December 22, 2015

KOREA

Sector News & Analysis Major Indices Close Chg Chg (%) Banks (Overweight) KOSPI 1,992.56 11.37 0.57 Post-FOMC meeting investment strategy KOSPI 200 245.48 1.72 0.71 KOSDAQ 663.42 -5.23 -0.78 Healthcare (Overweight) Healthcare Weekly Briefing Turnover ('000 shares, Wbn) Volume Value KOSPI 569,183 4,120 KOSPI 200 68,972 2,601 KOSDAQ 685,834 3,765

Market Cap (Wbn) Value KOSPI 1,261,911 KOSDAQ 193,864

KOSPI Turnover (Wbn) Buy Sell Net Foreign 929 936 -7 Institutional 889 666 223 Retail 2,219 2,492 -273

KOSDAQ Turnover (Wbn) Buy Sell Net Foreign 150 177 -27 Institutional 114 120 -6 Retail 3,499 3,457 43

Program Buy / Sell (Wbn) Buy Sell Net KOSPI 818 693 125 KOSDAQ 66 64 2

Advances & Declines Advances Declines Unchanged KOSPI 356 464 60 KOSDAQ 388 666 78

KOSPI Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value SunnyElec 7,070 1,230 268 Electronics 1,292,000 12,000 262 Hynix 32,200 1,700 213 KODEX LEVERAGE 9,995 40 163 Hanmi Pharm 700,000 23,000 106

KOSDAQ Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value AHNLAB 79,300 18,300 344 NTPIA 3,225 -1,375 208 Dexter 28,800 4,000 148 Tamul Multimedia 8,670 870 108 Digital Chosun 6,030 1,385 103 Note: As of December 22, 2015

This document is a summary of a report prepared by Daewoo Securities Co., Ltd. (“Daewoo”) and published on our website. Please review the compliance notices contained in the original report. Information and opinions contained herein have been compiled in good faith from sources deemed to be reliable. However, the information has not been independently verified. Daewoo makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy or completeness of the information and opinions contained in this document. Daewoo accepts no responsibility or liability whatsoever for any loss arising from the use of this document or its contents or otherwise arising in connection therewith. Information and opinions contained herein are subject to change without notice. This document is for informational purposes only. It is not and should not be construed as an offer or solicitation of an offer to purchase or sell any securities or other financial instruments. This document may not be reproduced, further distributed or published in whole or in part for any purpose.

Banks (Overweight/Maintain)

Post-FOMC meeting investment strategy

Bank stocks remain depressed News Comment December 22, 2015 US interest rate normalization has widely been seen as a positive for Korean banks, as stronger downside support for market rates should prop up net interest margin (NIM).

However, bank shares remain in a slump, as 1) it will likely take some time for the US hike to positively affect NIM, and 2) the BOK seems increasingly reluctant to follow in the footsteps Daewoo Securities CCo.,o., Ltd. of the Fed.

[Banks] In addition, rumors of corporate restructuring through year-end have given rise to worries

Joong-han Kim over heavier provisioning for banks, dragging down shares. +822-768-4152 [email protected] Figure 111.1. Relative performance of banking sector

Yong-uk Ku (12/14=100) +822-768-4494 115 KOSPI [email protected] Banking sector

110

105

100

95

90

85 1/15 2/15 3/15 4/15 5/15 6/15 7/15 8/15 9/15 10/15 11/15 12/15

Source: KDB Daewoo Securities Research

Figure 222.2. Monthly banking share performance (vs. KOSPI)

(%p) 4 3.0

2 1.3 0.6 0.2 0 -0.4 -0.2 -2 -1.9 -2.3 -2.5 -2.9 -4 -4.3 -4.4 -4.6 -6 12 1 2 3 4 5 6 7 8 9 10 11 12 2014 2015

Source: KDB Daewoo Securities Research

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

Healthcare (Overweight/Maintain)

Healthcare Weekly Briefing

I. Major issues and events Sector Update December 18, 2015 November outpatient prescription drug sales data (December 15 th ) On December 15 th , UBcare released its outpatient prescription drug sales data for November.

Daewoo Securities CCo.,o., Ltd. Overall outpatient prescription drug sales in November came in at W805.8bn (+1.4% YoY, -5.2% MoM, -0.9% YoY YTD). [Healthcare] Average daily outpatient prescription drug sales in November (based on business days) came Hyun-tae Kim +822-768-3251 in at W38.4bn (-3.4% YoY, -5.2% MoM, -1.9% YoY YTD). [email protected] With regard to outpatient prescription drug sales, the top 10 Korean pharmaceutical firms

Seung-min Kim commanded a combined market share of 25.2% (-0.05%p MoM), the top 10 foreign firms +822-768-4157 22.8% (-0.25%p MoM), and small/mid-sized firms 51.9% (+0.30%p MoM). [email protected]

By company, LG Life Sciences (LGLS), Green Cross, Chong Kun Dang, , and Hanmi Pharmaceutical outperformed in November, displaying YoY increases in outpatient drug sales of 28.8%, 15.1%, 5.4%, 5.0% and 0.2%, respectively. Meanwhile, Daewoong Pharmaceutical and Dong-A ST underperformed (-5.6% and -6.3% YoY, respectively).

Of the five largest drugmakers, Chong Kun Dang held the biggest market share in November (3.74%), followed by Hanmi Pharmaceutical (3.71%), Daewoong Pharmaceutical (3.27%), Yuhan (3.15%), and Dong-A ST (2.69%). Yuhan delivered the largest market share gain (+0.03%p MoM) among top drugmakers during the month.

The outpatient prescription drug market has expanded YoY for two consecutive months. Small/mid-sized pharmaceutical firms have outperformed their larger counterparts, with a 0.76%p increase in market share from the end-2014 level (vs. -0.50%p and -0.25%p for the top 10 Korean and top 10 foreign pharmaceutical firms, respectively).

For November, LGLS, Green Cross, Chong Kun Dang, and Yuhan posted particularly solid YoY increases in outpatient prescription drug sales relative to the overall level of growth.

According to UBcare data, outpatient prescription drug sales contracted YoY during January- November 2015. However, pharmacy costs, another important market indicator, increased 3.7% YoY in 3Q and 4.6% YoY during 1Q-3Q. As such, we believe that the domestic prescription drug market is growing compared to in 2014.

The National Health Insurance Service (NHIS) has posted solid financials, with a 2Q YTD balance of W3.39tr, and a cumulative balance of W16.19tr. We believe we are unlikely to see a repeat of the sweeping drug price cuts of 2012.

Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including tthehe U.S.

PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.

Key Universe Valuations December 22, 2015

※All data as of close December 21, 2015, unless otherwise noted.

16F Earnings growth Mkt Cap Price P/E (x) P/B (x) ROE (%) Ticker Company Div Yield OP EPS (Wbn) (W) (%) 16F 17F 16F 17F 16F 17F 16F 17F 16F 17F 005930 190,311 1,292,000 2.1 2.2 5.1 5.3 7.6 10.0 9.3 1.1 1.0 11.7 11.4 005380 Hyundai Motor 33,702 153,000 3.3 15.6 -1.2 12.6 1.1 5.8 5.7 0.6 0.6 11.4 10.5 015760 KEPCO 32,066 49,950 3.0 8.3 0.5 -46.9 -1.5 4.8 4.8 0.4 0.4 9.8 8.9 012330 24,677 253,500 1.4 15.0 7.2 22.5 5.8 6.6 6.2 0.8 0.7 13.4 12.6 090430 AmorePacific 24,202 414,000 0.3 33.4 31.0 25.2 31.7 36.9 28.0 6.9 5.7 20.6 22.3 000660 SK Hynix 23,442 32,200 1.2 -21.9 10.7 -22.9 11.3 7.0 6.3 0.9 0.8 14.1 13.8 000270 Motors 22,133 54,600 2.5 27.7 14.0 25.8 10.9 5.9 5.3 0.8 0.7 14.2 13.9 051910 LG Chem 22,068 333,000 1.2 10.2 23.4 28.4 24.2 15.4 12.4 1.7 1.5 11.5 12.9 032830 Samsung Life 21,700 108,500 - - - - 0.0 0.0 035420 NAVER 21,525 653,000 0.2 33.3 22.4 35.7 21.6 29.1 23.9 5.5 4.5 27.7 26.0 018260 Samsung SDS 19,693 254,500 0.2 12.2 1381.5 8.3 1338.7 41.1 2.9 4.0 1.7 10.1 82.3 055550 19,253 40,600 - - - - 0.0 0.0 034730 SK Holdings 18,434 262,000 0.8 9.0 13.4 4.3 -49.4 21.6 42.7 3.3 3.1 19.8 8.9 017670 SK Telecom 18,410 228,000 4.4 4.8 1.4 0.4 1.8 11.1 10.9 1.0 0.9 10.1 9.7 051900 LG Household & Health Care 16,165 1,035,000 0.5 21.6 16.8 22.7 18.6 31.1 26.2 7.0 5.6 25.7 24.4 005490 POSCO 15,083 173,000 4.6 10.9 11.3 593.2 33.2 10.3 7.7 0.3 0.3 3.5 4.6 033780 KT&G 15,034 109,500 3.3 -4.9 0.7 -9.4 2.0 15.8 15.4 2.1 2.0 14.7 13.9 000810 Samsung F&M 14,947 315,500 - - - - 0.0 0.0 105560 KB Financial Group 13,117 33,950 - - - - 0.0 0.0 003550 LG Corp. 12,769 74,000 1.4 8.3 0.0 5.2 2.1 11.7 11.4 0.9 0.9 8.2 7.8 096770 SK Innovation 12,437 134,500 2.4 4.2 9.9 18.9 13.9 11.3 9.9 0.7 0.7 6.8 7.3 034220 LG Display 9,267 25,900 1.9 -40.9 85.2 -43.9 110.7 15.0 7.1 0.7 0.7 4.9 9.7 010950 S-Oil 9,142 81,200 3.2 15.6 6.3 28.1 6.3 10.6 10.0 1.5 1.4 15.3 14.5 010130 Korea Zinc 8,992 476,500 1.4 22.0 16.2 23.5 17.4 13.5 11.5 1.6 1.4 12.4 13.0 035250 8,686 40,600 3.2 11.5 5.2 14.7 9.5 16.9 15.4 2.5 2.3 16.4 16.4 066570 LG Electronics 8,641 52,800 1.5 58.8 19.7 146.9 21.0 10.0 8.2 0.7 0.7 7.6 8.6 011170 Lotte Chemical 8,260 241,000 0.4 -1.5 13.7 21.2 17.6 6.6 5.6 0.9 0.8 15.2 15.4 006400 Samsung SDI 8,217 119,500 0.8 468.2 5.0 385.4 -81.4 5.4 29.0 0.6 0.6 12.3 2.2 047810 Korea Aerospace Industries 7,866 80,700 0.3 27.7 23.5 42.2 26.2 26.0 20.6 5.2 4.2 22.1 22.7 030200 KT 7,533 28,850 2.8 1.1 0.3 -13.4 4.2 10.1 9.7 0.6 0.6 6.5 6.4 023530 Lotte Shopping 7,511 238,500 0.8 12.1 12.9 57.4 14.1 15.3 13.4 0.4 0.4 2.8 3.2 024110 7,428 13,350 - - - - 0.0 0.0 086280 7,294 194,500 1.0 9.5 8.4 57.8 2.4 12.5 12.2 2.0 1.8 17.6 15.6 086790 7,178 24,250 - - - - 0.0 0.0 128940 Hanmi Pharmaceutical 7,162 700,000 63.1 28.5 73.0 36.4 112.7 82.6 12.9 11.1 12.1 14.5 001800 Orion 7,111 1,190,000 0.6 14.8 8.2 23.0 13.5 33.9 29.9 4.4 3.9 14.1 14.2 009540 6,848 90,100 - 123.3 - 724.4 126.0 15.3 0.4 0.4 0.4 3.1 021240 Coway 6,841 88,700 4.1 11.8 21.2 9.6 21.3 18.7 15.4 4.5 4.1 28.1 30.2 004020 6,792 50,900 1.5 6.8 9.9 7.6 31.6 7.8 5.9 0.4 0.4 5.6 6.9 035720 6,695 111,400 0.2 92.2 38.3 76.3 40.8 42.5 30.2 2.5 2.3 6.0 7.9 088350 Hanwha Life 6,636 7,640 - - - - 0.0 0.0 161390 5,952 48,050 0.9 7.1 14.0 7.7 14.9 8.3 7.2 1.0 0.9 12.8 13.0 139480 Emart 5,464 196,000 0.8 21.2 13.5 -24.0 12.3 12.5 11.1 0.7 0.7 6.0 6.3 009240 Hanssem 5,413 230,000 0.4 44.2 27.9 41.7 32.7 32.9 24.8 8.5 6.4 32.1 31.7 005830 Dongbu Insurance 5,091 71,900 - - - - 0.0 0.0 009150 Samsung Electro-Mechanics 5,027 67,300 1.0 25.4 29.0 240.2 32.7 19.3 14.5 1.1 1.0 6.0 7.5 078930 GS Holdings 4,832 52,000 2.6 -9.7 26.9 25.9 40.2 8.8 6.3 0.5 0.5 5.8 7.7 097950 CJ CheilJedang 4,796 364,500 0.6 8.6 9.5 28.5 33.2 18.0 13.5 1.5 1.4 8.9 10.8 032640 LG Uplus 4,759 10,900 2.7 2.0 1.8 5.4 4.8 11.1 10.5 1.0 0.9 9.2 9.0 036570 NCSOFT 4,748 216,500 1.8 29.6 21.8 34.4 24.9 18.3 14.6 2.7 2.4 16.5 18.1 Source: KDB Daewoo Securities Research

Market Data December 22, 2015

※All data as of close December 22, 2015, unless otherwise noted.

Other Major Indices Economic Indicators Close Net Chg 1D (%) YTD (%) Close 1D ago 1M ago 1Y ago MSCI Korea* 359.59 2.79 0.78 -7.01 USD/KRW 1,178.20 1,184.30 1,164.20 1,101.30 KOSPI 1,992.56 11.37 0.57 3.43 JPY100/KRW 971.91 976.18 947.08 921.28 KOSDAQ 663.42 -5.23 -0.78 19.81 EUR/KRW 1,285.71 1,286.56 1,249.48 1,345.90 Dow Jones* 17,251.62 123.07 0.72 -3.26 3Y Treasury 1.67 1.66 1.76 2.16 S&P 500* 2,021.15 15.60 0.78 -1.80 3Y Corporate 2.12 2.10 2.13 2.47 NASDAQ* 4,968.92 45.84 0.93 5.12 DDR2 1Gb* 1.09 1.09 1.11 1.35 Philadelphia Semicon* 666.13 12.41 1.90 -3.00 NAND 16Gb* 1.46 1.46 1.48 2.25 FTSE 100* 6,034.84 -17.58 -0.29 -7.83 Oil (Dubai)* 31.98 32.98 40.07 55.70 Nikkei 225 18,899.01 -17.01 -0.09 8.56 Gold* 1,081.90 1,066.20 1,076.30 1,195.90 Hang Seng* 21,791.68 36.12 0.17 -8.66 Customer deposits (Wbn)* 20,868 20,413 20,051 16,128 Taiwan (Weighted) 8,292.74 10.57 0.13 -10.58 Equity type BC (Wbn)(Dec. 18) 80,666 80,330 80,227 78,890 Note: * as of December 21, 2015 Source: KSDA, Wisefn, DRAMeXchange, MSCI

KOSPI Top 10 Foreign Net Buy / Net Sell (Wbn) KOSPI Top 10 Institutional Net Buy / Net Sell (Wbn) Net Buy Net Sell Net Buy Net Sell Hynix 94.08 KODEX 200 19.63 LG Display 38.93 DONGAONE 9.02 KEPCO 12.48 LG Display 18.83 POSCO 28.21 HANKOOK TIRE 6.57 LG Household & Health Care 9.66 Samsung Electronics 17.43 S-Oil 24.34 Daewoo Securities 6.14 KOREA AEROSPACE 8.16 SK Energy 17.02 Hanmi Pharm 22.34 KB Financial Group 5.45 SAMSUNG SDS 6.79 Samsung Electronics (P) 14.99 SK Energy 21.05 LG Household & Health Care 4.78 HANKOOK TIRE 6.47 POSCO 10.63 KODEX 200 19.91 Hynix 4.06 Amore Pacific 5.98 SK Telecom 9.74 Hyundai Motor 19.11 DHICO 3.65 Dongbu Insurance 4.90 Hyundai Motor 9.12 KODEX LEVERAGE 16.75 NCsoft 3.23 Hyundai Mobis 4.44 Hyundai Eng. & Cosnt. 7.43 Hyundai Mobis 14.04 KT&G 3.18 SAMSUNG C&T 4.26 Hanmi Pharm 7.36 SAMSUNG C&T 8.28 SAMSUNG SDS 3.13 Source: KSDA, Wisefn

KOSDAQ Top 10 Foreign Net Buy / Net Sell (Wbn) KOSDAQ Top 10 Institutional Net Buy / Net Sell (Wbn) Net Buy Net Sell Net Buy Net Sell Celltrion 7.34 Komipharm 4.78 Dexter 4.08 A-JIN INDUSTRY 8.12 Medy-tox 4.35 OSSTEM IMPLANT 3.63 Celltrion 3.63 CJ E&M 3.26 Daum Communications 2.88 ViroMed 3.40 EO Technics 2.41 Daum Communications 2.93 WiSoL 2.18 Com2us 3.20 W.I.C 2.14 OSSTEM IMPLANT 2.48 CJ E&M 1.96 Dexter 3.04 Nuri Telecom 1.95 Viatron 2.29 Silicon Works 1.61 Alticast 2.42 Com2us 1.57 AHNLAB 2.20 NUTRIBIOTECH 1.61 ASTK 2.17 PEPTRON 1.54 Value Added Technology 1.76 DH PHARM 1.38 AHNLAB 1.80 OCI Materials 1.45 KANGSTEM BIOTECH 1.58 EO Technics 1.35 OCI Materials 1.80 Kornic Systems 1.31 Kolon Life Science 1.53 Modetour Network 1.25 Binex 1.71 NCB Networks 1.18 Yonghyun Bm 1.20 Source: KSDA, Wisefn

KOSPI Top 10 by Market Cap (Wbn) KOSDAQ Top 10 by Market Cap (Wbn) Close (W) Chg (W) Mkt Cap Close (W) Chg (W) Mkt Cap Samsung Electronics 1,292,000 12,000 190,311 Celltrion 82,300 -1,000 9,253 Hyundai Motor 153,000 1,000 33,702 Daum Communications 111,400 -800 6,695 KEPCO 49,950 450 32,066 CJ E&M 83,200 -500 3,223 SAMSUNG C&T 148,500 2,500 28,169 Dongsuh 31,550 -800 3,146 Samsung Electronics (P) 1,085,000 5,000 24,774 Medy-tox 486,400 -200 2,751 Hyundai Mobis 253,500 4,500 24,677 ViroMed 167,500 9,500 2,378 Amore Pacific 414,000 3,000 24,202 Komipharm 38,450 -1,050 2,085 Hynix 32,200 1,700 23,442 LOEN 82,400 -1,600 2,084 Kia Motors 54,600 400 22,133 Paradise 18,000 -100 1,637 LG Chem 333,000 1,000 22,068 Com2us 111,300 -3,400 1,432 Source: