Hankook Tire

(161390 KS ) Margin improvement and revenue growth expected in 2018 Tire 4Q17 review: OP plunges on fixed-cost pressures and operation suspension Results Comment For 4Q17, Hankook Tire’s consolidated revenue and operating profit came in at February 9, 2018 W1.68tr and W139.8bn, respectively. Operating profit contracted 41.6% YoY, with OP margin falling sharply to 8.3%. Key factors impacting 4Q17 operating earnings were as follows: 1) Consolidated revenue was much weaker than anticipated, declining materially QoQ (Maintain) Buy due to a 7.7% drop in sales volume. Revenue was negatively affected by the end of the peak season for winter tires in 3Q17, but we believe the suspension of the Geumsan Target Price(12M, W) ▼ 67,000 plant following a fatal accident also led to a loss in revenue and a commensurate decline in operating profit. Share Price (02/08/18, W) 53,500 2) Delays to the operational normalization of the new Tennessee plant caused a W20bn operating loss, though the size of the loss narrowed markedly QoQ. Expected Return 25% 3) Higher raw material input costs, as well as an increase in the SG&A expense ratio (advertising and logistics expenses), further weighed on earnings. OP (17P, Wbn) 794 Consensus OP (17F, Wbn) 850 2018 outlook: 1) Revenue growth, 2) reduced fixed cost burden, and 3) wider margin spreads EPS Growth (17P, %) -28.3 We are now taking a more conservative view on revenue growth, the Tennessee plant’s Market EPS Growth (17F, %) 45.3 profit normalization, and raw material input costs for 2018. We modestly lowered our P/E (17P, x) 10.8 expectations for original equipment (OE) sales to Hyundai Motor Group (HMG), as well Market P/E (17F, x) 9.8 as replacement equipment (RE) sales across major markets. Meanwhile, we think the KOSPI 2,407.62 Tennessee plant will normalize in 4Q18, later than our previous expectation . As for Market Cap (Wbn) 6,627 major raw materials, including rubber, market prices have been stable, but we note Shares Outstanding (mn) 124 that raw material prices tend to lag oil prices, which are currently strengthening. Free Float (%) 57.4 Nevertheless, we still expect operating profit to improve visibly YoY, backed by: 1) the Foreign Ownership (%) 39.9 company’s expanding position in major markets (Europe, the US, and China); 2) Beta (12M) 0.40 product mix improvements driven by ultra-high-performance tires (UHPT) ; 3) 52-Week Low 52,700 continued normalization in global utilization; 4) dissipation of temporary fixe d cost 52-Week High 66,700 pressures; and 5) margin spread expansion resulting from a decline in average raw (%) 1M 6M 12M material input prices. Absolute -1.1 -15.1 -4.8 Cut TP by 6.2% to W67,000 on more conservative earnings outlook Relative 3.2 -15.5 -18.3 We adjusted down our 2018 operating profit forecast by 9.4%. Despite our lowered

130 Hankook Tire KOSPI earnings outlook, we still think the overall picture remains positive, with revenue 120 growth and visible margin improvements expected in 2018. Our 2018 revenue 110 forecasts are modeled on sales volume growth and ASP gains of more than 5%, similar 100 to management’s guidance. We cut our target price on Hankook Tire by 6.2% to 90 W67,000, based on a 2018F EV/EBITDA of 5.1x and P/E of 10x. We think valuation could 80 expand by more than 20% fro m current share prices, given large capex cuts, operating 70 2.17 6.17 10.17 2.18 cash flow improvements, and net debt reductions.

Mirae Asset Daewoo Co., Ltd.

