Kakao Corp. (035720 KS ) Focus on value of content and fintech

Internet 2Q18 review: Revenue and OP in line with consensus Results Comment reported 2Q18 earnings results that were broadly in line with consensus expectations. August 10, 2018 Positives: Consolidated revenue grew 26% YoY. In the content segment, PC game revenue roughly doubled YoY, boosted by the switch to paid services at PC cafes for PlayerUnknown's Battlegrounds . The company’s webtoon businesses, KakaoPage and Japan-based , recorded robust growth of 55% and 254% YoY, respectively. Commerce revenue also (Upgrade) Buy expanded 52% YoY. Labor and marketing expenses were lower than expected. Negatives: Ad revenue grew 10% YoY, slower than the rate in 1Q18. In the content Target Price (12M, W) ▲ 150,000 segment, mobile game revenue was weaker than anticipated. Operating profit slumped 38% YoY, as operating expenses surged 32% YoY, outpacing revenue growth. In particular, Share Price (08/09/18, W) 125,500 content commissions as a percentage of content revenue was higher than expected.

Expected Return 20% Value of content business to come into focus in near term

Games: is preparing to go public on KOSDAQ by the end of the year. We forecast Kakao’s consolidated game revenue to reach W457bn in 2018 and W514bn in 2019. OP (18F, Wbn) 102 Based on the proposed IPO price range, Kakao Games’ market value is expected to range Consensus OP (18F, Wbn) 120 between W1.2tr and W1.9tr. Key drivers of revenue growth this year are: 1) the launch of EPS Growth (18F, %) -22.4 paid services for the PC game PlayerUnknown's Battlegrounds ; and 2) a greater number o f Market EPS Growth (18F, %) 10.1 mobile title releases. As of end-March, Kakao held a 61.7% stake in Kakao Games. P/E (18F, x) 101.0 Webtoons: KakaoPage and Piccoma are generating stronger-than-expected revenues. Market P/E (18F, x) 9.0 We believe their business models—i.e., ”wait then free,” paid content, and KOSPI 2,303.71 advertising—are working well. The successful development of the webtoon What’s Market Cap (Wbn) 9,574 Wrong with Secretary Kim into a TV show is also encouraging. Looking ahead, we Shares Outstanding (mn) 76 expect revenue to accelerate, driven by VOD distribution, IP-related projects, and Free Float (%) 64.4 overseas business expansion. Foreign Ownership (%) 24.9 Entertainment: After its merger with in September, Kakao intends to spin off Beta (12M) 1.85 its music/video content business (not including the Melon platform). In June, Kakao M 52-Week Low 103,500 made stake acquisitions in BH Entertainment, J Wide Company, a nd Ready 52-Week High 161,000 Entertainment, and also established a strategic partnership with Soop Management. Given that the existing Kakao M was mostly valued for the Melon platform, we believe (%) 1M 6M 12M the entertainment/production business could be properly valued following the spinoff. Absolute 6.8 6.4 15.7 Relative 6.0 9.1 18.9 Focus on value of fintech business in the medium/long term

150 Kakao Corp. KOSPI We view the following as positive to Kakao’s fintech business: 1) the move to ease

130 regulations on the separation of financial and non-financial capital; and 2) the proliferation of offline QR code payments. We believe that policy tailwinds will help 110 bolster monetization at Kakao Bank and Kakao Pay. 90 Upgrade to Buy (from Trading Buy) and raise TP to W150,000 (from W130,000) 70 We upgrade our rating on Kakao to Buy and raise our target price to W150,000. We 8.17 12.17 4.18 8.18 believe the value of the content business will come into focus in the near term and expect the fintech business to bolster growth over the medium and long term. Mirae Asset Daewoo Co., Ltd.

