November 19, 2019 Korea Morning Focus

Company News & Analysis Major Indices Close Chg Chg (%) CJ CGV (079160/Buy/TP: W53,000) KOSPI 2,160.69 -1.49 -0.07 An appropriate move that puts profitability over expansion KOSPI 200 287.18 -0.11 -0.04 KOSDAQ 669.34 0.83 0.12

Turnover ('000 shares, Wbn) Volume Value KOSPI 483,349 4,451 KOSPI 200 55,362 2,546 KOSDAQ 1,057,993 5,401

Market Cap (Wbn) Value KOSPI 1,450,350 KOSDAQ 237,591

KOSPI Turnover (Wbn) Buy Sell Net Foreign 1,039 1,201 -163 Institutional 965 901 63 Retail 2,390 2,324 67

KOSDAQ Turnover (Wbn) Buy Sell Net Foreign 526 505 21 Institutional 239 237 2 Retail 4,611 4,600 11

Program Buy / Sell (Wbn) Buy Sell Net KOSPI 993 1,160 -167 KOSDAQ 493 456 37

Advances & Declines Advances Declines Unchanged KOSPI 368 459 78 KOSDAQ 666 574 87

KOSPI Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Samsung Electronics 53,500 -200 409 Next Science 11,500 50 311 NAVER 178,500 5,000 155 Hynix 85,500 300 155 KODEX Leverage 13,455 -25 152

KOSDAQ Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Mezzion Pharma 173,500 -52,900 421 CMG Pharm. 4,290 50 248 HLB 147,800 1,500 209 Eagle Vet 8,350 930 189 JETEMA 25,000 2,550 154 Note: As of November 18, 2019

This document is a summary of a report prepared by Mirae Asset Daewoo Co., Ltd. (“Mirae Asset 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. Mirae Asset 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. Mirae Asset 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.

CJ CGV (079160 KS) An appropriate move that puts profitability over expansion Media 28.6% stake in // to be sold for W333.6bn On November 18th, CJ CGV announced that it has signed a deal to raise outside capital Company Report for its overseas subsidiaries. The company will 1) integrate its China, Vietnam, and November 19, 2019 Indonesia subsidiaries (which were separately owned) into CGI Holdings, and then 2) sell new shares (28.57%) of CGI Holdings to the MBK Partners-Mirae Asset Daewoo PE consortium for W333.6bn. The deal is set to be finalized by the end of December. As a result of the stake sale, CJ CGV will see its equity increase and net debt decrease by W333.6bn each. Debt ratio will decline to 436% at year-end, down 287%p from 723% at (Maintain) Buy end-3Q19. Stake sale objective: Improving balance sheet＞raising investment funds Target Price (12M, W) 53,000 Of the total W333.6bn to be raised, the company will allocate W184.3bn to improving its balance sheet (including Korea CGV’s deleveraging) and retain the remaining Share Price (11/18/19, W) 38,500 W149.3bn at CGI Holdings. That said, a significant portion of the retained proceeds is likely to be used in paying down debt at overseas subsidiaries. Of the two objectives the company stated in its regulatory filing—i.e., raising investment funds and Expected Return 38% improving its balance sheet—we believe the latter will take precedence. The integration of the three subsidiaries is a development that had not been anticipated last year. Previously, there were plans to raise foreign capital in each OP (19F, Wbn) 112 country. The company appears to have switched gears after its bid to take the Vietnam Consensus OP (19F, Wbn) 113 subsidiary public fell through. EPS Growth (19F, %) - An appropriate move that puts profitability over expansion Market EPS Growth (19F, %) -32.8 CJ CGV’s stock rally in 2013-15 and subsequent decline from 2016 were driven, P/E (19F, x) - respectively, by China’s strong box-office growth (2014-15) and the market downturn in Market P/E (19F, x) 14.7 immediately after the company’s acquisition of the Turkey business. In other KOSPI 2,160.69 words, investment payoffs have been the key share price driver over the past five years. Investments in China (2006), Vietnam (2011), and Indonesia (2012) began to Market Cap (Wbn) 815 affect consolidated earnings in 2014. Since then, the company’s stock has responded more sensitively to market conditions surrounding its subsidiaries than its domestic Shares Outstanding (mn) 21 business. Free Float (%) 60.9 Foreign Ownership (%) 8.9 The latest stake sale reflects a shift in direction, as it marks the company’s first major decision that puts profitability over top-line growth. We view it as an appropriate move Beta (12M) 1.17 that will allow the company to better meet investor demands by reducing company- 52-Week Low 31,000 wide financial expenses (alongside domestic SG&A expenses) at a time when the global 52-Week High 48,100 multiplex market is slowing. If the proceeds were used entirely to repay debt, we estimate the company would save roughly W10bn in annual interest expenses (based (%) 1M 6M 12M on average financing rate of 3%). We also think the stake sale, as an investment Absolute 10.0 1.2 -2.3 decision, could be an important variable for the company’s long-term share price direction. Relative 4.9 -3.7 -5.4 1) Renewed attention on subsidiary value and 2) margin improvement 150 CJ CGV KOSPI expectations to set stage for revaluation 130 We reaffirm our Buy call and target price of W53,000 on CJ CGV. The latest deal valued the company’s overseas subsidiary stake at W1.2tr, which is 27% higher than our 110 previous valuation (W920.4bn) of the China/Vietnam/Indonesia subsidiaries. The