[ Auto/Tire ] FY (Dec.) 12/14 12/15 12/16 12/17P 12/18F 12/19F Revenue (Wbn) 6,681 6,428 6,622 6,813 7,419 8,062 Young -ho Park +822 -3774 -1743 OP (Wbn) 1,032 885 1,103 794 1,099 1,243 [email protected] OP margin (%) 15.4 13.8 16.7 11.7 14.8 15.4

NP (Wbn) 700 655 873 626 833 947 EPS (W) 5,654 5,291 7,046 5,051 6,727 7,645 ROE (%) 16.6 13.6 15.8 10.2 12.1 12.1

P/E (x) 9.3 8.9 8.2 10.8 8.0 7.0 P/B (x) 1.4 1.1 1.2 1.1 0.9 0.8 Dividend yield (%) 0.8 0.9 0.7 0.7 0.9 0.9 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

February 9, 2018 Hankook Tire

Table 1. 4Q17 review (Wbn, %) 4Q17P 4Q16 3Q17 YoY QoQ Preliminary Mirae Asset Daewoo Consensus Revenue 1,611 1,824 1,683 1,732 1,716 4.5 -7.8 Operating profit 239 217 140 196 192 -41.6 -35.6 OP margin 14.9 11.9 8.3 11.3 11.2 Pretax profit 264 225 111 206 200 -57.8 -50.4 Net profit 207 171 112 155 151 -45.7 -34.2 Notes: Net profit is attributable to controlling interests Source: Mirae Asset Daewoo Research estimates

Table 2. Quarterly earnings and forecasts (Wbn, %) 1Q18F 1Q18F 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17P 1Q18F 2Q18F 3Q18F 4Q18F YoY QoQ Revenue 1,626 1,727 1,658 1,611 1,639 1,667 1,824 1,683 1,752 1,877 1,832 1,959 6.9 4.1 Operating profit 251 310 303 239 232 205 217 140 269 264 291 275 15.8 92.4 OP margin 15.4 18.0 18.3 14.9 14.2 12.3 11.9 8.3 15.4 14.1 15.9 14.0 Pretax profit 247 311 271 264 207 213 225 111 272 256 285 280 31.6 144.4 Net profit 196 264 207 207 167 176 171 112 210 201 216 207 25.2 87.0 Notes: Net profit is attributable to controlling interests Source: Mirae Asset Daewoo Research estimates

Table 3. Earnings forecast revisions (Wbn, W, %) Previous Revised % chg. Notes 2017F 2018F 2019F 2017P 2018F 2019F 2017P 2018F 2019F Revenue 6,863 7,647 8,234 6,813 7,419 8,062 -0.7 -3.0 -2.1 - Reflected 4Q17 operating earnings Operating profit 850 1,213 1,349 794 1,099 1,243 -6.6 -9.4 -7.8 - Revised down OE/RE revenue and ASP estimates Pretax profit 845 1,224 1,372 755 1,093 1,245 -10.6 -10.6 -9.2

Net profit 664 933 1,043 626 833 947 -5.8 -10.7 -9.2 - Raised raw material input cost forecasts EPS 5,360 7,533 8,420 5,051 6,727 7,645 -5.8 -10.7 -9.2 - Lowered Tennessee plant profit estimates OP margin 12.4 15.9 16.4 11.7 14.8 15.4 - Lowered US$/W assumption

Net margin 9.7 12.2 12.7 9.2 11.2 11.7

Note: Net profit is attributable to controlling interests Source: Mirae Asset Daewoo Research estimates

Table 4. Earnings forecast revisions by region (Wbn, %) Previous Revised % chg.

2017F 2018F 2019F 2017P 2018F 2019F 2017P 2018F 2019F Revenue Korea 3,289 3,512 3,582 3,257 3,489 3,573 -1.0 -0.7 -0.3 China 1,759 1,886 1,976 1,747 1,775 1,889 -0.7 -5.9 -4.4 Hungary 1,047 1,085 1,125 1,047 1,053 1,113 0.0 -3.0 -1.1 Indonesia 623 734 775 618 699 751 -0.7 -4.8 -3.2 US 73 345 688 72 320 649 -1.5 -7.3 -5.7 Total 6,863 7,647 8,234 6,813 7,419 8,062 -0.7 -3.0 -2.1 Operating profit Korea 168 381 426 126 354 402 -24.8 -7.1 -5.5 China 161 210 224 160 182 205 -0.9 -13.3 -8.4 Hungary 260 280 291 260 266 285 0.0 -4.8 -1.9 Indonesia 87 115 121 86 109 118 -0.8 -4.8 -3.2 US -79 25 107 -78 -14 100 - - -6.3 Total 850 1,213 1,349 794 1,099 1,243 -6.6 -9.4 -7.8 OP margin Korea 5.1 10.8 11.9 3.9 10.1 11.3