[ Internet/Game/Advertising ] FY (Dec.) 12/15 12/16 12/17 12/18F 12/19F 12/20F Revenue (Wbn) 932 1,464 1,972 2,417 2,813 3,115 Jee -hyun Moon +822 -3774 -1640 OP (Wbn) 89 116 165 102 171 185 [email protected] OP margin (%) 9.5 7.9 8.4 4.2 6.1 5.9

NP (Wbn) 76 58 109 94 150 159 EPS (W) 1,269 874 1,602 1,243 1,972 2,089 ROE (%) 3.0 1.9 2.9 2.0 2.8 2.9

P/E (x) 91.2 88.1 85.5 101.0 63.6 60.1 P/B (x) 2.7 1.5 2.3 1.8 1.8 1.7 Dividend yield (%) 0.1 0.2 0.1 0.1 0.1 0.1 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

August 10, 2018 Kakao Corp.

Earnings review and forecast

Table 1. 2Q18 review (Wbn, %) 2Q18P Growth

2Q17 1Q18 Mirae Asset Preliminary Consensus YoY QoQ Daewoo Revenue 468 555 589 590 589 25.7 6.0 Operating profit 45 10 28 17 29 -38.1 165.2 OP margin (%) 9.5 1.9 4.7 2.9 4.9 Net profit 13 15 25 29 31 103.8 74.0 Notes: All figures are based on consolidated K-IFRS; net profit is attributable to controlling and non-controlling interests Source: Company data, FnGuide, Mirae Asset Daewoo Research estimates

Table 2. Earnings trends and forecasts (Wbn, %) 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18P 3Q18F 4Q18F 2017 2018F 2019F Revenue 444 468 515 545 555 589 618 655 1,972 2,417 2,813 1) Ads 133 151 151 160 155 166 168 176 596 665 742 1-1) PC 63 70 64 65 59 65 62 65 267 251 241 1-2) Mobile 71 82 88 94 96 101 105 112 334 415 502 2) Content 224 236 261 266 286 303 315 333 985 1,237 1,427 2-1) Game 80 79 94 89 106 112 116 124 342 457 514 2-2) Music 110 118 122 129 126 130 135 140 479 532 593 2-3) Other 33 39 45 48 54 61 65 69 165 249 321 3) Other 87 83 102 119 115 120 135 145 391 515 643 Operating profit 38 45 47 35 10 28 30 34 165 102 171 OP margin 8.6 9.5 9.2 6.4 1.9 4.7 4.9 5.1 8.4 4.2 6.1 Net profit 54 13 40 21 15 25 42 26 125 108 173 Net margin 12.3 2.7 7.7 3.8 2.6 4.3 6.8 3.9 6.3 4.5 6.1 YoY growth Revenue 83.0 24.4 31.7 20.0 25.2 25.7 19.8 20.2 34.7 22.5 16.4 1) Ads 3.0 11.2 19.4 12.8 16.0 9.9 10.8 10.6 11.6 11.7 11.6 1-1) PC -12.0 -5.3 2.3 -3.7 -6.2 -6.8 -2.0 -1.3 -3.0 -6.0 -4.0 1-2) Mobile 21.3 30.5 35.7 27.9 35.7 24.1 20.0 18.8 29.0 24.0 21.0 2) Content 144.1 24.1 31.8 20.0 27.7 28.1 20.5 25.4 40.4 25.5 15.4 2-1) Game 14.2 0.5 19.7 -4.3 31.5 41.9 23.1 39.2 6.8 33.6 12.4 2-2) Music 3164.8 30.5 27.7 20.6 14.5 10.4 10.4 8.6 61.5 11.1 11.6 2-3) Other 84.4 78.6 86.5 122.9 62.9 57.2 42.6 45.3 93.3 50.7 29.0 3) Other 303.5 65.6 54.9 31.3 32.7 44.9 31.5 21.6 71.3 31.6 25.0 Operating profit 81.8 67.5 56.5 -8.8 -72.9 -38.1 -35.9 -3.2 42.1 -38.2 68.2 Net profit 397.5 -5.6 192.8 -25.2 -73.1 103.8 5.4 25.1 91.0 -13.6 60.1 Notes: All figures are based on consolidated K-IFRS; Game (2-1) revenue includes Kakao VX from 1Q18; other content (2-3) revenue includes webtoons, web novels, and emoticons; other (3) revenue includes commerce, , Pay, and Mobility; net profit is attributable to controlling and non-controlling interests Source: Company data, Mirae Asset Daewoo Research estimates

