June 3, 2019 Korea Morning Focus

Sector News & Analysis Major Indices Close Chg Chg (%) Advanced Materials/Metals (Overweight) KOSPI 2,041.74 2.94 0.14 Rare earth prices climbing due to China’s potential export restrictions KOSPI 200 263.89 -0.04 -0.02 KOSDAQ 696.47 7.14 1.04

Turnover ('000 shares, Wbn) Volume Value KOSPI 426,549 5,039 KOSPI 200 74,686 3,183 KOSDAQ 631,339 3,499

Market Cap (Wbn) Value KOSPI 1,358,694 KOSDAQ 236,883

KOSPI Turnover (Wbn) Buy Sell Net Foreign 1,832 1,626 206 Institutional 1,131 1,277 -146 Retail 2,043 2,105 -61

KOSDAQ Turnover (Wbn) Buy Sell Net Foreign 403 366 38 Institutional 239 194 46 Retail 2,829 2,909 -80

Program Buy / Sell (Wbn) Buy Sell Net KOSPI 1,529 1,234 295 KOSDAQ 399 332 67

Advances & Declines Advances Declines Unchanged KOSPI 484 348 62 KOSDAQ 819 384 78

KOSPI Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value 42,500 -50 434 KODEX Leverage 11,405 -50 298 KODEX 200 Futures 8,065 25 222 Inverse 2X Hynix 65,300 -600 206 KODEX Kosdaq150 10,085 235 204 Leverage

KOSDAQ Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Nexon GT 15,950 600 104 Cheil Bio 5,090 720 102 Eagle Vet 6,600 1,520 90 Woogene B&G 3,615 590 89 Hyundai IT 17,450 -500 68 Note: As of May 31, 2019

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Advanced Materials/Metals (Overweight/Maintain)

Rare earth prices climbing due to China’s potential export restrictions  Rare earth prices surge on China’s threat to restrict exports to the US Issue Comment  China’s potential export cutoff could cause price rally in the short/medium term June 3, 2019  Lynas, the largest rare earth producer outside China, to be the main beneficiary

Mirae Asset Daewoo Co., Ltd. Rare earth prices surge on China’s threat to restrict exports to the US

[Advanced Materials/Metals] Worries that China could limit its rare earth exports to the US amid rising trade tensions have sparked a surge in rare earth prices. Compared to prior lows, prices are up 63% for Jaekwang Rhee dysprosium oxide (used in permanent magnets/magnetic refrigeration), 54% for gadolinium +822-3774-6022 oxide (used in nuclear reactor control rods/magneto-optical recording), 39% for holmium [email protected] oxide (used in pigments/lasers), 29% for neodymium oxide (used in glass/ceramics), 24% for terbium oxide (used in high color rendering lamps/magneto-optical recording), and 14% for erbium oxide (used in optical glass/semiconductors).

China’s potential export cutoff could cause price rally in the short/medium term

As of 2018, China accounted for roughly 71% of global rare earth ore production and at least 90% of global rare earth processing capacity. As such, if China restricts rare earth exports to the US, prices are likely to rally in the short and medium term. Back in 2010, China curbed rare earth exports to Japan due to a territorial dispute, causing rare earth prices to increase fivefold in just six months.

In the long term, rare earth prices are likely to stabilize lower as production outside China increases. However, most countries are likely to impose stricter environmental rules on rare earth mining and processing compared to those in China. Given the related cost pressures, we believe rare earth prices will still remain higher than current levels over the long term. Lynas, the largest rare earth producer outside China, to be the main beneficiary

If China restricts US-bound rare earth exports, we believe Australian company Lynas, the largest rare earth miner and processor outside China, will benefit. Lynas has a mine in Western Australia, and ores produced there are processed at its plant in Malaysia. The company also recently signed an MOU with US-based Blue Line to build a rare earth processing facility in Texas.

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

Mirae Asset Daewoo Research Key Universe Valuations June 3, 2019

※All data as of close May 30, 2019, unless otherwise noted.