China 9.2 11.1 11.3 9.1 10.2 10.9

Hungary 24.8 25.8 25.9 24.8 25.3 25.6

Indonesia 14.0 15.6 15.7 14.0 15.6 15.7

US -107.8 7.2 15.6 -108.7 -4.3 15.5

Total 12.4 15.9 16.4 11.7 14.8 15.4

Note: Excluding adjustments Source: Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 2 February 9, 2018 Hankook Tire

Figure 1. Tire sector index and RE demand growth to be Figure 2. OE demand growth deteriorated in 4Q17 sluggish in short term

(%, YoY) (1/05=100) (%, YoY) 40 Europe RE (L) 800 40 Europe North America RE (L) North America 30 30 China RE (L) China Tire index (R) 600 20 20

10 10 400 0 0

-10 200 -10

-20 -20

-30 0 -30 05 06 07 08 09 10 11 12 13 14 15 16 17 18 05 06 07 08 09 10 11 12 13 14 15 16 17 18

Note: The tire sector index includes Hankook Tire, Hankook Tire Worldwide, Nexen Tire Source: Thomson Reuters, Michelin, Mirae Asset Daewoo Research and Kumho Tire Source: Thomson Reuters, Michelin, Mirae Asset Daewoo Research

Figure 3. Natural rubber and crude oil prices to diverge Figure 4. Synthetic rubber prices are rebounding in line with further butadiene prices

(US$/tonne) (US$/bbl) (US$/tonne) 6,000 Natural rubber (L) 150.0 4,500 Synthetic rubber Butadiene WTI (R) 4,000 5,000 120.0 3,500

4,000 3,000 90.0 2,500 3,000 2,000 60.0 2,000 1,500

30.0 1,000 1,000 500

0 0.0 0 07 08 09 10 11 12 13 14 15 16 17 18 07 08 09 10 11 12 13 14 15 16 17 18

Source: Thomson Reuters, Mirae Asset Daewoo Research Source: Thomson Reuters, Mirae Asset Daewoo Research

Figure 5. P/E band Figure 6. P/B band

(W'000) (W'000) 2.1x 1.8x 1.5x 90 100 11.0x 80 10.0x 80 1.2x 70 8.9x

60 7.9x 60 0.9x

6.8x 50 40 40

30 20 13 14 15 1617F 1718F 1819F 19 13 14 15 16 17FF 18 19 F

Source: Thomson Reuters, Mirae Asset Daewoo Research Source: Thomson Reuters, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 3 February 9, 2018 Hankook Tire

Table 5. Earnings forecasts (consensus) and valuations of global tire makers (Wbn, %, x) Operating profit OP margin Net profit P/E P/B ROE EV/EBITDA 17F 18F 17F 18F 17F 18F 17F 18F 17F 18F 17F 18F 17F 18F Hankook 794 1,099 11.7 14.8 626 833 10.8 8.0 1.1 0.9 10.2 12.1 5.9 4.1 Nexen 224 248 10.6 10.8 160 178 7.8 7.0 0.8 0.8 11.6 11.6 5.1 4.7 Kumho -15 140 -0.5 4.3 -54 1 - 1,255.1 1.0 0.9 -5.0 0.0 17.3 9.6 Sumitomo 619 725 7.4 8.4 404 484 12.8 10.6 1.2 1.1 9.4 10.7 6.7 6.0 Yokohama 488 570 7.8 8.8 304 381 12.9 10.4 1.1 1.1 8.9 10.7 8.4 7.4 Toyo 466 525 12.0 13.8 212 302 12.7 8.6 1.7 1.5 14.9 19.2 5.0 4.6 Bridgestone 4,182 4,662 11.7 12.5 2,896 3,100 12.9 11.9 1.6 1.5 12.7 12.9 5.9 5.4 Goodyear 1,630 1,852 9.9 11.0 681 907 11.4 8.2 1.7 1.5 15.5 17.6 6.5 5.8 Cooper 298 308 9.7 9.8 180 172 11.9 10.3 1.7 1.4 14.5 13.6 5.0 4.7 Michelin 3,681 4,056 12.3 13.4 2,235 2,508 13.6 12.0 2.0 1.8 15.1 15.3 5.8 5.5 Note: Data for the four Japanese tire makers are based on the fiscal year ending in March Source: Bloomberg, Mirae Asset Daewoo Research estimates