Table 3. Earnings forecast revisions (Wbn, W, %)

Previous Revised % chg. Notes 18F 19F 18F 19F 18F 19F Ad estimates revised down ward; other revenue Revenue 2,446 2,806 2,417 2,813 -1.2 0.2 estimates revised upward Operating profit 100 176 102 171 2.0 -2.6 Content commission estimates revised up ward Non -operating income estimates revised Net profit 113 167 108 173 -4.4 3.6 downwards , effective tax rate revised upwards EPS (W) 1,297 1,900 1,243 1,972 -4.2 3.8 OP margin 4.1 6.3 4.2 6.1 Net margin 4.6 6.0 4.5 6.1 Notes: All figures are based on consolidated K-IFRS; net profit is attributable to controlling and non-controlling interests; EPS is attributable to controlling interests Source: Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 2 August 10, 2018 Kakao Corp.

Value of content business to come into focus in the near term

Figure 1. Kakao Games to be listed on KOSDAQ in 2018; market cap expected to be W1.2- 1.9tr, based on expected IPO price

Note: All figures are based on consolidated data Source: Company materials, Mirae Asset Daewoo Research

Figure 2. KakaoPage (Podotree) to take over parent company’s KakaoPage business in September

Note: Piccoma is Kakao’s brand for the webtoon, web novel, and VOD businesses in Japan Source: Company materials, Mirae Asset Daewoo Research

Figure 3. After merging Kakao M in September, Kakao to spin off its content and entertainment businesses

Note: Kakao M acquired stakes in BH Entertainment, J Wide Company, and Ready Entertainment, and established a strategic partnership with Soop Management Source: Each company , Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 3 August 10, 2018 Kakao Corp.

Focus on value of fintech business in the medium/long term

Figure 4. Kakao Pay’s QR code payment services, which it rolled out in May, are gathering steam; transaction value grew 37% QoQ in 2Q

Note: Revenue of Kakao Pay as well as Kakao Mobility () and other subsidiaries Source: Company data , Mirae Asset Daewoo Research

Figure 5. Kakao Bank to take off on back of eased regulations on separation of financial and nonfinancial

Note: Kakao’s stake in Kakao Bank is 18% (including preferred shares) with voting stake of 4%; the number of net monthly users is based on Android users , Source: Nielsen Koreanclick , Mirae Asset Daewoo Research

Figure 6. Kakao’s commerce on steady rise; 2Q revenue increased 8% QoQ and 52% YoY

Source: Company data, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 4 August 10, 2018 Kakao Corp.

Valuation

Table 4. Kakao 12-month target price calculation (Wbn, x, W) Valuation Notes

A) Sum-of-the-parts (SOTP) valuation methodology Operating value (1) 8,898

12MF Multiple

Kakao Talk 571 5.2 2,971 Revenue x LINE 12MF P/S 470 2.4 1,128 Revenue x avg. 12MF P/S of Yahoo Japan and Sina Kakao Games 485 3.3 999 Revenue x avg. 12MF P/S of domestic game publishers x 61.7% (stake) Kakao Mobility 1,179 Valuation of TPG x 69.3% (stake) Kakao Page 242 5.3 725 China Literature’s 12MF P/S -30% x 57% (stake) Kakao Pay 350 Valuation of Alipay x 60.9% (stake) Kakao Friends 22 8.6 189 Net profit x trailing P/E of Aurora World Kakao M 1,357 Market cap x 76.4% (stake) -30% Investment asset value (2) 639

Marketable securities 403 2Q18 estimates; Kakao Bank’s book value included Investments in associates 236 2Q18 estimates Total asset value (1+2=3) 9,537

