February 7, 2020 Korea Morning Focus

Company News & Analysis Major Indices Close Chg Chg (%) KB Financial Group (105560/Buy/TP: W63,000) KOSPI 2,227.94 62.31 2.88 Doing the best to enhance shareholder value during challenging times KOSPI 200 300.65 8.63 2.96 KOSDAQ 672.69 11.37 1.72 Korean Air (003490/Trading Buy/TP: W30,000) Disappointing results, when adjusting for accounting changes Turnover ('000 shares, Wbn) Volume Value KT (030200/Buy/TP: W36,500) KOSPI 683,230 8,335 5G-driven recovery continues KOSPI 200 108,722 5,351 KOSDAQ 927,730 4,609

Lotte Data Communication (286940/Buy/TP: W63,000) Market Cap (Wbn) Earnings dented by project delays Value KOSPI 1,501,461 KOSDAQ 243,440

KOSPI Turnover (Wbn) Buy Sell Net Foreign 2,192 2,040 152 Institutional 2,039 1,523 517 4,040 4,728 -688

KOSDAQ Turnover (Wbn) Buy Sell Net Foreign 561 495 66 Institutional 200 241 -41 Retail 3,807 3,830 -23

Program Buy / Sell (Wbn) Buy Sell Net KOSPI 1,795 1,495 301 KOSDAQ 523 478 44

Advances & Declines Advances Declines Unchanged KOSPI 733 130 43 KOSDAQ 996 263 87

KOSPI Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Electronics 61,100 1,600 886 KODEX Leverage 14,960 845 496 Poong Pharm. 9,970 1,420 488 KODEX 200 Futures 5,800 -380 363 Inverse 2X KIC Ltd 2,975 480 314

KOSDAQ Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Celltrion Healthcare 58,900 3,000 164 LabGen 8,210 640 146 HLB 104,500 6,600 131 HDI21 5,310 1,220 125 Welcron 6,240 -500 122 Note: As of February 06, 2020

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KB Financial Group (105560 KS) Doing the best to enhance shareholder value during challenging times Banks 4Q19 review: Net profit of W534.7bn (+177.9% YoY, -43.1% QoQ) Results Comment For 4Q19, KB Financial Group (KBFG) reported net profit attributable to controlling February 7, 2020 interests of W534.7bn, 5-6% below our estimate (W565bn) and the consensus (W571.8bn). Core income was better than our expectation, but SG&A expenses (including early retirement expenses) were higher. Major one-off items in the quarter included: 1) W173bn in early retirement expenses; 2) W67bn in digitalization-related expenses; and 3) W24bn in provisions (non-operating) related to an Australian real (Maintain) Buy estate fund sold by KB Securities. Excluding these one-offs, we estimate underlying net profit was about W700bn. For 2019 as a whole, non-bank businesses accounted for Target Price (12M, W) 63,000 31% of group net profit (vs. 30% in 2018). Among non-bank subsidiaries, the credit card subsidiary fared better than expected despite concerns about merchant fee cuts, Share Price (02/06/20, W) 45,250 but the non-life insurance subsidiary saw weaker profits, hurt by a rise in auto and medical reimbursement loss ratios and lower interest rates. Expected Return 39% Higher-than-expected 2019 DPS of W2,210; Dividend payout rises to 26.0%

For 2019, KBFG declared a dividend of W2,210 per share (vs. W1,920 in 2018), which is NP (19F, Wbn) 3,312 slightly higher than our projection (W2,200) and the consensus (W2,163). The group Consensus NP (19F, Wbn) 3,335 raised its 2019 dividend payout to 26% (from 23.2% in 2017 and 24.8% in 2018), consistent with its commitment to steadily increase its payout to 30%. Looking ahead, EPS Growth (19F, %) 8.2 we forecast dividend payout to rise to 27.4% for 2020 and 27.7% for 2021. This Market EPS Growth (19F, %) -34.7 translates into attractive dividend yields of 5.3% for 2020 and 5.6% for 2021. P/E (19F, x) 5.7 Market P/E (19F, x) 15.2 On December 12th, 2019, KBFG became the first bank holding company to cancel its KOSPI 2,227.94 treasury shares, taking a major step toward enhancing its shareholder value. On its recent earnings call, management said that while nothing has been decided yet, it Market Cap (Wbn) 18,815 recognizes that share cancellations are an important shareholder return and capital Shares Outstanding (mn) 416 efficiency policy and added that it is open to the possibility of further cancellations. Free Float (%) 76.7 Foreign Ownership (%) 67.5 Reaffirm Buy and TP of W63,000 Beta (12M) 1.01 We believe KBFG, which maintains the strongest capital position in the domestic 52-Week Low 38,250 financial sector, has the ability to buffer itself against future risks (such as economic 52-Week High 50,000 downturns) and carry out aggressive shareholder return policies (such as higher (%) 1M 6M 12M dividend payout and share retirements). On top of its earnings stability, we believe the Absolute -2.9 12.4 -6.9 group has the ability to: 1) seize M&A opportunities that can be accretive to earnings Relative -6.1 -3.2 -7.9 and shareholder value; and 2) pursue globalization by advancing into markets with high growth potential, like Southeast Asia. As such, we continue to recommend KBFG