Figure 7. 2018F OP growth and P/Es of global tire makers Figure 8. P/B-ROE comparison of global tire makers

(%) OP growth (L) P/E (R) (x) P/B (x) Michelin 30 14 1.8

25 12 1.6 Bridgestone Goodyear Toyo 10 20 (Peer avg. : 9.7x) Cooper 8 1.4 15 6 1.2 TTB Sumitomo 10 expected 4 Kumho 1.0 Yokohma Hankook 5 2 0.8 Nexen 0 0 ROE (%) 0.6 0 4 8 12 16 20

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

Mirae Asset Daewoo Research 4 February 9, 2018 Hankook Tire

Hankook Tire (161390 KS/Buy/TP: W67,000)

Comprehensive Income Statement (Summarized) Statement of Financial Condition (Summarized) (Wbn) 12/16 12/17F 12/18F 12/19F (Wbn) 12/16 12/17F 12/18F 12/19F Revenue 6,622 6,813 7,419 8,062 Current Assets 3,293 3,568 3,819 4,204 Cost of Sales 4,045 4,488 4,677 5,036 Cash and Cash Equivalents 465 400 675 706 Gross Profit 2,577 2,325 2,742 3,026 AR & Other Receivables 1,181 1,329 1,262 1,246 SG&A Expenses 1,474 1,531 1,643 1,782 Inventories 1,436 1,495 1,441 1,482 Operating Profit (Adj) 1,103 794 1,099 1,243 Other Current Assets 211 344 441 770 Operating Profit 1,103 794 1,099 1,243 Non-Current Assets 6,329 5,956 6,302 6,464 Non-Operating Profit -11 -39 -6 2 Investments in Associates 1,081 838 1,083 1,116 Net Financial Income -39 -44 -6 27 Property, Plant and Equipment 4,699 4,505 4,602 4,727 Net Gain from Inv in Associates 45 39 52 53 Intangible Assets 146 208 211 215 Pretax Profit 1,092 755 1,093 1,245 Total Assets 9,622 9,524 10,120 10,667 Income Tax 213 121 252 290 Current Liabilities 2,447 2,281 2,076 1,841 Profit from Continuing Operations 879 634 841 955 AP & Other Payables 704 663 655 668 Profit from Discontinued Operations 0 0 0 0 Short-Term Financial Liabilities 1,253 1,246 1,038 790 Net Profit 879 634 841 955 Other Current Liabilities 490 372 383 383 Controlling Interests 873 626 833 947 Non-Current Liabilities 1,214 852 665 554 Non-Controlling Interests 6 8 8 8 Long-Term Financial Liabilities 1,075 728 543 418 Total Comprehensive Profit 870 681 841 955 Other Non-Current Liabilities 139 124 122 136 Controlling Interests 865 674 836 949 Total Liabilities 3,660 3,133 2,740 2,394 Non-Controlling Interests 6 7 6 6 Controlling Interests 5,949 6,375 7,356 8,241 EBITDA 1,606 1,377 1,735 1,866 Capital Stock 62 62 62 62 FCF (Free Cash Flow) 495 425 859 824 Capital Surplus 2,993 2,796 2,993 2,993 EBITDA Margin (%) 24.3 20.2 23.4 23.1 Retained Earnings 2,951 3,527 4,311 5,196 Operating Profit Margin (%) 16.7 11.7 14.8 15.4 Non-Controlling Interests 12 16 24 32 Net Profit Margin (%) 13.2 9.2 11.2 11.7 Stockholders' Equity 5,961 6,391 7,380 8,273