Net debt (4) -1,826 2Q18 estimates Net asset value (3-4) 11,363

Share count (‘000 shares) 76,280 Number of shares issued Target price 150,000 Rounded up B) P/E valuation Operating value (1) 9,635

12MF Multiple

Consolidated 122 79.0 9,635 Net profit x upper-end of 12MF P/E band Investment asset value (2) 639

Marketable securities 403 2Q18 estimates, Kakao Bank’s book value included Investments in associates 236 2Q18 estimates Total asset value (1+2=3) 10,274

Net debt (4) -1,826 2Q18 estimates Net asset value (3-4) 12,100

Share count (‘000 shares) 76,280 Number of shares issued Target price 150,000 Rounded down Note: Stakes are as of end-1Q18; valuation of TPG (for Kakao Mobility’s valuation) is as of June 2017 and Alipay (for Kakao Pay’s valuation) is as of February; Kakao Page is currently Kakao’s subsidiary Podotree (Kakao is scheduled to transfer the Kakao Page business to Podotree in September and change name to Kakao Page). Factors that could affect the company’s value going forward include the listing of Kakao Games on the KOSDAQ, the spin-off of the content business after merging Kakao M, and progress in the monetization of Kakao Mobility, Kakao Pay, and Kakao Bank Source : Bloomberg, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 5 August 10, 2018 Kakao Corp.

Kakao Corp. (035720 KS/Buy/TP: W150,000)

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 1,972 2,417 2,813 3,115 Current Assets 1,993 3,166 3,229 3,483 Cost of Sales 0 0 0 0 Cash and Cash Equivalents 1,117 1,842 1,704 1,794 Gross Profit 1,972 2,417 2,813 3,115 AR & Other Receivables 307 369 415 459 SG&A Expenses 1,807 2,315 2,642 2,930 Inventories 22 26 30 33 Operating Profit (Adj) 165 102 171 185 Other Current Assets 547 929 1,080 1,197 Operating Profit 165 102 171 185 Non-Current Assets 4,356 4,724 4,809 4,884 Non-Operating Profit -12 86 69 69 Investments in Associates 162 195 227 251 Net Financial Income 3 39 49 51 Property, Plant and Equipment 271 266 263 261 Net Gain from Inv in Associates 9 22 0 0 Intangible Assets 3,690 3,709 3,701 3,693 Pretax Profit 153 188 240 254 Total Assets 6,349 7,890 8,038 8,367 Income Tax 28 80 67 71 Current Liabilities 1,041 1,262 1,213 1,343 Profit from Continuing Operations 125 108 173 183 AP & Other Payables 280 337 392 435 Profit from Discontinued Operations 0 0 0 0 Short-Term Financial Liabilities 177 223 4 4 Net Profit 125 108 173 183 Other Current Liabilities 584 702 817 904 Controlling Interests 109 94 150 159 Non-Current Liabilities 801 792 828 855 Non-Controlling Interests 16 14 22 24 Long-Term Financial Liabilities 621 576 576 576 Total Comprehensive Profit 119 104 173 183 Other Non-Current Liabilities 180 216 252 279 Controlling Interests 103 104 173 183 Total Liabilities 1,842 2,055 2,041 2,198 Non-Controlling Interests 16 0 0 0 Controlling Interests 4,029 5,253 5,392 5,540 EBITDA 295 224 292 305 Capital Stock 34 38 38 38 FCF (Free Cash Flow) 297 191 371 338 Capital Surplus 3,604 4,752 4,752 4,752 EBITDA Margin (%) 15.0 9.3 10.4 9.8 Retained Earnings 403 486 626 774 Operating Profit Margin (%) 8.4 4.2 6.1 5.9 Non-Controlling Interests 479 583 605 629 Net Profit Margin (%) 5.5 3.9 5.3 5.1 Stockholders' Equity 4,508 5,836 5,997 6,169

