February 20, 2013

KOREA

Company News & Analysis Major Indices Close Chg Chg (%) Seegene (Buy/TP: W73,000) Lower TP KOSPI 2,024.64 38.81 1.95 Investments needed to drive next growth phase KOSPI 200 268.07 5.91 2.25 KOSDAQ 525.69 3.20 0.61

Turnover ('000 shares, Wbn) Volume Value KOSPI 402,014 4,825 KOSPI 200 94,846 3,954 KOSDAQ 468,758 2,162

Market Cap (Wbn) Value KOSPI 1,172,480 KOSDAQ 116,535

KOSPI Turnover (Wbn) Buy Sell Net Foreign 1,600 1,033 566 Institutional 1,368 1,128 240 Retail 1,827 2,588 -761

KOSDAQ Turnover (Wbn) Buy Sell Net Foreign 101 85 16 Institutional 122 110 12 Retail 1,936 1,959 -23

Program Buy / Sell (Wbn) Buy Sell Net KOSPI 1,360 794 566 KOSDAQ 20 25 -5

Advances & Declines Advances Declines Unchanged KOSPI 560 235 93 KOSDAQ 568 347 87

KOSPI Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value KODEX LEVERAGE 13,295 545 644 Electronics 1,545,000 53,000 547 KODEX INVERSE 7,275 -170 286 KODEX 200 27,080 570 192 Hynix 26,500 650 176

KOSDAQ Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Homecast 4,870 365 55 Openbase 2,530 140 51 Makus 2,945 380 37 Semiconductor 29,950 250 33 Tamul Multimedia 6,520 350 31 Note: As of February 20, 2013

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.

February 20, 2013 Company Report

Seegene (096530 KQ) Bio

Daewoo Securities Co., Ltd. Investments needed to drive next growth phase Irene Kim +822-768-3251 4Q12 preview: OP likely to miss consensus [email protected] Under non-consolidated K-IFRS, we expect Seegene to report 4Q revenues of W16bn

(+34.5% YoY) and an operating profit of W4.52bn (+105.6% YoY), missing the market consensus (W17.4bn and W5.8bn, respectively). We primarily attribute our expectations for below-consensus earnings to: 1) delayed product sales and 2) smaller-than-projected initial payments for licensed-out technologies. We estimate overseas revenues to have grown +56.7%YoY and domestic revenues to have climbed 28.6%YoY in 4Q.

B2B tech exports are important, but so are proprietary brands KoreaÊs aging population has been putting increasing pressure on the governmentÊs Buy (Maintain) healthcare budget. We thus expect the diagnostics market to see rapid growth; early Target Price (12M, W) 73,000 diagnoses can help shorten treatment periods, and preventive diagnoses can reduce the Share Price (02/19/13, W) 64,100 consumption of medicine. SeegeneÊs multiplex PCR technology (though not a premium Expected Return (%) 13.9 product) is more cost-competitive compared to rivalsÊ technologies, as it allows for the EPS Growth (13F, %) 16.3 screening of multiple pathogens using a single test. We therefore expect growing Market EPS Growth (13F, %) 18.8 demand for this technology in public health clinics (financed by public health insurance) P/E (13F, x) 80.3 and medical examination centers, advancing the firmÊs position in the global molecular Market P/E (13F, x) 9.4 diagnosis market in the years ahead. KOSDAQ 522.49 Market Cap (Wbn) 1,047 In particular, SeegeneÊs TOCE technology can detect viruses and pathogens, screen for Shares Outstanding (mn) 16 diseases, and conduct quantitative analyses. TOCE can be used for respiratory diseases Avg Trading Volume (60D, '000) 104 as well as cancer and hepatitis, making it desirable for co-development with Avg Trading Value (60D, Wbn) 7 multinational pharmaceuticals. There are downsides, however: an increasing sales Dividend Yield (13F, %) 0.0 contribution of B2B technology exports would delay the actual commercialization of Free Float (%) 42.4 proprietary products. This would deter SeegeneÊs growth stability and delay the firmÊs 52-Week Low (W) 42,050 attempts to secure marketing channels for its proprietary brands. Thus, we believe the 52-Week High (W) 86,800 drug maker needs to rebalance its strategy, placing an equal focus on both areas. Beta (12M, Daily Rate of Return) 0.76 Price Return Volatility (12M Daily, %, SD) 3.3 Maintain Buy, but Lower TP to W73,000 Foreign Ownership (%) 4.3 We reiterate our Buy call on Seegene, but cut our target price from W92,000 to Major Shareholder(s) W73,000 in light of: 1) the expected earnings disappointment and 2) the firmÊs recent Chon Jong-yoon et al. (56.76%) bonus issue (25%). For the 2013 full-year, we forecast revenues of W72.5bn National Pension Service (5.07%) (+40.5%YoY) and an operating profit of W18.7bn (+41.3%YoY). We expect stronger sales to Bio-Reference Laboratories (major US customer) and upfronts (W7bn) from high Price Performance multiplex real-time quantitative TOCE exports to drive top-line growth. However, we see (%) 1M 6M 12M Absolute 0.2 26.8 18.0 limited upside to margins due to: 1) increased R&D spending and 2) higher labor costs. Relative 0.3 24.8 19.9