Cash Flows (Summarized) Forecasts/Valuations (Summarized) (Wbn) 12/16 12/17F 12/18F 12/19F 12/16 12/17F 12/18F 12/19F Cash Flows from Op Activities 1,218 922 1,575 1,553 P/E (x) 8.2 10.8 8.0 7.0 Net Profit 879 634 841 955 P/CF (x) 4.3 5.0 3.9 3.7 Non-Cash Income and Expense 798 732 842 824 P/B (x) 1.2 1.1 0.9 0.8 Depreciation 489 567 619 604 EV/EBITDA (x) 5.5 5.9 4.1 3.5 Amortization 14 16 17 18 EPS (W) 7,046 5,051 6,727 7,645 Others 295 149 206 202 CFPS (W) 13,535 11,024 13,587 14,361 Chg in Working Capital -237 -305 115 3 BPS (W) 48,036 51,470 59,391 66,536 Chg in AR & Other Receivables -44 -25 65 19 DPS (W) 400 400 500 500 Chg in Inventories -12 -53 54 -42 Payout ratio (%) 5.6 7.8 7.4 6.5 Chg in AP & Other Payables 0 -120 -6 10 Dividend Yield (%) 0.7 0.7 0.9 0.9 Income Tax Paid -225 -121 -252 -290 Revenue Growth (%) 3.0 2.9 8.9 8.7 Cash Flows from Inv Activities -740 -673 -862 -1,108 EBITDA Growth (%) 19.5 -14.3 26.0 7.6 Chg in PP&E -683 -491 -716 -729 Operating Profit Growth (%) 24.6 -28.0 38.4 13.1 Chg in Intangible Assets -23 -8 -21 -22 EPS Growth (%) 33.2 -28.3 33.2 13.6 Chg in Financial Assets -47 -130 -90 -331 Accounts Receivable Turnover (x) 6.4 5.9 6.1 6.9 Others 13 -44 -35 -26 Inventory Turnover (x) 4.6 4.6 5.1 5.5 Cash Flows from Fin Activities -650 -597 -245 -435 Accounts Payable Turnover (x) 9.9 11.3 12.2 13.0 Chg in Financial Liabilities -567 -355 -393 -373 ROA (%) 9.2 6.6 8.6 9.2 Chg in Equity 0 -198 198 0 ROE (%) 15.8 10.2 12.1 12.1 Dividends Paid -50 -54 -50 -62 ROIC (%) 14.1 10.1 12.7 14.1 Others -33 10 0 0 Liability to Equity Ratio (%) 61.4 49.0 37.1 28.9 Increase (Decrease) in Cash -172 -66 276 31 Current Ratio (%) 134.6 156.5 184.0 228.4 Beginning Balance 637 465 400 675 Net Debt to Equity Ratio (%) 28.4 20.0 7.0 -2.6 Ending Balance 465 400 675 706 Interest Coverage Ratio (x) 24.2 11.5 16.0 22.8 Source: Company data, Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 5 February 9, 2018 Hankook Tire

APPENDIX 1

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

Company (Code) Date Rating Target Price (W) Hankook Tire Hankook Tire (161390) 02/08/2018 Buy 67,000 100,000 11/16/2017 Buy 71,400 80,000 09/18/2017 Buy 76,000 07/20/2017 Buy 82,000 60,000 05/01/2017 Buy 71,000 40,000 02/05/2017 Buy 72,500 11/02/2016 Buy 73,500 20,000

10/23/2016 Buy 71,000 0 08/17/2016 Buy 68,000 Feb 16 Feb 17 Feb 18 05/01/2016 Buy 65,000 02/05/2016 Trading Buy 56,000

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 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 company 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

Mirae Asset Daewoo Research 6 February 9, 2018 Hankook Tire

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.

Mirae Asset Daewoo Research 7 February 9, 2018 Hankook Tire

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Mirae Asset Daewoo Research 8