90 revaluation of the three subsidiaries through the latest deal should provide a more concrete rationale in valuing CJ CGV. It looks increasingly likely the stock’s gap with our 70 target price will gradually narrow. 11.18 3.19 7.19 11.19

Mirae Asset Daewoo Co., Ltd.

[ Media] FY (Dec.) 12/16 12/17 12/18 12/19F 12/20F 12/21F Revenue (Wbn) 1,432 1,714 1,769 1,973 2,238 2,528 Jeong-yeob Park +822-3774-1652 OP (Wbn) 70 86 78 112 138 168 [email protected] OP margin (%) 4.9 5.0 4.4 5.7 6.2 6.6

NP (Wbn) 12 -1 -141 -24 1 26 EPS (W) 583 -66 -6,647 -1,152 68 1,212 ROE (%) 3.1 -0.4 -67.0 -24.1 1.6 26.1

P/E (x) 120.7 - - - 569.0 31.8 P/B (x) 4.0 5.1 7.8 9.0 9.3 7.5 Dividend yield (%) 0.5 0.5 0.5 0.5 0.5 0.5 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 November 19, 2019

※All data as of close November 15, 2019, unless otherwise noted.

19F Earnings growth Mkt Cap Price P/E (x) P/B (x) ROE (%) Ticker Company Div Yield OP EPS (Wbn) (W) (%) 19F 20F 19F 20F 19F 20F 19F 20F 19F 20F 005930 Samsung Electronics 319,383 53,500 2.6 -54.3 40.3 -47.7 35.9 17.0 12.5 1.4 1.3 8.6 10.8 000660 SK Hynix 62,244 85,500 1.8 -85.8 150.5 -85.5 140.0 27.6 11.5 1.2 1.1 4.7 10.7 035420 NAVER 29,419 178,500 0.2 -16.6 76.2 -46.2 130.5 84.4 36.6 4.3 3.9 6.5 13.6 005380 Hyundai Motor 26,922 126,000 3.2 45.9 22.7 116.0 32.0 10.9 8.3 0.5 0.5 4.6 5.8 012330 Hyundai Mobis 24,351 255,500 1.6 10.3 7.8 25.4 8.8 10.5 9.7 0.7 0.7 7.4 7.4 068270 Celltrion 23,935 186,500 - - - - 0.0 0.0 051910 LG Chem 22,307 316,000 1.3 -47.5 54.5 -63.7 118.3 46.3 21.2 1.4 1.3 3.1 6.6 055550 Shinhan Financial Group 20,723 43,700 12.3 3.9 10.0 -0.2 6.0 6.0 0.5 0.5 9.1 8.4 005490 POSCO 19,835 227,500 4.8 -23.9 -9.2 37.8 -0.3 8.5 8.5 0.4 0.4 5.3 5.1 017670 SK Telecom 19,742 244,500 4.1 7.3 -3.5 -60.6 68.2 16.0 9.5 0.8 0.7 5.4 8.8 028260 Samsung C&T 19,728 104,000 1.9 -27.7 39.8 -42.8 17.9 20.3 17.2 0.6 0.6 4.0 3.9 034730 SK Holdings 19,349 275,000 1.8 -2.8 21.5 -36.6 11.0 13.6 12.3 1.0 0.9 8.2 8.3 051900 LG H&H 19,148 1,226,000 0.9 12.8 9.7 16.5 10.7 24.1 21.7 5.2 4.5 20.3 19.1 105560 KB Financial Group 18,397 44,000 9.3 2.3 12.6 0.5 5.3 5.3 0.5 0.4 9.2 8.5 015760 KEPCO 17,879 27,850 - - - - - 145.9 0.3 0.3 - 0.2 000270 Kia Motors 17,714 43,700 2.1 82.2 7.7 95.5 11.5 7.8 7.0 0.6 0.6 8.0 8.3 006400 Samsung SDI 16,538 240,500 0.4 -33.0 108.9 -38.3 99.8 39.1 19.6 1.3 1.2 3.5 6.7 018260 Samsung SDS 15,746 203,500 1.2 10.4 12.3 10.3 11.8 22.7 20.3 2.4 2.2 11.1 11.3 032830 Samsung Life 