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 372 254 431 398 P/E (x) 85.5 101.0 63.6 60.1 Net Profit 125 108 173 183 P/CF (x) 30.3 37.7 30.7 29.6 Non-Cash Income and Expense 181 144 139 140 P/B (x) 2.3 1.8 1.8 1.7 Depreciation 61 64 63 62 EV/EBITDA (x) 30.5 37.0 27.8 26.0 Amortization 69 58 58 58 EPS (W) 1,602 1,243 1,972 2,089 Others 51 22 18 20 CFPS (W) 4,517 3,327 4,082 4,237 Chg in Working Capital 28 4 137 95 BPS (W) 59,344 68,870 70,694 72,635 Chg in AR & Other Receivables -2 -37 -35 -27 DPS (W) 148 148 148 148 Chg in Inventories 1 -7 -4 -3 Payout ratio (%) 8.0 10.4 6.5 6.2 Chg in AP & Other Payables 3 158 21 16 Dividend Yield (%) 0.1 0.1 0.1 0.1 Income Tax Paid -3 -59 -67 -71 Revenue Growth (%) 34.7 22.6 16.4 10.7 Cash Flows from Inv Activities -355 -759 -307 -273 EBITDA Growth (%) 28.3 -24.1 30.4 4.5 Chg in PP&E -72 -63 -60 -60 Operating Profit Growth (%) 42.2 -38.2 67.6 8.2 Chg in Intangible Assets -28 -50 -50 -50 EPS Growth (%) 83.3 -22.4 58.6 5.9 Chg in Financial Assets -278 -659 -197 -163 Accounts Receivable Turnover (x) 11.2 12.2 12.1 11.8 Others 23 13 0 0 Inventory Turnover (x) 115.6 101.8 100.3 98.0 Cash Flows from Fin Activities 468 1,217 -231 -11 Accounts Payable Turnover (x) 0.0 0.0 0.0 0.0 Chg in Financial Liabilities -210 1 -219 0 ROA (%) 2.1 1.5 2.2 2.2 Chg in Equity 499 1,153 0 0 ROE (%) 2.9 2.0 2.8 2.9 Dividends Paid -16 -10 -11 -11 ROIC (%) 3.7 2.1 4.4 4.7 Others 195 73 -1 0 Liability to Equity Ratio (%) 40.9 35.2 34.0 35.6 Increase (Decrease) in Cash 475 726 -138 90 Current Ratio (%) 191.5 250.8 266.2 259.2 Beginning Balance 642 1,117 1,842 1,704 Net Debt to Equity Ratio (%) -17.1 -31.8 -34.5 -36.6 Ending Balance 1,117 1,842 1,704 1,794 Interest Coverage Ratio (x) 14.7 0.0 0.0 0.0 Source: Company data, Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 6 August 10, 2018 Kakao Corp.

APPENDIX 1

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

Company (Code) Date Rating Target Price (W) Kakao Corp. Kakao Corp. (035720) 08/10/2018 Buy 150,000 200,000 05/11/2018 Trading Buy 130,000 02/08/2018 Trading Buy 150,000 150,000 12/17/2017 Trading Buy 170,000 11/05/2017 Buy 190,000 100,000 08/10/2017 Buy 130,000 50,000 06/18/2017 Buy 125,000

05/11/2017 Buy 115,000 0 04/04/2017 Buy 105,000 Aug 16 Aug 17 Aug 18 01/02/2017 No Coverage 10/13/2016 Buy 100,000 08/11/2016 Buy 110,000 07/15/2016 Buy 120,000

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 73.40% 14.78% 11.82% 0.00% Investment Banking Services 77.42% 9.68% 12.90% 0.00% * Based on recommendations in the last 12-months (as of June 30, 2018)

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 Kakao Corp. 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.

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. Mirae Asset Daewoo Research 7 August 10, 2018 Kakao Corp.

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 report is distributed in Hong Kong by Mirae Asset Securities (HK) Limited, 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 8 August 10, 2018 Kakao Corp.

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