19F Earnings growth Mkt Cap Price P/E (x) P/B (x) ROE (%) Ticker Company Div Yield OP EPS (Wbn) (W) (%) 19F 20F 19F 20F 19F 20F 19F 20F 19F 20F 005930 Samsung Electronics 253,716 42,500 3.3 -54.2 38.9 -46.7 34.7 13.2 9.8 1.1 1.1 8.8 11.1 000660 SK Hynix 47,539 65,300 2.3 -85.3 94.0 -85.4 87.6 21.0 11.2 0.9 0.9 4.8 8.5 005380 Hyundai Motor 28,738 134,500 3.0 40.1 30.5 139.2 15.0 10.5 9.1 0.5 0.5 5.1 5.7 068270 Celltrion 24,383 190,000 - - - - 0.0 0.0 051910 LG Chem 23,507 333,000 1.8 -13.1 52.7 -15.4 63.6 20.9 12.8 1.4 1.3 7.1 10.9 055550 Shinhan Financial Group 21,078 44,450 12.5 3.1 10.5 0.7 6.0 6.0 0.5 0.5 9.4 8.8 005490 POSCO 20,707 237,500 4.6 -16.7 1.8 69.3 2.3 7.2 7.1 0.4 0.4 6.5 6.3 012330 20,682 217,000 1.6 9.1 10.2 27.0 7.4 8.8 8.2 0.6 0.6 7.5 7.6 017670 SK Telecom 20,227 250,500 4.0 5.8 9.8 -34.9 53.0 9.9 6.5 0.8 0.7 8.8 12.5 051900 LG H&H 19,960 1,278,000 12.8 9.7 15.7 10.6 25.3 22.8 5.4 4.7 20.0 18.9 035420 NAVER 18,377 111,500 0.3 -15.1 26.3 -31.4 68.6 41.3 24.5 2.6 2.4 8.2 12.5 105560 KB Financial Group 18,313 43,800 9.7 3.8 10.8 4.0 5.4 5.2 0.5 0.4 9.3 9.0 028260 Samsung C&T 17,508 92,300 2.2 5.4 20.1 -4.2 20.7 13.9 11.5 0.6 0.6 5.2 5.9 015760 KEPCO 16,691 26,000 ------0.3 0.3 - - 034730 SK Holdings 16,288 231,500 2.0 13.3 12.9 -32.3 20.1 10.8 9.0 0.9 0.8 8.9 9.8 032830 Samsung Life 16,160 80,800 - - - - 0.0 0.0 018260 Samsung SDS 16,017 207,000 1.4 11.6 16.5 12.7 15.4 22.6 19.6 2.4 2.2 11.3 12.0 000270 Motors 15,951 39,350 2.0 20.5 19.7 54.5 16.7 8.9 7.7 0.6 0.5 6.3 7.0 096770 SK Innovation 15,257 165,000 4.8 -29.5 18.8 -40.7 27.9 15.8 12.3 0.8 0.8 5.3 6.7 006400 Samsung SDI 15,025 218,500 0.5 16.8 45.7 -1.0 42.4 22.2 15.6 1.2 1.1 5.6 7.5 033780 KT&G 13,867 101,000 4.2 12.8 5.6 17.5 5.1 13.1 12.5 1.6 1.5 12.7 12.6 066570 LG Electronics 12,863 78,600 1.0 7.1 20.0 23.7 39.9 9.3 6.6 0.9 0.8 10.3 12.9 000810 Samsung F&M 12,839 271,000 - - - - 0.0 0.0 003550 LG Corp. 12,648 73,300 3.1 17.2 15.4 5.5 15.6 6.6 5.7 0.7 0.6 10.5 11.1 086790 Hana Financial Group 10,899 36,300 8.6 8.1 9.5 8.2 4.4 4.1 0.4 0.4 9.0 9.1 036570 NCsoft 10,468 477,000 1.3 32.4 26.4 49.5 17.4 16.7 14.3 3.2 2.7 23.9 23.1 090430 AmorePacific 10,464 179,000 0.7 6.0 20.7 6.9 22.4 29.5 24.1 2.6 2.4 7.8 8.9 035720 10,384 124,500 0.1 167.0 116.1 127.8 160.4 89.1 34.2 2.0 1.9 2.2 5.6 251270 9,784 114,500 44.5 59.7 57.2 39.0 32.7 23.5 2.0 1.9 6.6 8.5 010950 S-Oil 9,401 83,500 3.0 60.1 77.0 99.7 139.4 18.9 7.9 1.4 1.2 7.7 16.5 011170 Lotte Chemical 8,843 258,000 4.1 -34.3 31.9 -35.0 35.1 8.6 6.4 0.7 0.6 7.8 9.9 009540 HHI 8,316 117,500 - 594.6 - - - 69.8 0.7 0.7 - 1.0 010130 Korea Zinc 8,246 437,000 2.5 8.9 6.0 19.1 2.4 13.1 12.8 1.2 1.1 9.7 9.3 091990 Celltrion Healthcare 8,183 56,900 - 192.4 1119.2 156.4 58.7 22.9 4.4 3.8 8.2 18.6 024110 Industrial Bank of Korea 7,963 13,850 7.5 4.5 5.4 3.6 4.9 4.8 0.4 0.4 8.6 8.3 030200 KT 7,298 27,950 3.9 2.0 3.0 28.2 5.6 8.3 7.8 0.5 0.5 6.5 6.6 009150 Samsung Electro-Mechanics 7,111 95,200 1.2 -19.1 28.9 -17.5 31.2 13.7 10.4 1.4 1.2 10.7 12.6 018880 Hanon Systems 6,192 11,600 - - - - 0.0 0.0 034220 LG Display 6,119 17,100 - - - - - 19.2 0.4 0.4 - 2.3 086280 Hyundai Glovis 6,094 162,500 2.0 8.8 2.2 20.2 8.7 11.6 10.7 1.3 1.2 11.8 11.7 032640 LG Uplus 6,091 13,950 4.7 -2.9 11.7 2.0 18.2 12.4 10.5 0.8 0.8 7.0 7.9 000720 Hyundai E&C 5,724 51,400 1.0 24.6 6.1 20.7 0.6 12.4 12.4 0.9 0.8 7.2 6.8 004020 5,445 40,800 1.8 2.5 16.1 42.1 23.3 9.6 7.8 0.3 0.3 3.3 3.8 Hyundai Heavy Industries 267250 5,147 316,000 5.9 78.7 2.1 154.0 4.5 7.5 7.2 0.6 0.6 8.6 8.5 Holdings 010140 SamsungHvyInd 4,946 7,850 - - - - - 64.0 0.7 0.6 - 1.2 128940 Hanmi Pharmaceutical 4,744 408,500 0.1 37.5 -0.2 141.7 -12.3 78.8 89.9 6.1 5.7 8.2 6.8 023530 Lotte Shopping 4,526 160,000 3.3 6.5 3.9 - 10.5 11.3 10.2 0.4 0.4 3.4 3.7 005830 DB Insurance 4,354 61,500 - - - - 0.0 0.0 029780 Samsung Card 4,264 36,800 -16.3 3.1 2.8 4.1 12.0 11.5 0.6 0.6 1.5 1.5 097950 CJ CheilJedang 4,223 280,500 1.2 15.4 12.7 -64.8 23.7 14.7 11.9 0.9 0.8 6.3 7.3 Source: Mirae Asset Daewoo Research

Mirae Asset Daewoo Research Market Data June 3, 2019

※All data as of close May 31, 2019, unless otherwise noted.

Other Major Indices Economic Indicators Close Net Chg 1D (%) YTD (%) Close 1D ago 1M ago 1Y ago MSCI Korea* 408.73 6.12 1.52 -4.71 USD/KRW 1,190.00 1,193.10 1,158.20 1,081.30 KOSPI 2,041.74 2.94 0.14 1.58 JPY100/KRW 1,085.82 1,088.59 1,037.02 993.98 KOSDAQ 696.47 7.14 1.04 4.05 EUR/KRW 1,324.83 1,328.70 1,295.33 1,261.34 Dow Jones* 25,169.88 43.47 0.17 7.90 3Y Treasury 1.59 1.63 1.70 2.20 S&P 500* 2,788.86 5.84 0.21 11.11 3Y Corporate 2.08 2.11 2.17 2.82 NASDAQ* 7,567.72 20.41 0.27 13.53 DDR2 1Gb* 9.30 1.05 1.06 1.35 Philadelphia Semicon* 1,315.29 9.72 0.74 12.87 NAND MLC 64G* 12.50 2.35 2.55 3.64 FTSE 100* 7,218.16 32.86 0.46 7.19 Oil (Dubai)* 67.12 67.13 71.63 73.53 Nikkei 225 20,601.19 -341.34 -1.63 5.31 Gold* 1,287.10 1,281.00 1,285.70 1,301.50 Hang Seng* 27,114.88 -120.83 -0.44 7.90 Customer deposits (Wbn)* 26,291 26,630 25,807 29,611 Taiwan (Weighted) 10,498.49 115.50 1.11 9.88 Equity type BC (Wbn)(May. 29) 80,377 80,894 83,016 80,636 Note: * as of May 30, 2019 Source: KSDA, FnGuide, 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 Hyundai Motor 23.29 Hana Financial Group 12.18 KODEX Kosdaq150 Leverage 22.36 Samsung Electronics 26.35 Samsung Electronics 18.90 SK Energy 11.66 KODEX 200 Futures Inverse 2X 13.21 KODEX Leverage 23.88 Celltrion 17.92 Netmarble 10.82 KEPCO 12.71 SEMCO 22.45 Samsung Electronics (P) 17.73 KODEX KOSDAQ150 INVERSE 10.07 SK Energy 12.61 Hyundai Motor 19.26 13.84 Kia Motors 7.94 Hyundai Heavy Industries 9.81 Samsung Electronics (P) 16.46 Fila Korea 11.42 emart 5.28 Hotel Shilla 8.49 Fila Korea 12.51 Samsung SDI 8.00 Hyundai Wia 4.25 LG Electronics 8.25 KODEX KOSDAQ150 INVERSE 11.00 LG Electronics 7.59 KEPCO 3.04 Netmarble 6.89 Shinhan Financial Group 8.49 Hyundai Eng. & Cosnt. 7.10 Asiana Airlines 2.82 KODEX Inverse 6.68 NAVER 8.27 NC Soft 6.33 KODEX Inverse 2.55 Hyundai Eng. & Cosnt. 6.14 LG Uplus 7.22 Source: KSDA, FnGuide

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 SillaJen 10.72 KMW 8.72 SM 8.05 DB Finance No.7 SPAC 4.74 ViroMed 7.95 Kangstem Biotech 7.18 Silicon Works 4.14 Eugene SPAC IV 4.44 ECHO 6.41 SFA Engineering 4.35 Seoul Semiconductor 3.39 Kangstem Biotech 2.45 Solid Technologies 5.93 Celltrion Healthcare 4.35 Neo Pharm. 3.34 OE Solutions 1.66 ABL Bio 3.11 Seoul Semiconductor 4.13 HLB 3.29 ABL Bio 1.38 LB Semicon 3.04 Neo Pharm. 3.21 InBody 3.22 TESNA 1.34 SM 3.04 Silicon Works 2.72 SFA Engineering 3.18 ViroMed 1.33 Cellivery 2.71 RFTech 2.44 CJ ENM 3.04 Dasan Networks 1.19 Kolon Life Science 2.64 SFA Semicon 2.42 Celltrion Healthcare 2.82 Paradise 0.89 PearlAbyss 2.58 ECOPROBM 2.35 HFR 2.64 0.83 Source: KSDA, FnGuide

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 42,500 -50 253,716 Celltrion Healthcare 56,900 1,000 8,183 Hynix 65,300 -600 47,539 CJ ENM 191,600 6,900 4,202 Hyundai Motor 134,500 -1,000 28,738 SillaJen 55,000 1,900 3,876 Samsung Electronics (P) 34,800 350 28,636 ViroMed 194,800 11,100 3,108 Celltrion 190,000 4,000 24,383 HLB 70,200 2,500 2,754 LG Chem 333,000 5,500 23,507 Medy-tox 448,200 8,200 2,606 Shinhan Financial Group 44,450 -750 21,078 PearlAbyss 197,700 1,300 2,574 POSCO 237,500 -2,000 20,707 Studio Dragon 73,800 400 2,070 Hyundai Mobis 217,000 -4,000 20,682 Hugel 399,700 3,200 1,742 SK Telecom 250,500 500 20,227 Celltrion 51,100 1,150 1,741 Source: Korea Exchange