14,880 74,400 - - - - 0.0 0.0 096770 SK Innovation 14,794 160,000 5.0 -37.5 28.9 -60.6 85.6 23.1 12.4 0.8 0.8 3.6 6.5 033780 KT&G 13,606 99,100 4.2 12.8 5.6 17.5 5.1 12.8 12.2 1.5 1.4 12.7 12.6 035720 Kakao 13,214 157,500 0.1 184.6 138.3 226.0 114.7 78.8 36.7 2.6 2.4 3.2 6.7 003550 LG Corp. 12,631 73,200 3.4 -28.0 45.0 -18.4 16.8 8.5 7.2 0.7 0.6 8.1 8.9 036570 NCsoft 12,141 553,000 1.1 6.0 76.9 33.5 52.9 21.7 14.2 3.8 3.1 21.6 27.0 066570 LG Electronics 11,701 71,500 1.0 -4.2 15.6 -39.2 107.1 17.2 8.3 0.9 0.8 5.1 9.9 000810 Samsung F&M 11,038 233,000 - - - - 0.0 0.0 010950 S-Oil 11,033 98,000 1.3 18.3 161.1 0.4 471.9 44.1 7.7 1.7 1.4 3.9 20.1 086790 Hana Financial Group 10,824 36,050 4.6 2.7 14.8 -6.2 4.2 4.5 0.4 0.3 9.2 8.1 090430 AmorePacific 10,727 183,500 0.6 -15.7 30.9 -9.8 31.4 35.8 27.2 2.7 2.5 6.6 8.1 009150 Samsung Electro-Mechanics 8,440 113,000 1.0 -32.8 17.4 -5.4 -2.9 14.1 14.5 1.6 1.4 12.1 10.5 009540 KSOE 8,245 116,500 - 88.1 - -39.1 33.6 55.1 0.7 0.7 2.1 1.3 010130 Korea Zinc 8,010 424,500 2.6 12.2 15.7 25.4 9.3 12.1 11.1 1.2 1.1 10.2 10.3 011170 Lotte Chemical 7,729 225,500 4.7 -35.3 21.0 -39.4 30.8 8.1 6.2 0.6 0.5 7.3 9.0 251270 7,725 90,100 1.8 57.7 14.5 36.9 35.3 25.8 1.6 1.5 4.9 6.3 091990 Celltrion Healthcare 7,513 52,200 - 144.5 435.7 165.0 122.6 46.2 4.2 4.0 3.7 9.3 030200 KT 7,181 27,500 4.0 -2.4 -1.1 -7.8 21.0 11.3 9.3 0.5 0.5 4.7 5.5 024110 Industrial Bank of Korea 7,070 12,250 0.6 -0.8 -1.0 -2.3 4.6 4.8 0.4 0.3 8.0 7.3 032640 LG Uplus 6,069 13,900 4.7 -11.8 10.9 -16.7 15.0 15.1 13.1 0.9 0.8 5.8 6.4 018880 Hanon Systems 6,005 11,250 - - - - 0.0 0.0 086280 Hyundai Glovis 5,606 149,500 2.2 22.7 2.0 3.3 34.0 12.4 9.3 1.2 1.1 10.1 12.2 Hyundai Heavy Industries 267250 5,570 342,000 5.4 -1.6 92.1 74.3 199.2 11.9 4.0 0.7 0.6 6.0 16.5 Holdings 034220 LG Display 5,206 14,550 ------0.4 0.4 - - 000720 Hyundai E&C 4,939 44,350 1.1 20.6 14.3 32.0 12.8 9.8 8.7 0.7 0.7 7.8 8.2 010140 Samsung Heavy Industries 4,391 6,970 - - - - - 44.5 0.7 0.6 - 1.7 271560 Orion 4,349 110,000 0.5 12.3 7.0 52.7 9.2 20.4 18.7 2.7 2.4 14.1 13.4 004020 Hyundai Steel 4,277 32,050 2.3 -45.2 39.1 -75.8 289.4 44.4 11.4 0.2 0.2 0.6 2.1 029780 Samsung Card 4,258 36,750 11.7 -28.6 1.7 6.8 12.1 11.4 0.6 0.6 1.5 1.6 071050 Korea Investment Holdings 3,973 71,300 - - - - 0.0 0.0 005830 DB Insurance 3,894 55,000 - - - - 0.0 0.0 004990 LOTTE Corporation 3,861 36,800 2.2 91.0 11.9 198.2 20.3 7.1 5.9 0.4 0.4 7.5 8.3 Source: Mirae Asset Daewoo Research

Mirae Asset Daewoo Research Market Data November 19, 2019

※All data as of close November 18, 2019, unless otherwise noted.

Other Major Indices Economic Indicators Close Net Chg 1D (%) YTD (%) Close 1D ago 1M ago 1Y ago MSCI Korea* 458.40 6.83 1.51 6.87 USD/KRW 1,166.30 1,170.40 1,186.60 1,130.30 KOSPI 2,160.69 -1.49 -0.07 7.50 JPY100/KRW 1,072.61 1,079.75 1,092.99 995.25 KOSDAQ 669.34 0.83 0.12 0.00 EUR/KRW 1,289.05 1,289.96 1,320.15 1,279.78 Dow Jones* 28,004.89 222.93 0.80 20.05 3Y Treasury 1.52 1.51 1.38 1.95 S&P 500* 3,120.46 23.83 0.77 24.32 3Y Corporate 2.02 2.02 1.88 2.41 NASDAQ* 8,540.83 61.81 0.73 28.13 DDR4 8Gb* 2.82 2.83 3.05 6.78 Philadelphia Semicon* 1,742.93 15.34 0.89 49.57 NAND MLC 64G* 2.32 2.31 2.31 3.04 FTSE 100* 7,302.94 10.18 0.14 8.45 Oil (Dubai)* 61.93 62.47 59.42 65.39 Nikkei 225 23,416.76 113.44 0.49 19.71 Gold* 1,468.50 1,473.40 1,477.60 1,215.00 Hang Seng* 26,326.66 2.97 0.01 4.76 Customer deposits (Wbn)* 24,814 26,105 26,678 24,670 Taiwan (Weighted) 11,599.78 74.18 0.64 -99.82 Equity type BC (Wbn)(Nov. 14) 81,563 81,210 79,121 81,318 Note: * as of November 15, 2019 Source: KSDA, FnGuide, DRAMeXchange, MSCI

KOSPI Top 10 Foreign Net Buy / Net Sell (Wbn) KOSPI Top 10 Institutional Net Buy / Net Sell (Wbn) Net Buy Net Sell Net Buy Net Sell KODEX MSCI Korea TR 50.48 Samsung Electronics 62.75 Samsung Electronics 37.28 KODEX MSCI Korea TR 50.48 Samsung Biologics 11.05 Samsung Electronics (P) 21.26 Samsung Electronics (P) 14.50 KODEX Leverage 14.86 Samsung SDI 10.39 Namsun Aluminum 12.43 NAVER 14.27 SK C&C 14.85 F&F 5.79 Celltrion 11.25 Hynix 11.85 KODEX Kosdaq150 Leverage 8.31 SK C&C 5.10 KT&G 9.13 Celltrion 11.23 Mando 5.64 Mando 5.03 Amore Pacific 7.41 LG Electronics 11.21 Korea Zinc 4.70 Kakao 4.69 Hyundai Mobis 6.95 Samsung Biologics 9.93 SEMCO 3.70 SEMCO 3.40 KODEX 200 6.87 Kakao 9.40 F&F 3.67 KODEX Leverage 3.06 Hyundai Motor 6.25 Samsung SDI 9.08 Hyundai Steel 3.66 Hana Financial Group 2.97 LG Chem 5.78 KODEX 200 Futures Inverse 2X 7.50 Hyundai Glovis 3.41 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 Emerson Pacific 10.32 HLB 10.08 Mezzion Pharma 24.99 SJG 5.24 JYP Entertainment 6.97 Mezzion Pharma 8.87 Tes 6.36 CJ ENM 5.00 ViroMed 4.22 Organic Tea Cosmetics 8.57 SM 3.94 AP Systems 4.98 Partrion 3.66 Soulbrain 7.81 HLB 2.70 IntroMedic 4.94 Classys 3.41 Celltrion Healthcare 3.41 S-MAC 2.70 Icure Pharm. Inc. 2.37 Alteogen 3.14 AP Systems 3.23 ADTechnology 2.58 RAPHAS 2.32 PearlAbyss 2.60 KMW 3.19 OSSTEM IMPLANT 2.07 PearlAbyss 2.14 Medy-tox 2.35 BH,LTD. 3.08 Philoptics 2.04 Seegene 1.96 Seegene 2.27 OSSTEM IMPLANT 2.89 T-Robotics 1.81 MC Nex 1.79 ECHO 2.06 Intellian Tech 2.41 ECOPROBM 1.41 Soulbrain 1.57 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 53,500 -200 319,383 Celltrion Healthcare 52,200 -500 7,513 Hynix 85,500 300 62,244 HLB 147,800 1,500 5,919 Samsung Electronics (P) 42,950 -150 35,343 CJ ENM 151,900 900 3,331 NAVER 178,500 5,000 29,419 PearlAbyss 191,600 -6,800 2,495 Hyundai Motor 126,000 500 26,922 77,600 -600 2,180 Samsung Biologics 402,000 4,000 26,598 ViroMed 99,600 600 2,133 Hyundai Mobis 255,500 -2,000 24,351 Hugel 400,000 6,000 2,048 Celltrion 186,500 500 23,935 KMW 49,450 -400 1,968 LG Chem 316,000 -1,500 22,307 SK Materials 173,800 -4,100 1,833 Shinhan Financial Group 43,700 -100 20,723 Paradise 19,600 750 1,782 Source: