6.5 6.5 - 1.1 012330 Hyundai Mobis 24,725 254,000 1.4 -17.3 18.4 -18.7 19.4 10.0 8.4 0.8 0.7 8.3 9.2 015760 KEPCO 24,106 37,550 2.4 -46.5 20.5 -51.9 19.1 7.1 6.0 0.3 0.3 4.7 5.5 105560 KB Financial Group 23,331 55,800 137.9 11.5 49.2 -0.6 6.8 6.8 0.7 0.6 10.4 9.6 055550 Shinhan Financial Group 22,714 47,900 40.9 -0.2 23.4 -1.1 6.7 6.8 0.7 0.6 10.5 9.6 034730 SK Holdings 20,827 296,000 1.3 11.0 9.6 160.5 12.3 10.5 9.4 1.4 1.2 14.5 14.5 017670 SK Telecom 20,227 250,500 4.0 6.1 4.9 65.0 8.4 7.3 6.7 1.0 0.9 16.5 16.1 051900 LG Household & Health Care 19,179 1,228,000 0.7 7.7 10.5 16.4 10.2 32.9 29.9 7.2 6.0 24.1 22.3 096770 SK Innovation 18,401 199,000 4.0 -3.3 3.0 40.2 0.3 8.0 7.9 1.0 0.9 13.2 12.3 090430 AmorePacific 18,122 310,000 0.6 -25.9 41.3 -29.4 49.7 47.4 31.7 5.1 4.5 11.2 15.1 251270 Netmarble Games Corporation 16,240 191,000 84.7 16.0 62.7 17.6 45.7 38.9 3.9 3.5 13.2 9.5 033780 KT&G 16,132 117,500 3.3 3.6 5.3 -12.9 11.8 15.0 13.5 2.1 1.9 15.0 15.8 018260 Samsung SDS 15,437 199,500 0.4 18.2 10.1 13.7 12.1 29.3 26.1 2.8 2.5 9.9 10.2 066570 LG Electronics 15,203 92,900 0.4 96.2 38.2 2427.2 15.3 8.6 7.5 1.2 1.1 15.2 15.3 003550 LG Corp. 15,151 87,800 1.5 44.4 3.3 71.5 -7.6 8.4 9.1 1.0 0.9 12.6 10.6 006400 Samsung SDI 15,025 218,500 0.5 - 366.2 236.5 54.7 20.8 13.5 1.3 1.2 6.7 9.7 000270 Kia Motors 13,640 33,650 3.3 -58.0 113.9 -44.8 62.5 9.0 5.5 0.5 0.5 5.6 8.8 086790 Hana Financial Group 13,572 45,850 54.4 18.0 42.0 14.3 7.2 6.3 0.6 0.5 8.1 8.6 010950 S-Oil 13,397 119,000 5.2 -13.6 39.0 -3.2 29.9 11.9 9.2 2.1 1.8 17.8 21.2 000810 Samsung F&M 12,507 264,000 - - - - 0.0 0.0 002790 AmoreG 12,369 150,000 0.3 -30.8 34.9 -35.9 50.2 60.8 40.5 4.3 3.9 7.5 10.5 011170 Lotte Chemical 12,065 352,000 1.7 15.5 9.6 28.1 10.7 5.1 4.6 1.0 0.9 22.6 20.4 091990 Celltrion Healthcare 11,948 87,000 31.1 64.5 65.1 29.6 47.8 36.9 13.6 10.0 29.4 31.2 034220 LG Display 11,343 31,700 1.6 109.2 -49.2 115.0 -51.5 5.8 12.0 0.8 0.7 14.2 6.4 035720 Kakao Corp. 10,926 161,000 0.1 53.2 37.2 102.5 23.6 91.0 73.6 3.0 2.9 3.4 4.0 036570 NCSOFT 10,202 465,000 1.5 91.4 52.1 85.0 43.6 20.2 14.1 3.7 3.1 22.5 25.2 010130 Korea Zinc 9,322 494,000 1.7 20.8 8.8 15.3 16.2 13.6 11.7 1.6 1.4 12.0 12.8 024110 Industrial Bank of Korea 8,652 15,450 32.4 7.5 30.4 7.8 6.7 6.2 0.5 0.5 8.0 8.0 009540 Hyundai Heavy Industries 8,216 145,000 -72.6 -40.6 -96.7 1511.9 607.7 37.7 0.9 0.9 0.1 2.5 009150 Samsung Electro-Mechanics 8,104 108,500 0.6 1152.0 75.1 1036.5 81.2 50.4 27.8 1.8 1.7 3.9 6.7 030200 KT 7,677 29,400 2.7 6.9 5.0 3.1 11.1 10.5 9.4 0.6 0.6 6.3 6.7 021240 Coway 7,482 100,000 3.3 45.2 8.6 46.2 10.9 21.6 19.5 7.0 6.5 32.1 37.0 004020 Hyundai Steel 7,313 54,800 1.4 0.3 9.4 10.6 9.2 8.1 7.4 0.4 0.4 5.5 5.8 018880 Hanon Systems 6,859 12,850 - - - - 0.0 0.0 161390 Hankook Tire 6,801 54,900 0.7 -23.0 42.8 -23.9 40.5 10.2 7.3 1.0 0.9 10.7 13.5 128940 Hanmi Pharmaceutical 6,519 584,000 267.9 -11.3 150.4 -9.1 111.6 122.9 9.0 8.3 8.5 7.1 088350 Hanwha Life 6,410 7,380 - - - - 0.0 0.0 078930 GS Holdings 5,603 60,300 2.5 -5.3 10.4 -0.8 11.8 7.2 6.5 0.8 0.7 11.0 11.2 097950 CJ CheilJedang 5,478 416,000 0.6 -3.3 15.0 46.4 -12.9 14.9 17.1 1.6 1.5 11.4 9.2 032640 LG Uplus 5,458 12,500 3.6 10.0 9.8 8.0 14.1 10.3 9.0 1.1 1.0 10.7 11.4 086280 Hyundai Glovis 5,344 142,500 2.1 1.6 3.4 22.2 3.6 8.6 8.3 1.4 1.2 16.9 15.5 047810 Korea Aerospace Industries 5,069 52,000 1.3 - - - - - 344.4 4.0 4.2 - 1.2 Source: Mirae Asset Daewoo Research

Mirae Asset Daewoo Research Market Data November 22, 2017

※All data as of close November 21, 2017, unless otherwise noted.

Other Major Indices Economic Indicators Close Net Chg 1D (%) YTD (%) Close 1D ago 1M ago 1Y ago MSCI Korea* 553.17 -3.96 -0.71 45.05 USD/KRW 1,098.90 1,096.10 1,132.30 1,182.30 KOSPI 2,530.70 3.03 0.12 24.90 JPY100/KRW 976.19 977.83 1,005.73 1,065.28 KOSDAQ 789.38 4.06 0.52 24.89 EUR/KRW 1,289.50 1,288.14 1,341.49 1,251.64 Dow Jones* 23,430.33 72.09 0.31 17.85 3Y Treasury 2.16 2.16 2.09 1.73 S&P 500* 2,582.14 3.29 0.13 14.36 3Y Corporate 2.71 2.71 2.63 2.13 NASDAQ* 6,790.71 7.92 0.12 25.08 DDR2 1Gb* 1.28 1.28 1.25 1.17 Philadelphia Semicon* 1,322.81 15.88 1.22 45.79 NAND 16Gb* 2.88 2.88 2.93 1.77 FTSE 100* 7,389.46 8.78 0.12 2.95 Oil (Dubai)* 60.68 59.66 55.13 42.80 Nikkei 225 22,416.48 154.72 0.70 14.40 Gold* 1,275.30 1,296.50 1,277.40 1,208.70 Hang Seng* 29,260.31 61.27 0.21 32.10 Customer deposits (Wbn)* 27,182 26,758 24,018 21,990 Taiwan (Weighted) 10,779.24 114.69 1.08 16.24 Equity type BC (Nov)(Sep. 17) 73,136 72,971 71,841 73,088 Note: * as of November 20, 2017 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 Hynix 142.27 Samsung Electronics 47.75 Hynix 65.36 Honam Petrochemical 12.85 LG Display 64.67 Lotte Shopping 22.38 NCsoft 51.56 POSCO 12.17 NCsoft 40.45 Samsung Electronics (P) 16.69 Netmarble Games 20.63 Hyundai Eng. & Cosnt. 11.72 LG Chem 29.67 POSCO 14.56 Daum Communications 19.60 KODEX KOSDAQ150 LEVERAGE 9.43 LG Electronics 11.47 Amore Pacific 13.00 Samsung Electronics 18.95 Samsung Heavy Ind. 7.00 Hyundai Motor 8.96 emart 11.65 KT&G 11.57 Daewoo Eng .& Const. 6.88 LG Innotek 8.11 Samsung F&M Insurance 9.10 emart 11.45 Hyundai Heavy Industries 5.99 LG Corp. 4.45 SEMCO 8.46 LG Innotek 11.41 LG Chem 5.93 COSMAX 4.19 KT&G 8.27 Samsung SDI 9.65 KODEX KOSDAQ150 INVERSE 5.85 Samsung Heavy Ind. 4.14 Hyundai Eng. & Cosnt. 8.08 Kolon Ind. 9.23 SK Energy 5.30 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 Celltrion 34.18 TissueGene(Reg.S) 16.92 Seoul Semiconductor 6.96 Medy-tox 9.07 ViroMed 4.37 Posco Chemtech 15.28 SKPI 5.16 CJ E&M 6.11 Celltrion Healthcare 3.78 SillaJen 7.47 Modetour Network 4.06 Hugel 6.08 Gamevil 2.75 Jtuen Entertainment 3.42 Com2us 4.00 SillaJen 4.65 INICIS 2.74 GS Home Shopping 2.98 Celltrion 3.24 Tes 4.53 Kolon Life Science 2.64 Binex 2.67 Jenexine 2.47 NUTRIBIOTECH 3.96 Homecast 2.47 AP Systems 2.58 Gamevil 2.30 Koh Young 3.61 SM 2.36 SEEGENE 2.50 Interflex 2.20 Optomagic CO. 3.55 Webzen 2.03 Choongwae Shin-Yak 2.21 SEEGENE 1.84 TissueGene(Reg.S) 3.11 Modetour Network 1.86 Hugel 2.17 BH,LTD. 1.63 SK Materials 2.56 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 2,764,000 4,000 356,828 Celltrion 222,700 6,000 27,318 Hynix 85,000 2,900 61,880 Celltrion Healthcare 87,000 6,300 11,948 Samsung Electronics (P) 2,207,000 2,000 40,279 SillaJen 131,000 3,600 8,712 Hyundai Motor 157,000 500 34,583 TissueGene(Reg.S) 68,600 8,800 4,142 LG Chem 413,000 3,500 29,155 CJ E&M 92,000 0 3,563 POSCO 312,000 -5,000 27,202 LOEN 111,900 -2,600 2,830 NHN 808,000 7,000 26,634 ViroMed 169,900 7,100 2,711 SAMSUNG C&T 139,000 500 26,367 Medy-tox 446,700 -17,500 2,527 Samsung Life Insurance 131,500 0 26,300 Paradise 25,050 -450 2,278 SAMSUNG BIOLOGICS 392,000 -3,000 25,937 Celltrion 66,500 900 2,217 Source: Korea Exchange