§ Earnings & Valuation Metrics Share price FY Revenues OP OP Margin NP EPS EBITDAFCF ROE P/E P/B EV/EBITDA 150 KOSDAQ

(Wbn) (Wbn) (%) (Wbn) (Won) (Wbn) (Wbn) (%) (x) (x) (x) 130

12/10 25 6 26.0 6 404 8 -8 30.8 63.1 15.3 52.6 110

12/11 39 10 25.1 9 575 12 -4 25.9 104.4 28.2 81.5 90 12/12F 52 13 24.4 11 686 16 0 26.5 111.2 27.8 64.8 70 12/13F 73 19 25.8 16 798 22 1 30.4 80.3 21.2 48.7 50 12/14F 82 22 26.7 19 944 25 13 27.1 67.9 16.3 41.8 2/12 6/12 10/12 2/13 Note: All figures are based on non-consolidated K-IFRS Source: Company data, KDB Daewoo Securities Research estimates

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

Key Universe Valuations February 20, 2013

※All data as of close February 19, 2013, unless otherwise noted.

12F Earnings growth Mkt Cap Price P/E (x) P/B (x) ROE (%) Ticker Company Div Yield OP EPS (Wbn) (W) (%) 12F 13F 12F 13F 12F 13F 12F 13F 12F 13F 005930 219,771 1,492,000 0.5 81.8 22.4 75.0 20.4 11.1 9.0 2.1 1.7 21.6 21.2 005380 Hyundai Motor 46,368 210,500 0.9 7.4 -7.8 11.8 -6.4 7.3 7.5 1.4 1.2 20.8 16.3 005490 POSCO 31,736 364,000 2.7 -36.2 41.3 -21.6 25.9 12.2 10.1 0.7 0.7 6.5 7.8 012330 29,203 300,000 0.7 8.6 9.6 17.7 1.1 7.9 8.1 1.8 1.5 23.2 19.4 000270 Motors 21,768 53,700 1.2 2.3 -16.2 11.5 -11.0 5.9 6.3 1.5 1.2 25.5 18.6 032830 Samsung Life 21,400 107,000 2.0 33.2 0.0 23.0 4.2 18.4 17.6 1.1 1.0 6.2 6.0 051910 LG Chem 19,981 301,500 1.2 -30.8 25.2 -29.0 19.7 16.1 12.3 2.3 1.9 15.0 15.9 055550 19,371 40,850 2.0 -18.2 -1.5 -14.1 2.3 8.1 8.4 0.7 0.7 9.2 8.7 000660 SK Hynix 17,944 25,850 - - - - - 16.9 2.0 1.8 - 10.2 009540 16,416 216,000 -56.4 20.9 -63.3 55.1 19.6 11.3 1.2 1.0 5.7 8.4 096770 SK Innovation 16,413 177,500 1.7 -38.5 52.8 -62.8 58.3 13.8 8.9 1.1 1.1 7.9 11.5 105560 KB Financial Group 14,508 37,550 1.6 -19.5 3.6 -11.8 3.5 7.2 6.9 0.6 0.5 8.5 8.2 066570 LG Electronics 12,339 75,400 0.7 301.4 3.3 - 848.5 199.3 21.5 1.2 1.1 0.5 5.0 035420 NHN 11,936 248,000 0.3 13.2 26.0 22.1 16.8 19.9 18.6 3.9 3.5 29.8 27.7 023530 Lotte Shopping 11,935 379,000 0.4 -15.3 11.7 8.4 12.6 10.8 9.7 1.1 1.0 7.0 7.4 010950 S-Oil 11,179 99,300 3.1 -50.1 97.1 -52.1 121.6 21.2 9.2 2.3 1.8 10.8 21.6 003550 LG Corp. 10,906 63,200 1.5 13.8 8.8 22.5 9.1 9.6 8.5 1.0 0.9 10.9 10.9 033780 KT&G 10,764 78,400 4.0 -8.8 4.8 -9.6 5.8 15.0 13.8 2.1 1.9 15.0 14.9 034220 LG Display 10,502 29,350 1.0 - 63.8 - 244.1 46.7 12.8 1.1 1.0 2.3 7.8 000810 Samsung F&M 10,422 220,000 2.3 12.6 20.2 17.0 19.2 12.1 10.2 1.3 1.1 11.1 11.7 086790 9,722 40,000 2.9 49.3 -19.3 66.0 -32.8 4.4 7.5 0.9 0.6 16.1 9.4 051900 LG Household & Health Care 9,496 608,000 0.5 0.5 35.0 14.8 24.7 38.3 28.4 8.7 6.9 27.2 27.2 011170 Lotte Chemical 8,860 258,500 0.8 -68.8 78.1 -60.4 63.5 20.2 13.0 1.5 1.4 6.9 11.2 010140 8,843 38,300 2.5 0.7 -6.5 15.3 11.2 9.6 1.5 1.3 16.0 15.9 003600 SK Holdings 8,336 177,500 1.1 -28.1 20.1 -35.3 27.3 7.9 6.1 2.1 1.4 9.7 11.2 086280 7,538 201,000 0.9 26.9 11.7 34.4 6.9 20.5 17.4 4.7 3.5 25.2 21.9 004020 7,337 86,000 0.6 -32.1 40.1 6.6 18.6 9.4 7.8 0.8 0.7 8.4 9.1 010130 Korea Zinc 7,265 385,000 0.6 -18.8 24.0 -19.1 30.3 13.4 9.8 2.0 1.6 15.6 17.5 009150 Samsung Electro-Mechanics 6,984 93,500 0.8 89.6 14.3 26.1 18.0 17.5 14.0 2.1 1.7 11.8 12.4 024110 Industrial of Korea 6,934 12,700 3.4 -11.0 -15.4 -13.0 -12.3 6.0 7.4 0.5 0.5 9.3 7.6 035250 6,696 31,300 2.6 -19.2 23.7 -22.2 28.6 20.4 17.0 2.4 2.4 13.1 15.6 088350 Hanwha Life 6,610 7,610 3.3 - - 11.5 3.5 11.1 10.7 1.0 0.9 8.8 8.6 006400 Samsung SDI 6,378 140,000 1.3 720.9 -87.1 359.7 -57.1 4.8 10.5 1.0 0.8 21.8 8.3 078930 GS 6,374 68,600 1.7 -21.8 67.6 -34.4 64.6 13.4 7.8 1.2 1.0 8.2 12.4 001800 Orion 6,345 1,063,000 0.3 16.4 26.5 37.3 44.0 48.1 32.3 7.5 6.1 14.7 18.4 139480 Emart 6,342 227,500 0.3 56.3 4.1 72.2 3.3 12.6 11.7 1.1 1.0 9.2 8.7 090430 Amorepacific 6,015 1,029,000 0.5 7.3 14.4 -2.4 16.1 26.3 19.2 3.7 2.7 14.1 14.4 161390 5,556 44,850 1.0 211.0 221.5 26.7 7.9 1.9 1.6 6.9 20.6 068270 Celltrion 5,440 27,100 17.2 36.3 1.3 30.2 26.3 21.0 6.5 5.6 17.6 19.2 034730 SK C&C 5,275 105,500 1.2 15.9 13.7 -8.2 30.6 12.8 10.0 1.8 1.5 16.1 17.3 004940 Bank 4,817 7,470 2.3 -51.5 -4.8 -55.1 0.0 6.6 6.5 - - - - 097950 CJ CheilJedang 4,776 365,000 0.6 38.2 13.3 5.7 49.7 15.9 2.8 11.0 14.3 001300 4,646 88,600 0.8 23.8 24.1 -21.6 58.8 23.7 14.0 1.7 1.4 6.3 9.4 034020 Doosan Heavy I&C 4,488 42,400 3.3 0.8 -88.1 1307.8 146.4 9.8 1.3 1.2 0.7 9.6 016360 Samsung Securities 4,257 55,700 1.4 9.6 19.4 24.0 18.6 16.6 14.0 1.2 1.1 6.9 7.7 010060 OCI 4,078 171,000 2.0 -77.6 31.9 -86.7 24.8 38.1 31.6 1.2 1.3 3.1 3.9 011210 Hyundai Wia 3,988 155,000 0.9 67.6 3.5 72.6 8.4 10.6 8.8 2.6 1.9 25.5 22.3 011780 3,641 119,500 1.5 -72.4 89.1 -71.7 135.9 30.5 11.8 2.8 2.2 9.6 20.2 069960 Hyundai Department Store 3,428 146,500 0.5 -2.9 4.1 1.1 6.0 10.5 9.1 1.3 1.1 13.6 12.7 005830 Dongbu Insurance 3,267 46,150 3.1 19.7 11.9 21.4 13.0 6.7 5.9 1.2 1.0 19.6 18.3 Source: KDB Daewoo Research

Market Data February 20, 2013

※All data as of close February 20, 2013, unless otherwise noted.

Other Major Indices Economic Indicators Close Net Chg 1D (%) YTD (%) Close 1D ago 1M ago 1Y ago MSCI Korea* 421.80 1.14 0.27 -1.73 USD/KRW 1,081.40 1,082.60 1,058.20 1,124.40 KOSPI 2,024.64 38.81 1.95 -0.32 JPY100/KRW 1,155.96 1,153.17 1,174.93 1,408.49 KOSDAQ 525.69 3.20 0.61 4.80 EUR/KRW 1,447.83 1,445.54 1,415.50 1,485.95 Dow Jones* 14,035.67 53.91 0.39 4.65 3Y Treasury 2.71 2.69 2.75 3.47 S&P 500* 1,530.94 11.15 0.73 4.69 3Y Corporate 3.05 3.03 3.20 4.27 NASDAQ* 3,213.59 21.56 0.68 3.26 DDR2 1Gb* 1.26 1.19 1.20 1.32 Philadelphia Semicon* 433.64 5.14 1.20 8.48 NAND 16Gb* 1.96 1.93 1.93 2.49 FTSE 100* 6,379.07 60.88 0.96 5.84 Oil (Dubai)* 111.93 113.20 106.39 117.56 Nikkei 225 11,468.28 95.94 0.84 7.30 Gold* 1,603.60 1,608.80 1,687.00 1,724.50 Hang Seng* 23,143.91 -238.03 -1.02 -0.72 Customer deposits (Wbn)* 16,821 17,467 17,763 20,580 Taiwan (Weighted) 8,029.10 68.22 0.86 3.21 Equity type BC (Wbn)(Feb. 18) 93,013 92,940 93,548 101,154 Note: * as of February 19, 2013 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 Samsung Electronics 143.80 KODEX 200 10.35 KODEX LEVERAGE 212.43 KODEX INVERSE 97.37 NHN 56.94 KODEX INVERSE 7.90 Samsung Electronics 84.83 NHN 22.75 Hyundai Motor 40.16 Daelim Industrial 5.23 Hynix 55.10 Glovis 11.81 Shinhan Financial Group 31.21 Korea Exchange Bank 4.11 KODEX 200 41.14 Shinhan Financial Group 11.27 Hynix 25.55 emart 3.93 Kia Motors 35.14 Hyundai M&F Insurance 10.32 Hana Financial Group 18.73 LG Electronics 3.52 LG Electronics 29.16 Korea Zinc 10.31 LG Chem 16.19 HANKOOK TIRE 2.93 KB Financial Group 15.75 SK Telecom 10.19 SK Energy 15.00 Industrial Bank of Korea 2.88 HANKOOK TIRE 13.72 KODEX FTSE A50 8.90 NCsoft 14.89 GS Construction 2.74 Korea Gas Corp. 13.49 SK Corp. 8.48 KB Financial Group 13.11 Samsung Fine Chemicals 2.46 Industrial Bank of Korea 13.08 Hana Financial Group 8.10 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 Partrion 7.84 Daum Communications 7.84 NEPES 3.81 Partrion 4.61 Duk San Hi Metal 3.14 Innochips Technology 3.41 TK Corp. 3.53 Paradise 3.67 CJ O Shopping 2.24 Gamevil 1.59 YG Entertainment 3.00 Interflex 2.75 Paradise 2.18 GD 1.48 Gamevil 2.91 SK Broadband 2.64 Seoul Semiconductor 2.02 Silicon Works 1.23 Medy-tox 2.53 Duk San Hi Metal 2.47 SFA Engineering 1.79 Eugene Technology 0.87 Daum Communications 2.30 OSSTEM IMPLANT 1.99 Sung Kwang Bend 1.64 NEPES 0.79 CJ E&M 1.84 Chemtronics 1.60 TK Corp. 1.63 Techno Semichem 0.77 Flexcom 1.75 GOLFZON 1.55 Suprema 1.63 Speco 0.75 Com2us 1.75 Celltrion 1.35 Medy-tox 1.36 SM 0.62 Eugene Technology 1.39 Danal 1.17 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 1,545,000 53,000 227,577 Celltrion 27,000 -100 4,720 Hyundai Motor 217,000 6,500 47,800 CJ O Shopping 286,000 1,500 1,774 POSCO 371,000 7,000 32,346 Seoul Semiconductor 29,950 250 1,746 Hyundai Mobis 305,500 5,500 29,739 Paradise 19,000 -350 1,728 Kia Motors 54,700 1,000 22,173 SK Broadband 4,580 0 1,355 106,500 -500 21,300 Daum Communications 97,500 100 1,318 Samsung Electronics (P) 918,000 20,000 20,961 CJ E&M 34,550 150 1,311 KEPCO 31,700 500 20,350 GS Home Shopping 184,700 800 1,212 LG Chem 306,000 4,500 20,279 Dongsuh 18,800 150 1,113 Shinhan Financial Group 42,100 1,250 19,964 SFA Engineering 58,900 600 1,058 Source: Korea Exchange