110 KB Financial Group KOSPI as our top pick.

100 As for the acquisition of Prasac, Cambodia’s largest microfinance institution, KB 90 Kookmin Bank plans to purchase a 70% stake by the end of March (following regulatory approval) and acquire the remaining stake sometime after late 2021. We 80 believe Prasac will serve as a gateway to neighboring markets in the region and expect 70 the 70% stake purchase to contribute W75-90bn to annual profits. 1.19 5.19 9.19 1.20

Mirae Asset Daewoo Co., Ltd. Fiscal year-end 12/16 12/17 12/18 12/19P 12/20F 12/21F Net interest inc. (Wbn) 6,403 7,853 8,905 9,197 9,376 9,737 [Banks/Credit Cards] Net non-interest inc. (Wbn) 1,042 2,339 1,955 2,235 2,595 2,753 Operating profit (Wbn) 1,677 4,016 4,267 4,491 4,773 5,005 Heather Kang +822-3774-1903 Net profit (Wbn) 2,144 3,312 3,061 3,312 3,415 3,581 [email protected] EPS (W) 5,520 8,036 7,321 7,924 8,203 8,611

EPS growth (%) 25.6 45.6 -8.9 8.2 3.5 5.0 P/E (x) 8.2 5.6 6.2 5.7 5.5 5.3 P/PPOP (x) 8.5 4.1 3.8 3.6 3.3 3.1

P/B (x) 0.61 0.56 0.53 0.49 0.45 0.41 ROE (%) 7.2 10.2 8.8 8.9 8.5 8.2 Dividend yield (%) 2.8 4.2 4.2 4.9 5.3 5.6 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

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.

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Korean Air (003490 KS) Disappointing results, when adjusting for accounting changes Airlines 4Q19 review: Disappointing results, when adjusting for accounting changes Results Comment For 4Q19, Korean Air reported revenue of W3.05tr (-7.5% YoY). In international February 7, 2020 passenger, we estimate traffic grew nearly 5% YoY, led by long-haul routes, but yield decline likely continued (-4-5% YoY) due to routes, resulting in a 3% YoY fall in revenue. Cargo revenue also contracted sharply on lower yields and weaker traffic. Operating profit improved significantly YoY to W123.6bn (vs. W5.4bn in 4Q18). (Maintain) Trading Buy However, this was primarily due to a temporary maintenance cost decline (estimated at over W100bn) related to changes in accounting standards. Minus this factor, we believe Target Price (12M, W) 30,000 operating profit was around breakeven and far below the market consensus (W101.1bn). Losses from the unit likely narrowed modestly, and the aerospace Share Price (02/06/20, W) 27,000 unit likely remained relatively resilient (operating profit of W13bn). At the net level, we believe Korean Air swung to net profit attributable to controlling Expected Return 11% interests of W86.8bn, buoyed by roughly W350bn in F/X translation gains. Non- consolidated debt ratio came in at 810%, slightly down from 862% in 3Q19. OP (19F, Wbn) 262 Asset sale plan is positive; Keep eye on spread of virus Consensus OP (19F, Wbn) 143 1) Asset sale plan: On February 6th, Korean Air announced plans to sell its Songhyun- EPS Growth (19F, %) - dong site and wholly-owned subsidiary Wangsan Leisure Development. The Songhyun- Market EPS Growth (19F, %) -34.7 dong site, which has a book value of roughly W360bn, is expected to fetch a price of P/E (19F, x) - more than W500-600bn. Wangsan Leisure Development, a marina operator, recorded Market P/E (19F, x) 15.2 revenue of W722.4bn and a net loss of W4.9bn in 2018, and has equity capital of KOSPI 2,227.94 W99.7bn and assets of W165.8bn. If the sales come through, we estimate Korean Air’s debt ratio would drop nearly 100%p from end-2019 and net interest expenses would Market Cap (Wbn) 2,561 decline almost W20bn (though much will depend on the final sale price). Shares Outstanding (mn) 96 Free Float (%) 64.5 2) Virus concerns: Worries about the impact of the coronavirus outbreak are Foreign Ownership (%) 17.4 continuing. Korean Air has already reduced over 70% of its flights. Other routes Beta (12M) 1.43 have so far been minimally affected, but if the virus continues to spread, the impact on demand could spill over to Japan and Southeast Asia. For 1Q20, we see operating profit 52-Week Low 21,800 slumping 47% YoY to W74.5bn. 52-Week High 37,750

