[China] Autos February 18, 2021

BYD Buy (1211 HK) (Maintain)

Poised for full-fledged profit growth TP: HK$320 ▲ Upside: 20.6%

Mirae Asset Daewoo Co., Ltd. Hyunwoo Jin [email protected]

Valuation Raise TP to HK$320  We raised our 2021 and 2022 EPS estimates for BYD by 27% and 53%, respectively, as we revised up our electric vehicle (EV) sales volume and margin forecasts.  Our target P/E remains unchanged at 100x. We believe the company will cement its leadership in the EV market and meet earnings growth expectations.  We switched our valuation base from 2021F EPS to 2022F EPS.

Investment points Launch of EV-dedicated platform/brand  BYD will unveil its EV-dedicated platform and new models at Auto Shanghai in April.  The integration of EV technology into a dedicated platform should lead to cost savings (scale effects), improved performance, and better space efficiency.  We forecast BYD’s EV sales volume to climb 95% to 360,000 units in 2021, including 160,000 units for the Han and 72,000 units for the Tang.  Expanding target market: The company plans to launch a luxury EV brand in 2022 and enter the luxury market in 2023. Strong potential of LFP battery business  Chinese and non-Chinese brands are likely to adopt BYD’s Blade Battery, which already meets the technological requirements for mass commercialization in terms of driving range, fire safety, and cost.  We expect BYD’s battery market share to rise from 15% in 2020 to 18% in 2021. We forecast battery capacity to expand to 60-70GWh at end-2021. Strengthening vertical integration  Taking innovation into its own hands: BYD is strengthening its capabilities across key parts, including batteries, motors, and power control units. Reliance on third parties for parts supplies and electrification technology innovation is gradually decreasing.  BYD plans to spin off its power semiconductor business and take it public. We believe the move will help accelerate capacity expansions and technology development. In late January, BYD raised CNY29.8bn (around W4.3tr) through a sale of new shares. The proceeds will be used to accelerate technology development and pay down debt.

Risks  A decline in EV ASP (our forecast: +5% annually) and higher selling expenses due to intensifying competition  Battery quality defects

Key data

Current price (2/17/21, HK$) 265.40 Market cap (HK$bn) 859.2 800 BYD HSI 700 Exchange Hong Kong Market cap (Wtr) 122.7 600 500 EPS growth (22F, %) 36.0 Shares outstanding (mn) 821.5 400 P/E (22F, x) 82.9 52-week low (HK$) 33.50 300 200 Dividend yield (%) 0.1 52-week high (HK$) 278.40 100 0 19.1 19.7 20.1 20.7 21.1

Share performance Earnings and valuation metrics (%) 1M 6M 12M (Dec.) 2017 2018 2019 2020F 2021F 2022F Absolute 8.0 267.8 488.5 Revenue (CNYmn) 102,651 121,791 121,778 135,412 180,532 222,321 Relative -0.7 199.9 429.3 EBIT (CNYmn) 7,963 7,504 5,919 9,723 11,684 14,394

EBIT margin (%) 7.8 6.2 4.9 7.2 6.5 6.5 NP (CNYmn) 4,066 2,780 1,614 4,317 5,613 7,634 EPS (CNY) 1.49 1.02 0.59 1.58 1.96 2.67 ROE (%) 8.6 6.2 3.9 5.1 6.6 7.2 P/E (x) 40.5 47.2 69.5 139.8 112.7 82.9 P/B (x) 3.0 2.3 1.8 10.0 7.1 6.6 Source: Company data, Mirae Asset Daewoo Research estimates Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including the US. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES AND DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT. February 18, 2021 BYD

Earnings growth to accelerate

With the EV market entering a full-fledged growth phase, BYD’s steady efforts to build EV competitiveness and strengthen vertical integration are set to pay off. We expect the sales mix of EVs to increase from 43% in 2020 to 69% 2021 and 78% in 2022, and we see the auto unit’s pretax margin rising from 8.8% in 2020 to 10.1% in 2021 and 10.5% in 2022.

We forecast BYD’s EV sales volume to expand 95% YoY to 360,000 units in 2021, including 160,000 units for the Han electric sedan (released in 2020; first model equipped with the Blade Battery) and 70,000 units for the Tang SUV (second Blade Battery-equipped model; release expected in 2H21). BYD plans to unveil a dedicated EV platform and new models in 1H21, and it plans to launch a luxury EV brand in 2022 and enter the luxury market in 2023. We expect auto margins to continue to improve, aided by ASP growth and scale effects.

BYD’s battery business is also well-positioned for steady growth. We expect the company’s battery market share to rise from 15% in 2020 to 18% in 2021, aided by growing adoption of the Blade Battery by its own EVs as well as other domestic and foreign brands. We believe BYD’s lithium iron phosphate (LFP) battery already meets the technological requirements for mass commercialization in terms of driving range (over 500km), fire safety, and cost. BYD’s batteries are likely to be adopted by compact or affordable EV models targeting China, Southeast Asia, and India, where income levels are relatively low.

BYD is bullish on demand for its batteries, with management recently announcing plans to build a new battery plant with annual production capacity of 20GWh. We expect BYD’s annual battery production capacity to expand to 60-70GWh by end-2021, equivalent to 40-50% of that of CATL, the no. 1 player in the global battery market. We also expect utilization at BYD’s battery facilities to increase from below 40% to over 60%, aided by robust demand growth.

BYD stands to enhance its EV competitiveness further, as the Blade Battery (a cell-to-pack LFP battery technology commercialized in 2020) is likely to generate synergies with the soon-to- be-released “EV 2.0” platform. The integration of EV technology into a dedicated platform should lead to cost savings (scale effects), enhanced battery efficiency and driving performance, and better space efficiency. It should also help shorten the new model development cycle.

BYD is taking innovation into its own hands, strengthening its capabilities across key parts such as batteries, motors, and power control units. Compared to rivals that depend on outside vendors for parts and technology development, BYD is better positioned to drive agile, bold innovation. Such vertical integration should also help generate economies of scale as EV production increases.

Meanwhile, BYD issued 133mn shares (equivalent to 4.9% of old shares) for HK$225 each at end-January. The proceeds from the share issue (CNY29.8bn) will be used to develop EV/autonomous vehicles, pay down debt, and expand battery production capacity. BYD’s share price had rallied strongly, leading to successful capital raising. The company’s ample cash holdings will likely help it cement its leadership in the EV market.

Mirae Asset Daewoo Research 2 February 18, 2021 BYD

Figure 1. BYD: Sales projections

('000 units)

700 EVs (L) Conventional vehicles (L) EV share (R) 90%

80% 600 70% 500 60%

400 50%

300 40% 30% 200 20% 100 10%

0 0% 2015 2016 2017 2018 2019 2020 2021F 2022F

Note: PHEVs are included in EV data. Source: Company data, MarkLines, Mirae Asset Daewoo Research

Table 1. BYD: Sales projections 2015 2016 2017 2018 2019 2020 2021F 2022F EV sales (‘000 units) 60 102 114 229 221 183 357 508 YoY 70% 11% 102% -3% -17% 95% 42% % of total sales 14% 20% 27% 44% 48% 43% 69% 78% Total car sales (‘000 units) 447 508 420 521 461 427 521 651 YoY 14% -17% 24% -11% -7% 22% 25% Conventional sales (‘000 387 405 306 292 240 244 164 143 units) YoY 5% -24% -5% -18% 2% -33% -13% Note: PHEVs are included in EV data. Source: Company data, MarkLines, Mirae Asset Daewoo Research

Table 2. BYD: 2021 Tang EV

Manufacturer BYD Acceleration (0–100km/h) 4.6s Model 2021 Tang EV Battery pack capacity 86.4kWh Release schedule 2H21 Battery type LFP Blade Battery After-subsidy price CNY284,000 Dimensions 4,870 x 1,950 x 1,725mm Range (NEDC) 505km Wheelbase 2,820mm Source: Company data, press materials, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 3 February 18, 2021 BYD

Figure 2. China: Monthly avg. BEV sales by model in 4Q20 (incl. micro EVs)

(Units) 30,000 28,035

25,000 19,184 20,000

15,000

10,000 8,581 7,181 6,480 5,132 4,007 5,000 3,773 3,442 2,870

0 SAIC-GM- Telsa Great Wall BYD GAC SAIC BYD SAIC-GM- WM Wuling Model 3 Ora R1 Han eQ1 S MG ZS Qin Pro Wuling EX5 Hong SUV Guang Mini E100

Note: Blue bars indicate micro EVs priced below W10mn. Source: MarkLines, SNE Research, Mirae Asset Daewoo Research

Figure 3. China: BEV market breakdown in 2020 (incl. micro Figure 4. China: BEV market breakdown in 2020 (excl. micro

EVs) EVs)

3.1% 2.8% 3.1% 2.9% 3.0% SAIC-GM-Wuling Tesla 4.5% Tesla BYD 19.7% 3.5% 20.6% 4.6% BYD GAC 3.8% GAC NIO 5.5% Great Wall 6.3% SAIC SAIC BAIC 5.8% NIO 14.2% 6.6% Chery Xpeng 6.2% 19.6% BAIC WM 9.0% 13.5% Changan Changan

Source: MarkLines, SNE Research, Mirae Asset Daewoo Research Source: MarkLines, SNE Research, Mirae Asset Daewoo Research

Figure 5. China: EV battery market breakdown (2020) Figure 6. China: EV battery sales volume (2020)

CATL BYD LG Energy Solution CALB Gotion Other (MWh) CATL BYD 6,000 CALB LG Energy Solution Gotion

5,000 18% 4,000

4% 47% 3,000 5%

2,000 11%

1,000 15%

0 12/19 3/20 6/20 9/20 12/20

Source: SNE Research, Mirae Asset Daewoo Research Source: SNE Research, Mirae Asset Daewoo Research

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Revisions to earnings estimates

For 2021 and 2022, we revised up our projections for BYD’s total car sales by 15% (+70,000 units) and 25% (+130,000 units), respectively. We increased our EV sales estimates by 57% (+130,000 units) and 94% (+250,000 units), respectively, and reduced our conventional car sales estimates by 28% (-60,000 units) and 45% (-120,000 units), respectively.

We expect 160,000 Han units to be sold in 2021 (vs. our previous estimate of 120,000), displaying faster-than-expected growth. For the Tang (BYD’s second EV model to be equipped with the Blade Battery), we forecast 2021 sales at 72,000 units (vs. our previous estimate of 40,000 units). With the upcoming release of a dedicated EV platform (1H21), new EV model launches are likely to accelerate, and existing models should become more competitive on price and performance, supporting sales growth. In contrast, production of conventional vehicles is set to decline sharply. We estimate BYD’s total car sales volume to expand 22% in 2021 and 25% in 2022, supported by the company’s: 1) strong EV model lineup (about 20 models); 2) mass production capacity; 3) vertical integration; and 4) leadership in technology innovation.

BYD is rapidly expanding its battery production capacity to meet a sharp increase in demand for LFP batteries. We expect BYD’s LFP battery production capacity to increase to 70GWh by end-2021 (vs. our previous estimate of 60GWh). We also adjusted up our battery plant utilization estimates from 35% to 60% for 2021 and from 40% to 70% for 2022. We expect the share of external customers to reach 15-20%.

We believe BYD’s EV business yields higher margins than its conventional vehicle business, thanks to robust vertical integration across core parts. Accordingly, the rising share of EVs in total sales volume (less than 50%  69% in 2021F  78% in 2022F) is positive to auto margins. For the battery business, we anticipate scale effects from EV sales growth and rapid cost reductions from technology innovation. The growing share of external Blade Battery customers is also positive from a margin standpoint. Meanwhile, the proceeds from the recent share issue (W4.3tr) will be used to pay down debt, lowering interest expenses.

Table 3. Earnings forecast revisions Previous Revised % chg. 2021F 2022F 2021F 2022F 2021F 2022F Revenue (CNYmn) 164,150 186,917 180,532 222,321 10.0% 18.9% GP 24,787 28,411 29,788 36,461 20.2% 28.3% EBIT 10,160 11,290 11,684 14,394 15.0% 27.5% NP attributable to owners of 4,201 4,756 5,613 7,634 33.6% 60.5% the parent EPS (CNY) 1.54 1.74 1.96 2.67 27.4% 53.1% Note: Reflecting end-January share issue (133mn shares) and increased share of owners of the parent in NP Source: Mirae Asset Daewoo Research estimates

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Table 4. BYD: Annual earnings (CNYmn)

2017 2018 2019 2020F 2021F 2022F Revenue 102,651 121,791 121,778 135,412 180,532 222,321 YoY 2.4% 18.6% 0.0% 11.2% 33.3% 23.1% Autos 54,501 71,769 59,537 55,095 70,589 92,649 YoY -0.9% 31.7% -17.0% -7.5% 28.1% 31.3% Mobile components 39,708 41,341 52,522 66,178 88,679 103,754 YoY 4.3% 4.1% 27.0% 26.0% 34.0% 17.0% Batteries/other 8,442 8,681 9,719 14,139 21,264 25,919 YoY 18.9% 2.8% 12.0% 45.5% 50.4% 21.9% COGS -84,716 -103,724 -103,702 -112,662 -150,744 -185,860 GP 17,935 18,067 18,076 22,749 29,788 36,461 Margin 17.5% 14.8% 14.8% 16.8% 16.5% 16.4% YoY -5.7% 0.7% 0.1% 25.9% 30.9% 22.4% Selling/distribution expenses -4,925 -4,729 -4,346 -4,604 -6,499 -7,781 Administrative expenses -3,048 -3,826 -4,232 -5,010 -6,319 -7,559 R&D -3,739 -4,989 -5,629 -5,146 -7,221 -8,737 Government subsidies 1,276 2,333 1,708 1,519 1,620 1,596 Non-operating income 690 875 765 500 500 500 Equity-method gains/losses -225 -225 -423 -285 -185 -85 EBIT 7,963 7,504 5,919 9,723 11,684 14,394 Margin 7.8% 6.2% 4.9% 7.2% 6.5% 6.5% YoY -4.8% -5.8% -21.1% 64.3% 20.2% 23.2% EBITDA 14,927 16,786 15,387 19,995 25,017 30,147 Margin 14.5% 13.8% 12.6% 14.8% 13.9% 13.6% YoY -2.3% 12.5% -8.3% 29.9% 25.1% 20.5% Depreciation 5,759 7,615 8,147 8,802 11,373 13,339 Amortization 1,204 1,666 1,322 1,470 1,960 2,413 Interest expenses -2,343 -3,119 -3,487 -3,453 -3,532 -3,307 PBT 5,621 4,386 2,431 6,270 8,152 11,088 Margin 5.5% 3.6% 2.0% 4.6% 4.5% 5.0% Tax -704 -829 -312 -941 -1,223 -1,663 Tax rate 12.5% 18.9% 12.8% 15.0% 15.0% 15.0% NP 4,917 3,556 2,119 5,330 6,930 9,425 Owners of the parent 4,066 2,780 1,614 4,317 5,613 7,634 Margin 4.0% 2.3% 1.3% 3.2% 3.1% 3.4% YoY -19.5% -31.6% -41.9% 167.4% 30.0% 36.0% EPS (CNY) 1.49 1.02 0.59 1.58 1.96 2.67 YoY -25.1% -31.6% -41.9% 167.4% 24.0% 36.0% Note: CNY/HKD = 1.20 Source: Company data, Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 6 February 18, 2021 BYD

Valuation

BYD is currently trading at 113x 2021F EPS and 83x 2022F EPS. We switched our valuation base from 2021F EPS to 2022F EPS. Our target P/E remains unchanged at 100x. We believe BYD is well-positioned to cement its leadership in China’s EV market, backed by its recent successful capital raising (W4.3tr), upcoming launches of an EV platform and new EV models, battery and power semiconductor capacity expansions, and planned entry into the luxury segment. While most of the company’s rivals are registering net losses due to their EV operations, we believe BYD will display stable profit growth. We believe that EVs will account for 69% of total sales volume in 2021 and 78% in 2022, and that EPS will grow 24% in 2021 and 36% in 2022 (vs. EPS growth of 167% and EV sales volume mix of 43% in 2020F).

The stock’s 12-month forward P/E multiple jumped from roughly 60x in Aug. 2020 to 100x by year-end. This coincided with the successful launch of BYD’s new Han EV and internally developed LFP battery. Meanwhile, the company’s battery EV market share in China (including micro EVs; based on sales units) slipped from 21% in 2019 to 14% in 2020, and EV sales volume contracted 18% in 2020 (vs. +1% for the market). We estimate gross margin improved 2%p, mainly because of a 4%p gain in OP margin due to subsidiary BYD Electronic’s strong mask sales.

In addition to optimism on a profit turnaround, we attribute BYD’s rally to expectations on upcoming models (following the Han) and robust vertical integration across core parts (batteries, power semiconductors, etc.). This year and next, we believe such expectations will be realized in the form of stable earnings growth. Such earnings stability (with EPS forecast to grow 24% in 2021 and 36% in 2022) should make BYD stand out from other EV makers.

Table 5. BYD: Valuation 2020F 2021F 2022F EPS (CNY) 1.58 1.96 2.67 EPS (HK$) 1.90 2.35 3.20 Growth 167.4% 24.0% 36.0% Trading P/E (x) 139.8 112.7 82.9 Target P/E (x) 100.0 Fair value per share (HK$) 320.18 Target price (HK$) 320.00 Current price (HK$) 265.40 Upside potential 20.6% Note: CNY/HKD = 1.20 Source: Bloomberg, Mirae Asset Daewoo Research estimates

Figure 7. BYD: 12-month forward P/E band chart Figure 8. BYD: 12-month forward P/E band chart (±2 SD)

(HK$) (x) 300 120 110x 250 100 +2 SD 86x 200 80 +1 SD 150 63x 60 3Y avg. 100 39x 40 -1 SD 50 20 15x -2 SD 0 0 2018 2019 2020 2021 2018 2019 2020 2021

Source: Mirae Asset Daewoo Research Source: Mirae Asset Daewoo Research

BYD (1211 HK)

Mirae Asset Daewoo Research 7 February 18, 2021 BYD

Income statement (summarized) Balance sheet (summarized) (CNYmn) 2019 2020F 2021F 2022F (CNYmn) 2019 2020F 2021F 2022F Revenue 121,778 135,412 180,532 222,321 Current assets 106,967 113,712 149,610 158,954 COGS -103,702 -112,662 -150,744 -185,860 Cash & equivalents 12,650 12,829 23,126 16,224 GP 18,076 22,749 29,788 36,461 AR & other receivables 47,144 50,084 64,299 73,092 Selling & marketing -4,346 -4,604 -6,499 -7,781 Inventory 25,572 27,780 35,105 40,737 G&A -4,232 -5,010 -6,319 -7,559 Other current assets 21,601 23,020 27,080 28,902 R&D -5,629 -5,146 -7,221 -8,737 Non-current assets 88,675 96,915 106,675 116,329 Government subsidies/grants 1,708 1,519 1,620 1,596 PP&E 62,634 68,727 75,407 82,077 Net other income 765 500 500 500 Intangible assets 11,888 13,126 14,777 16,810 Share of JVs/associates -423 -285 -185 -85 Investments in JVs/associates 5,982 6,482 7,482 7,982 EBITDA 15,387 19,995 25,017 30,147 Other non-current assets 8,171 8,579 9,008 9,459 Depreciation 8,147 8,802 11,373 13,339 Total assets 195,642 210,627 256,285 275,283 Amortization 1,322 1,470 1,960 2,413 Current liabilities 108,029 113,485 133,528 149,986 EBIT 5,919 9,723 11,684 14,394 AP & other payables 45,989 50,621 67,731 81,473 Financial expenses -3,487 -3,453 -3,532 -3,307 ST financial liabilities 54,062 54,062 54,062 54,062 PBT 2,431 6,270 8,152 11,088 Other current liabilities 7,978 8,802 11,735 14,451 Income tax -312 -941 -1,223 -1,663 Non-current liabilities 25,011 30,011 25,011 20,011 NP 2,119 5,330 6,930 9,425 Long-term financial liabilities 21,916 26,916 21,916 16,916 Attributable to owners of the parent 1,614 4,317 5,613 7,634 Other non-current liabilities 3,095 3,095 3,095 3,095 Total liabilities 133,040 143,496 158,539 169,997 Gross margin (%) 14.8 16.8 16.5 16.4 Share capital 2,728 2,728 2,861 2,861 EBITDA margin (%) 12.6 14.8 13.9 13.6 Reserves 49,640 53,157 82,322 88,071 EBIT margin (%) 4.9 7.2 6.5 6.5 Perpetual loans 4,395 4,395 4,395 4,395 Net margin (%) 1.3 3.2 3.1 3.4 Minority interests 5,839 6,852 8,168 9,959 Total equity 62,601 67,132 97,746 105,286

Cash flow statement (summarized) Key valuation metrics/ratios (CNYmn) 2019 2020F 2021F 2022F 2019 2020F 2021F 2022F Cash flow from operating activities 14,741 16,081 16,410 26,938 P/E (x) 69.5 139.8 112.7 82.9 NP attributable to owners of the parent 1,614 4,317 5,613 7,634 P/B (x) 1.8 10.0 7.1 6.6 Depreciation 8,147 8,802 11,373 13,339 EV/EBITDA (x) 12.6 39.4 31.5 26.1 Amortization 1,322 1,470 1,960 2,413 EPS (CNY) 0.59 1.58 1.96 2.67 Chg. in working capital -6,617 -516 -4,430 -683 BPS (CNY) 20.81 22.10 31.31 33.32 NP from JVs/associates 423 285 185 85 DPS (CNY) 0.26 0.29 0.48 0.66 Government subsidies & grants -1,708 -1,519 -1,620 -1,596 Dividend payout ratio (%) 43.8 15.0 20.0 20.0 Other 11,560 3,243 3,329 5,746 Dividend yield (%) 0.1 0.1 0.2 0.2 Cash flow from investing activities -20,881 -18,104 -22,664 -24,955 Revenue growth (%) 0.0 11.2 33.3 23.1 Capex -17,721 -14,895 -18,053 -20,009 EBITDA growth (%) -8.3 29.9 25.1 20.5 Asset sales 413 0 0 0 EBIT growth (%) -21.1 64.3 20.2 23.2 Acquisition of intangibles -2,906 -2,708 -3,611 -4,446 EPS growth (%) -37.8 167.4 24.0 36.0 Investment in JVs/associates -736 -500 -1,000 -500 AR collection period in days 141 135 130 120 Other 68 0 0 0 Inventory days outstanding 90 90 85 80 Cash flow from financing activities 6,610 2,201 16,552 -8,885 AP days outstanding 124 124 124 120 Issuance/repayment of ST debt -508 0 0 0 ROA (%) 1.1 2.0 2.2 2.8 Issuance/repayment of LT debt 10,855 5,000 -5,000 -5,000 ROE (%) 3.9 5.1 6.6 7.2 Issuance of common shares 0 0 24,937 0 ROIC (%) 5.5 8.1 8.6 9.7 Dividends paid -707 -799 -1,386 -1,885 Debt-to-equity ratio (%) 133.9 134.3 84.8 74.5 Other -3,030 -2,000 -2,000 -2,000 Net debt-to-equity ratio (%) 111.6 113.1 59.0 57.4 Net chg. in cash 470 178 10,298 -6,902 Current ratio (%) 99.0 100.2 112.0 106.0 Beginning cash balance 12,180 12,650 12,829 23,126 Ending cash balance 12,650 12,829 23,126 16,224 Source: Company data, Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 8 February 18, 2021 BYD

Appendix 1

Important disclosures and disclaimers Two-year rating and TP history

Company Date Rating TP (HK$) BYD (1211 HK) 2/18/21 Buy 320 10/21/20 Buy 180 8/21/20 Buy 90

Stock ratings Sector ratings Buy Expected 12-month performance: +20% or greater Overweight Expected to outperform the market over 12 months Trading Buy Expected 12-month performance: +10% to +20% Neutral Expected to perform in line with the market over 12 months Hold Expected 12-month performance: -10% to +10% Underweight Expected to underperform the market over 12 months Sell Expected 12-month performance: -10% or worse

Rating and TP history: Share price (─), TP (▬), Not Rated (■), Buy (▲), Trading Buy (■), Hold (●), Sell (◆) * Our investment rating is a guide to the expected return of the stock over the next 12 months. * Outside of the official ratings of Mirae Asset Daewoo Co., Ltd., analysts may call trading opportunities should technical or short-term material developments arise. * The TP was determined by the research analyst through valuation methods discussed in this report, in part based on estimates of future earnings. * TP achievement may be impeded by risks related to the subject securities and companies, as well as general market and economic conditions.

Ratings distribution and investment banking services Buy Trading Buy Hold Sell Ratings distribution 78.43% 11.76% 8.50% 1.31% Investment banking services 66.67% 22.22% 11.11% 0.00% * Based on recommendations in the last 12 months (as of December 31, 2020)

Disclosures As of the publication date, Mirae Asset Daewoo Co., Ltd. and/or its affiliates do not have any special interest in 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 divisions. 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 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

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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. For further information regarding company-specific information as it pertains to the representations and disclosures in this Appendix 1, please contact [email protected] or +1 (212) 407-1000.

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.

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Mirae Asset Daewoo International Network

Mirae Asset Daewoo Co., Ltd. (Seoul) Mirae Asset Securities (HK) Ltd. Mirae Asset Securities (UK) Ltd. One-Asia Equity Sales Team Units 8501, 8507-8508, 85/F 41st Floor, Tower 42 Mirae Asset Center 1 Building International Commerce Centre 25 Old Broad Street, 26 Eulji-ro 5-gil, Jung-gu, Seoul 04539 1 Austin Road West London EC2N 1HQ Korea Kowloon United Kingdom Hong Kong Tel: 82-2-3774-2124 Tel: 852-2845-6332 Tel: 44-20-7982-8000

Mirae Asset Securities (USA) Inc. Mirae Asset Wealth Management (USA) Inc. Mirae Asset Wealth Management (Brazil) CCTVM 810 Seventh Avenue, 37th Floor 555 S. Flower Street, Suite 4410, Rua Funchal, 418, 18th Floor, E-Tower Building New York, NY 10019 Los Angeles, California 90071 Vila Olimpia USA USA Sao Paulo - SP 04551-060 Brazil Tel: 1-212-407-1000 Tel: 1-213-262-3807 Tel: 55-11-2789-2100

PT. Mirae Asset Sekuritas Indonesia Mirae Asset Securities (Singapore) Pte. Ltd. Mirae Asset Securities (Vietnam) LLC Equity Tower Building Lt. 50 6 Battery Road, #11-01 7F, Saigon Royal Building Sudirman Central Business District Singapore 049909 91 Pasteur St. Jl. Jend. Sudirman, Kav. 52-53 Republic of Singapore District 1, Ben Nghe Ward, Ho Chi Minh City Jakarta Selatan 12190 Vietnam Indonesia Tel: 62-21-515-3281 Tel: 65-6671-9845 Tel: 84-8-3911-0633 (ext.110) Mirae Asset Securities Mongolia UTsK LLC Mirae Asset Investment Advisory (Beijing) Co., Ltd Beijing Representative Office #406, Blue Sky Tower, Peace Avenue 17 2401B, 24th Floor, East Tower, Twin Towers 2401A, 24th Floor, East Tower, Twin Towers 1 Khoroo, Sukhbaatar District B12 Jianguomenwai Avenue, Chaoyang District B12 Jianguomenwai Avenue, Chaoyang District Ulaanbaatar 14240 Beijing 100022 Beijing 100022 Mongolia China China

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Tel: 86-21-5013-6392 Tel: 84-8-3910-7715

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