(%) 1M 6M 12M Maintain Trading Buy and TP of W30,000 Absolute 1.9 12.0 -24.5 We maintain our Trading Buy rating and target price of W30,000 on Korean Air. The Relative -1.4 -3.6 -25.3 airline’s stock corrected 17% last month on fears over the spread of the coronavirus, but has since regained 70% of its losses. At a P/B of less than 1x, we believe the stock is 110 Korean Air KOSPI being propped up by expectations on 1) shareholder-friendly policies and 2) ownership 100 restructuring. However, given the likely continuation of earnings deterioration and 90 80 uncertainties surrounding the timing of asset sales, we believe investors, rather than 70 chasing the stock, should wait and keep an eye on 1) signs of a cargo earnings 60 turnaround and 2) the pace of the spread of the coronavirus. 50 1.19 5.19 9.19 1.20

Mirae Asset Daewoo Co., Ltd.

[ Transport/Energy] FY (Dec.) 12/16 12/17 12/18 12/19F 12/20F 12/21F Revenue (Wbn) 11,732 12,092 13,020 12,692 12,453 12,689 Jay JH Ryu +822-3774-1738 OP (Wbn) 1,121 940 640 262 228 453 [email protected] OP margin (%) 9.6 7.8 4.9 2.1 1.8 3.6

NP (Wbn) -565 792 -193 -628 -392 -84 EPS (W) -7,171 8,631 -2,012 -6,542 -4,088 -871 ROE (%) -27.2 29.4 -5.9 -22.6 -14.6 -2.9

P/E (x) - 3.9 - - - - P/B (x) 1.2 0.9 1.1 1.0 1.0 0.8 Dividend yield (%) 0.0 0.7 0.8 0.9 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

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.

KT (030200 KS) 5G-driven recovery continues

Telecom Service 4Q19 review: OP of W148.2bn, in line with consensus

Results Comment For 4Q19, KT announced revenue of W6.19tr and operating profit of W148.2bn, in line February 7, 2020 with consensus expectations. 5G subscribers grew at a slower pace than in 3Q19, but the company still added nearly 400,000 5G subscribers and increased its 5G subscriber share to 6.5%. We view this as positive, considering that there were no new 5G smartphones rolled out in 4Q19. Backed by 5G subscriber growth, ARPU also continued (Maintain) Buy to move higher (after bottoming in 4Q18). Admittedly, headline ARPU was down sharply due to accounting changes related to membership points (which are now Target Price (12M, W) 36,500 deducted from revenue rather than treated as expenses), with the impact magnified by the new accounting rules being applied in 4Q19 to all of the W40bn in membership points provided during the previous three quarters. However, excluding this factor, Share Price (02/06/20, W) 25,450 ARPU continued its upward trend, rising 0.6% QoQ.

Expected Return 43% Strengthening 5G dominance and related services

KT has so far expanded its 5G coverage to 85 major cities around the country. In 2020, the company is seeking to cement its 5G dominance by broadening coverage and OP (19P, Wbn) 1,151 providing stable services through the rollout of in-building networks in public places Consensus OP (19P, Wbn) 1,176 and large buildings. The company has also been taking the lead in the 5G B2B space. EPS Growth (19P, %) -11.0 After launching its 5G B2B service in April 2019, the company has acquired more than Market EPS Growth (19P, %) -34.7 50 business clients and identified 150 use cases as of end-December. Meanwhile, KT is P/E (19P, x) 11.5 strengthening its presence in core 5G services, especially OTT, one of the key Market P/E (19P, x) 15.2 applications of 5G. In 4Q19, the company rolled out its own OTT service called Seezn, KOSPI 2,227.94 which attracted an impressive 100,000 subscribers in just two weeks after its release. The OTT service, which is working on making AI-based recommendations and offering Market Cap (Wbn) 6,645 differentiated content, looks well-positioned for growth. Shares Outstanding (mn) 261 Free Float (%) 47.7 In the fixed-line space, the GiGa internet business is continuing to benefit from first Foreign Ownership (%) 47.4 mover advantages, and the IPTV business is steadily growing, fully making up for the Beta (12M) 0.26 decline of the telephony business and driving overall growth of the fixed-line segment. 52-Week Low 24,750 Maintain Buy and TP of W36,500 52-Week High 28,750 We find it positive that 5G subscriber growth remained stable in 4Q19, despite the (%) 1M 6M 12M absence of new 5G devices and the resulting lack of marketing spending during the Absolute -3.6 -8.8 -11.0 quarter. While is set to roll out a new 5G device in 1Q20, we do Relative -6.8 -21.5 -12.0 not expect a repeat of last year’s intense competition for 5G subscribers and hence believe KT will continue to demonstrate a stable recovery. We maintain our Buy rating 110 KT KOSPI and target price of W36,500 on KT. 100

90

80

70 1.19 5.19 9.19 1.20

Mirae Asset Daewoo Co., Ltd.

[ Telecom Services/Robotics/Shipbuilding] FY (Dec.) 12/16 12/17 12/18 12/19P 12/20F 12/21F Revenue (Wbn) 22,744 23,387 23,460 24,342 24,739 25,349 Hakmoo Lee +822-3774-1785 OP (Wbn) 1,440 1,375 1,262 1,151 1,193 1,241 [email protected] OP margin (%) 6.3 5.9 5.4 4.7 4.8 4.9

NP (Wbn) 711 477 688 613 505 698 EPS (W) 2,723 1,826 2,637 2,346 1,935 2,673 ROE (%) 6.4 4.1 5.5 4.5 3.6 4.9

P/E (x) 10.8 16.6 11.3 11.5 13.2 9.5 P/B (x) 0.6 0.6 0.6 0.5 0.4 0.4 Dividend yield (%) 2.7 3.3 3.7 4.1 4.3 4.3 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

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.

February 7, 2020 KT

Earnings and forecasts

Table 1. 4Q19 review (Wbn, %) 4Q19P Growth 4Q18 3Q19 Preliminary Mirae Asset Daewoo Consensus YoY QoQ Revenue 5,995 6,214 6,195 6,142 6,200 3.3 -0.3 Operating profit 96 312 148 228 149 54.5 -52.6 OP margin (%) 1.6 5.0 2.4 3.7 2.4 Pretax profit 13 270 28 128 79 123.5 -89.6 Net profit 18 190 18 101 64 0.0 -90.5 Notes: All figures are based on consolidated K-IFRS; net profit is attributable to controlling interests Source: WISEfn, company data, Mirae Asset Daewoo Research estimates Table 2. Quarterly earnings and forecasts (Wbn, %) 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19P 1Q20F 2Q20F 3Q20F 4Q20F Operating revenue 5,710 5,807 5,948 5,994 5,834 6,099 6,214 6,195 6,074 6,173 6,096 6,396 Wireless 1,741 1,764 1,760 1,689 1,732 1,743 1,756 1,738 1,755 1,762 1,775 1,798 Fixed-line 1,199 1,181 1,186 1,178 1,167 1,189 1,168 1,173 1,149 1,159 1,135 1,147 Media/content 554 595 616 649 641 690 701 708 710 708 705 703 Finance 833 867 882 863 839 850 836 887 847 858 845 896 Other 537 597 652 641 576 616 596 639 582 622 602 645 Merchandise sales 847 803 852 973 879 1,010 1,156 1,051 1,031 1,064 1,034 1,208 Operating expenses 5,313 5,408 5,579 5,899 5,432 5,810 5,901 6,047 5,688 5,876 5,796 6,186 * Marketing expenses 616 552 674 764 674 715 686 741 621 640 623 675 Operating profit 397 399 369 96 402 288 313 148 387 297 299 210 OP margin 7.0 6.9 6.2 1.6 6.9 4.7 5.0 2.4 6.4 4.8 4.9 3.3 Net profit 224 281 239 18 260 203 213 -7 279 213 188 80 Net margin 3.9 4.8 4.0 0.3 4.5 3.3 3.4 -0.1 4.6 3.5 3.1 1.3 YoY Operating revenue 1.8 -0.6 2.1 -1.8 2.2 5.0 4.5 3.4 4.1 1.2 -1.9 3.2 Wireless -2.9 -1.0 -3.1 -6.8 -0.5 -1.2 -0.2 2.9 1.3 1.1 1.1 3.4 Fixed-line -4.4 -3.6 -2.6 -2.0 -2.7 0.6 -1.5 -0.5 -1.5 -2.5 -2.8 -2.2 Media/content 6.6 6.0 7.6 10.9 15.7 15.9 13.8 9.1 10.7 2.6 0.6 -0.6 Finance -1.7 -5.3 1.0 -3.3 0.7 -1.9 -5.2 2.7 1.0 1.0 1.0 1.0 Other 0.6 1.9 15.0 13.6 7.2 3.3 -8.6 -0.4 1.0 1.0 1.0 1.0 Merchandise sales 27.7 3.9 9.3 -7.2 3.8 25.8 35.7 8.0 17.3 5.3 -10.6 14.9 Operating expenses 2.3 0.2 2.4 -1.2 2.2 7.4 5.8 2.5 4.7 1.1 -1.8 2.3 * Marketing expenses -3.7 -12.0 -0.6 8.6 9.4 29.7 1.8 -3.0 -7.8 -10.5 -9.2 -8.9 Operating profit -4.8 -10.8 -2.1 -28.7 1.3 -27.8 -15.4 54.7 -3.9 3.1 -4.3 41.6 Net profit -6.4 -10.2 -4.1 TTB 15.9 -27.6 -10.9 TTR 7.4 5.1 -12.1 TTB Notes: All figures are based on consolidated K-IFRS; 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 2019F 2020F 2019P 2020F 2019P 2020F Revenue 24,288 24,580 24,342 24,739 0.2 0.6 Operating profit 1,231 1,217 1,151 1,193 -6.5 -2.0 Pretax profit 1,079 1,066 980 1,041 -9.3 -2.3 Net profit 635 768 613 505 -3.5 -34.2 EPS (W) 2,431 2,942 2,346 1,935 -3.5 -34.2 OP margin (%) 5.1 5.0 4.7 4.8 Net margin (%) 2.6 3.1 2.5 2.0 Notes: All figures are based on consolidated K-IFRS; net profit is attributable to controlling interests Source: Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research

Lotte Data Communication (286940 KS) Earnings dented by project delays

4Q19 review: Below-consensus OP of W14.8bn (-12.0% YoY) Company Report For 4Q19, Lotte Data Communication posted revenue of W237.9bn (+0.9% YoY), operating profit of W14.8bn (-12.0% YoY), and net profit attributable to controlling February 7, 2020 interests of W11.9bn (+23.0% YoY), disappointing market expectations.

The operating profit miss was attributable to sluggish revenue, caused by 1) delays in the execution of previously awarded projects (Incheon Bridge ITS, Osan training center, etc.) and 2) the carryover of several affiliate project awards to the following (Maintain) Buy fiscal year. The projects and project awards that have been delayed will be successively carried out in 2020. Target Price (12M, W) 63,000 For 2019, the company declared a dividend of W700 per share (yield of 1.7% vs. W650 in 2018). Total dividends will be W10.6bn, implying a payout ratio of roughly 30%, when Share Price (02/06/20, W) 40,650 adjusting for the merger-related one-off expenses recorded in 3Q19. Expected Return 55% 2020 forecasts: Revenue of W946.6bn (+11.9% YoY), OP of W49bn (+23.7% YoY) In 2020, we expect Lotte Data Communication to deliver double-digit revenue growth,

driven by revenue recognition of previously awarded projects (’s smart OP (19P, Wbn) 40 factory, Lotte Group’s logistics platform integration/automation project, etc.) and new Consensus OP (19{, Wbn) 44 order wins. And with the company raising IT service prices by an average of 3.4% this year (as it did last year), we expect margins to also improve (2020F OP margin of 5.2%). EPS Growth (19F, %) 63.4 Market EPS Growth (19F, %) -34.7 The company’s cloud and IDC operations are also progressing smoothly. At end-2019, P/E (19F, x) 11.4 Lotte Group’s cloud conversion rate stood at 30% (targeting 100% by 2025). In 2020, the cloud conversion of group e-commerce sites and portals will continue, leading to Market P/E (19F, x) 15.2 additional revenue recognition for the company. Meanwhile, the company’s fourth KOSPI 2,227.94 global IDC, the construction of which is currently 21% complete (construction period: April 2019-December 2020), should begin to generate revenue in 2021. Market Cap (Wbn) 626 Shares Outstanding (mn) 15 Maintain Buy and TP of W63,000; Digital transformation to gather steam; Free Float (%) 28.8 M&A to drive growth Foreign Ownership (%) 4.2 We maintain our Buy call and target price of W63,000 on Lotte Data Communication. At Beta (12M) -0.05 a 2020F P/E of 14.6x, the stock remains cheaper than its rivals. 52-Week Low 37,200 52-Week High 51,300 Lotte Corp. has launched a digital transformation strategy that focuses on realizing smart factory, smart logistics, smart retail, and smart services across the group. The (%) 1M 6M 12M pace of the group’s digital transformation push was somewhat slow in 2019, but now Absolute 2.4 4.4 7.8 that the IT spending plans and schedules of affiliates have become much clearer, we Relative -1.0 -10.2 6.6 believe Lotte Data Communication—the only IT services firm under Lotte Group’s umbrella—will secure a number of business opportunities on the back of the execution 150 Lotte Data Communication of the group’s IT investments. KOSPI 130 Supported by abundant cash assets (W150bn at end-2019), the company is actively considering M&A deals in order to 1) advance the technology of its current businesses, 110 2) develop platforms related to IoT, cloud, big data, mobile, AI, and blockchain, and 3) 90 expand its presence in and . By doing so, we believe the company, which already enjoys stable growth thanks to group affiliates, will gain new growth 70 1.19 5.19 9.19 1.20 engines and business opportunities.

Mirae Asset Daewoo Co., Ltd.

[ Conglomerates/Software] FY (Dec.) 12/16 12/17 12/18 12/19P 12/20F 12/21F Revenue (Wbn) 0 149 812 846 947 1,072 Dae-ro Jeong +822-3774-1634 OP (Wbn) 0 5 39 40 49 57 [email protected] OP margin (%) - 3.4 4.8 4.7 5.2 5.3

NP (Wbn) 0 2 26 53 43 49 EPS (W) 0 1,139 2,205 3,603 2,792 3,184 ROE (%) 0.0 1.0 9.6 14.5 10.6 11.1

P/E (x) - - 16.1 11.4 14.6 12.8 P/B (x) - - 1.4 1.6 1.4 1.3 Dividend yield (%) - - 1.8 1.6 1.6 1.6 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

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 February 7, 2020

※All data as of close February 05, 2020, 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 364,754 61,100 2.3 -53.2 41.0 -46.6 37.2 19.0 13.8 1.6 1.5 8.7 11.1 000660 SK Hynix 73,164 100,500 1.0 -87.0 169.0 -85.4 160.5 32.2 12.4 1.4 1.3 4.8 11.6 035420 NAVER 29,914 181,500 0.2 -24.7 37.5 -36.2 28.5 72.3 56.3 4.3 4.0 7.6 9.1 005380 Hyundai Motor 28,204 132,000 3.0 52.1 39.6 103.3 59.0 12.1 7.6 0.5 0.5 4.3 6.6 051910 LG Chem 26,966 382,000 0.5 -60.1 43.5 -78.7 143.1 95.4 39.2 1.7 1.7 1.8 4.4 012330 22,302 234,000 2.1 16.5 18.7 23.0 29.3 9.8 7.6 0.7 0.6 7.2 8.6 068270 Celltrion 22,138 172,500 - - - - 0.0 0.0 028260 Samsung C&T 21,909 115,500 1.7 -21.5 23.4 -38.7 11.0 21.0 19.0 0.9 0.9 4.9 5.1 006400 Samsung SDI 21,902 318,500 0.3 -35.4 91.7 -49.2 112.2 62.9 29.7 1.7 1.7 2.9 5.9 051900 LG H&H 21,147 1,354,000 0.8 13.2 11.5 14.0 15.6 27.2 23.5 5.8 4.9 19.9 19.5 005490 POSCO 19,530 224,000 4.5 -27.4 6.4 31.6 22.7 8.8 7.2 0.4 0.4 5.1 6.0 055550 18,873 39,800 12.2 2.0 7.8 2.1 5.5 5.4 0.5 0.5 9.1 8.6 105560 KB Financial Group 18,815 45,250 5.2 6.3 8.2 3.5 5.7 5.5 0.5 0.4 8.9 8.5 017670 SK Telecom 18,491 229,000 4.4 7.3 -3.5 -60.6 68.2 15.0 8.9 0.7 0.7 5.4 8.8 034730 SK Holdings 17,062 242,500 2.1 -2.8 21.5 -36.6 11.0 12.0 10.8 0.9 0.8 8.2 8.3 000270 Motors 16,742 41,300 2.2 73.6 26.7 58.0 32.0 9.2 6.9 0.6 0.5 6.5 8.0 015760 KEPCO 16,402 25,550 - - - - - 133.8 0.2 0.2 - 0.2 018260 Samsung SDS 15,476 200,000 1.2 12.8 6.7 17.0 8.3 21.0 19.4 2.3 2.1 11.7 11.5 036570 NCsoft 14,709 670,000 0.9 -14.6 117.7 10.5 99.6 31.8 15.9 4.7 3.7 18.2 29.7 035720 14,328 166,000 0.1 179.1 115.5 220.9 96.5 84.4 42.9 2.7 2.5 3.2 6.1 032830 Samsung Life 14,080 70,400 - - - - 0.0 0.0 003550 LG Corp. 12,804 74,200 3.4 -28.0 45.0 -18.4 16.8 8.6 7.3 0.7 0.6 8.1 8.9 096770 SK Innovation 12,575 136,000 4.7 -42.8 18.2 -68.7 92.4 24.7 12.8 0.7 0.6 2.8 5.4 066570 LG Electronics 10,932 66,800 1.1 -9.9 9.3 -97.5 4049.2 386.0 9.3 0.8 0.8 0.2 8.6 090430 AmorePacific 10,698 183,000 0.4 -11.2 18.4 -37.2 80.8 51.2 28.4 2.8 2.6 4.6 8.0 086790 10,478 34,900 3.9 2.4 7.3 1.8 4.4 4.3 0.4 0.3 8.7 8.3 009150 Samsung Electro-Mechanics 10,121 135,500 0.8 -30.6 16.2 -21.6 20.6 20.4 17.0 1.8 1.6 9.7 10.2 000810 Samsung F&M 9,996 211,000 - - - - 0.0 0.0 010950 S-Oil 8,759 77,800 0.4 -13.3 197.8 -54.2 948.9 76.8 7.3 1.4 1.2 1.8 17.3 009540 KSOE 8,740 123,500 - 88.1 - -39.1 35.6 58.5 0.8 0.8 2.1 1.3 091990 Celltrion Healthcare 8,477 58,900 - 144.5 435.7 165.0 138.3 52.2 4.7 4.5 3.7 9.3 251270 8,095 94,400 1.8 57.7 14.5 36.9 37.0 27.0 1.7 1.6 4.9 6.3 010130 Korea Zinc 7,935 420,500 2.6 9.2 6.9 23.3 3.5 12.2 11.8 1.2 1.1 10.0 9.6 011170 Lotte Chemical 7,301 213,000 4.9 -46.0 12.7 -54.7 32.3 10.2 7.7 0.5 0.5 5.5 6.9 030200 KT 6,645 25,450 4.3 -8.8 3.6 -11.0 -17.5 10.8 13.2 0.5 0.4 4.5 3.6 024110 6,291 10,900 -3.6 -3.5 -4.5 -6.0 4.3 4.6 0.3 0.3 7.7 6.8 034220 LG Display 5,940 16,600 ------0.5 0.6 - - 032640 LG Uplus 5,894 13,500 4.8 -11.8 10.9 -16.7 15.0 14.7 12.8 0.8 0.8 5.8 6.4 018880 Hanon Systems 5,818 10,900 - - - - 0.0 0.0 086280 5,419 144,500 2.4 23.4 -0.1 14.9 15.2 10.8 9.4 1.1 1.0 11.1 11.6 267250 5,000 307,000 6.0 -1.6 92.1 74.3 199.2 10.7 3.6 0.6 0.5 6.0 16.5 Holdings 000720 Hyundai E&C 4,532 40,700 1.2 12.4 10.9 42.6 -6.7 8.3 8.9 0.7 0.6 8.3 7.3 029780 Samsung Card 4,443 38,350 -5.7 8.1 -0.3 7.5 12.9 12.0 0.6 0.6 1.5 1.6 010140 4,316 6,850 - - - - - 43.7 0.6 0.6 - 1.7 004020 3,950 29,600 2.5 -53.6 23.0 -97.9 2611.5 473.0 17.4 0.2 0.2 0.0 1.3 071050 Korea Investment Holdings 3,867 69,400 - - - - 0.0 0.0 008770 3,729 95,000 0.4 41.5 7.3 53.6 28.2 22.4 17.5 3.7 3.1 20.0 21.1 011070 LG Innotek 3,692 156,000 0.2 53.0 13.4 -37.3 196.2 36.1 12.2 1.7 1.5 4.7 12.8 003670 POSCO Chemical 3,690 60,500 0.7 -14.2 26.4 -22.5 -18.1 34.9 42.6 3.7 3.5 12.0 8.4 004990 3,688 35,150 2.3 91.0 11.9 198.2 20.3 6.8 5.6 0.4 0.4 7.5 8.3 Source: Mirae Asset Daewoo Research

Mirae Asset Daewoo Research Market Data February 7, 2020

※All data as of close February 06, 2020, unless otherwise noted. Other Major Indices Economic Indicators Close Net Chg 1D (%) YTD (%) Close 1D ago 1M ago 1Y ago MSCI Korea* 462.02 1.07 0.23 -2.42 USD/KRW 1,188.50 1,189.40 1,162.70 1,111.60 KOSPI 2,227.94 62.31 2.88 2.43 JPY100/KRW 1,082.27 1,086.36 1,078.42 1,021.36 KOSDAQ 672.69 11.37 1.72 -0.20 EUR/KRW 1,307.29 1,313.75 1,298.15 1,272.50 Dow Jones* 29,290.85 483.22 1.68 2.64 3Y Treasury 1.31 1.31 1.28 1.80 S&P 500* 3,334.69 37.10 1.13 2.36 3Y Corporate 1.90 1.90 1.86 2.25 NASDAQ* 9,508.68 40.71 0.43 4.58 DDR4 8Gb* 3.45 3.49 3.05 5.94 Philadelphia Semicon* 1,909.52 40.87 2.19 1.14 NAND MLC 64G* 2.51 2.50 2.40 2.59 FTSE 100* 7,482.48 42.66 0.57 -1.60 Oil (Dubai)* 53.57 53.99 67.79 62.93 Nikkei 225 23,873.59 554.03 2.38 2.88 Gold* 1,557.80 1,550.40 1,552.40 1,314.20 Hang Seng* 26,786.74 110.76 0.42 -6.15 Customer deposits (Wbn)* 29,161 29,507 30,667 25,182 Taiwan (Weighted) 11,749.68 176.06 1.52 -2.90 Equity type BC (Wbn)(Feb. 4) 85,525 84,756 87,219 88,592 Note: * as of February 05, 2020 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 Hynix 65.59 NAVER 49.97 Samsung Electronics 149.95 KODEX 200 Futures Inverse 2X 77.43 Samsung Electronics 47.00 Samsung Electronics (P) 31.01 KODEX Leverage 80.24 KODEX Inverse 30.31 Celltrion 37.93 Amore Pacific 28.59 KODEX Kosdaq150 Leverage 34.41 KODEX 200 16.50 28.63 Hyundai Mobis 18.23 Korea Zinc 24.81 Iljin Materials 12.25 KODEX 200 26.23 Korea Zinc 17.31 NAVER 21.86 SKC 11.17 Hotel Shilla 18.08 KEPCO 15.66 Hynix 19.48 Doosan Solus 8.76 LG Display 17.66 SK Energy 15.06 Hyundai Mobis 18.37 Shin Poong Pharm. 6.49 SEMCO 17.09 Shinhan Financial Group 14.73 Hyundai Heavy Industries 17.23 KT&G 5.50 LG Chem 13.36 Kakao 7.31 Celltrion 16.80 Posco Chemtech 5.16 Hyundai Heavy Industries Honam Petrochemical 12.38 6.94 SEMCO 15.38 LG Display 5.06 Holdings 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 Celltrion Healthcare 19.02 Eugene Technology 4.54 Celltrion Healthcare 21.78 ITM Semiconductor 11.33 HLB 9.74 GemVax 4.32 Energy Solutions 1.89 ECOPROBM 3.80 SFA Semicon 6.12 IDIS 2.87 Eugene Technology 1.88 Alteogen 3.59 ECOPROBM 5.59 Curocom 2.41 Classys 1.82 TESNA 3.34 ECOPRO 5.08 Cafe24 Corp. 2.35 JYP Entertainment 1.64 Techwing 2.59 PearlAbyss 4.01 Partrion 2.14 BH,LTD. 1.48 Leeno 2.51 Celltrion 2.97 Silicon Works 1.98 Finetec 1.45 L&C BIO 2.48 Medy-tox 2.70 Nas Media 1.72 ECHO 1.29 2.35 Simmtech 2.60 AfteecaTV 1.60 YG Entertainment 1.17 YIKC 2.27 Leeno 2.50 Semiconductor 1.54 Paradise 1.13 ICD 1.95 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 61,100 1,600 364,754 Celltrion Healthcare 58,900 3,000 8,477 Hynix 100,500 2,800 73,164 HLB 104,500 6,600 4,466 Samsung Electronics (P) 51,300 600 42,214 CJ ENM 145,700 1,600 3,195 Samsung Biologics 519,000 29,000 34,340 PearlAbyss 187,900 6,300 2,447 NAVER 181,500 0 29,914 Studio Dragon 84,300 -300 2,369 Hyundai Motor 132,000 8,000 28,204 KMW 53,900 800 2,146 LG Chem 382,000 0 26,966 Medy-tox 339,500 9,900 1,974 Hyundai Mobis 234,000 7,000 22,302 Hugel 436,800 9,700 1,887 Celltrion 172,500 8,000 22,138 SK Materials 170,000 3,100 1,793 Samsung C&T 115,500 5,000 21,909 Wonik IPS 36,050 200 1,769 Source: