September 4, 2019 Korea Morning Focus

Company News & Analysis Major Indices Close Chg Chg (%) CJ Hello (037560/Buy/TP: W7,800) Lower TP KOSPI 1,965.69 -3.50 -0.18 Acquisition synergies expected over the medium term KOSPI 200 258.25 -0.83 -0.32 KOSDAQ 620.02 0.21 0.03

Turnover ('000 shares, Wbn) Volume Value KOSPI 331,143 3,916 KOSPI 200 62,663 2,592 KOSDAQ 760,686 3,729

Market Cap (Wbn) Value KOSPI 1,311,680 KOSDAQ 216,093

KOSPI Turnover (Wbn) Buy Sell Net Foreign 881 1,186 -305 Institutional 1,103 854 249 Retail 1,899 1,858 40

KOSDAQ Turnover (Wbn) Buy Sell Net Foreign 336 383 -47 Institutional 143 189 -46 Retail 3,229 3,111 117

Program Buy / Sell (Wbn) Buy Sell Net KOSPI 948 998 -50 KOSDAQ 292 348 -55

Advances & Declines Advances Declines Unchanged KOSPI 439 364 85 KOSDAQ 673 535 98

KOSPI Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value 43,250 -550 369 KODEX KOSDAQ150 8,905 50 207 INVERSE KODEX Kosdaq150 6,920 -75 203 Leverage Hwacheon Machinery 4,455 215 143 Works KODEX Leverage 10,905 -75 140

KOSDAQ Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value SillaJen 11,750 -300 152 KRTNet Corporation 4,480 820 137 HLB 46,500 -1,100 96 OSUNG Advanced 2,410 40 82 Materials KMW 73,300 1,000 78 Note: As of September 03, 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 Hello (037560 KS) Acquisition synergies expected over the medium term Media Lower TP to W7,800 due to near-term earnings pressures, but maintain Buy Company Report As the cable business environment continues to worsen amid the onslaught from IPTV September 4, 2019 (provided by telcos), CJ Hello has seen its revenue decline due to subscriber losses and falling ARPU. Making matters worse, subscriber losses 1) act as a further drag on revenue by curtailing home shopping transmission fees and 2) increase cost pressures by weakening content negotiating power (leading to higher content purchase prices). We expect such dynamics to continue through the end of the year or early next year, (Maintain) Buy when the company’s acquisition by LG Uplus is likely to be finalized. Thus, margin contraction should be inevitable. We are reducing our 2019 net profit forecast by 19% ▼ Target Price (12M, W) 7,800 to W25bn (from W30.7bn) and lowering our target price to W7,800 (from W9,200). As our target price still implies more than 20% upside, we maintain our Buy rating. Share Price (09/03/19, W) 6,250 Once acquisition is finalized, synergies with LG Uplus to support recovery Expected Return 25% Once the acquisition is finalized, we believe most of the current margin headwinds will dissipate. We think losses in cable TV subscribers could be halted or reversed through

bundled packages with LG Uplus’s wireless subscribers. In addition, as the subscriber OP (19F, Wbn) 49 conversion to digital accelerates, ARPU could stabilize and rise. We also believe CJ Consensus OP (19F, Wbn) 53 Hello’s content negotiating power could improve. Although the two companies’ platforms will not be integrated, we still think CJ Hello will enjoy greater negotiating EPS Growth (19F, %) -36.3 power as a combined company. Market EPS Growth (19F, %) -27.7 P/E (19F, x) 19.1 Over the medium and long term, the company should benefit from a gradual Market P/E (19F, x) 12.4 stabilization in the pay TV market. In addition to LG Uplus’s acquisition of CJ Hello, T- KOSPI 1,965.69 broad is being merged with SK Broadband, while D’Live—which is currently looking for a buyer—also appears likely to be acquired by a telco. Once such industry Market Cap (Wbn) 484 consolidation is complete, we expect actual competition between cable TV and IPTV to Shares Outstanding (mn) 77 loosen, leading to a normalization in excessively low prices and margin improvements. Free Float (%) 45.4 Foreign Ownership (%) 10.1 Watch for acquisition approval and 3Q19 OP recovery Beta (12M) 0.80 On August 26th, CJ Hello’s stock rallied sharply following news that the Fair Trade 52-Week Low 5,230 Commission (FTC) was set to approve LG Uplus’s acquisition of the company on the 52-Week High 11,800 condition that pay TV price hikes are restricted. Similarly, we think the stock will see (%) 1M 6M 12M strong upside momentum when the approval comes through in 2H19. While the final Absolute 6.3 -33.9 -25.4 decision has been somewhat delayed due to leadership changes at the FTC, we believe Relative 8.0 -26.2 -12.5 the deal will be approved and closed in 2H19. We expect 3Q19 operating profit to recover to W12bn with the removal of one-off expenses seen in the previous quarter. 160 CJ Hello KOSPI 140 120 100

80

60 8.18 12.18 4.19 8.19

Mirae Asset Daewoo Co., Ltd.

[ Telecom Services/Robotics/Shipbuilding] FY (Dec.) 12/16 12/17 12/18 12/19F 12/20F 12/21F Revenue (Wbn) 1,101 1,120 1,171 1,130 1,155 1,194 Hakmoo Lee +822-3774-1785 OP (Wbn) 43 73 68 49 57 70 [email protected] OP margin (%) 3.9 6.5 5.8 4.3 4.9 5.9

NP (Wbn) 22 29 40 25 32 42 EPS (W) 278 373 514 328 409 538 ROE (%) 2.2 3.0 3.9 2.4 2.9 3.7

P/E (x) 33.7 19.0 17.8 19.1 15.3 11.6 P/B (x) 0.8 0.6 0.7 0.4 0.4 0.4 Dividend yield (%) 0.8 1.1 0.8 1.2 1.2 1.2 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 September 4, 2019

※All data as of close September 02, 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 258,193 43,250 3.3 -53.4 23.9 -46.6 21.4 13.4 11.1 1.1 1.1 8.8 10.0 000660 SK Hynix 56,056 77,000 1.9 -85.3 102.4 -84.1 94.0 22.7 11.7 1.1 1.0 5.2 9.5 005380 Hyundai Motor 27,456 128,500 3.1 67.7 4.7 142.3 10.8 9.9 8.9 0.5 0.5 5.2 5.5 035420 NAVER 24,804 150,500 0.2 -25.8 110.5 -52.8 148.1 81.0 32.7 3.6 3.3 5.7 13.0 012330 23,731 249,000 1.6 10.3 7.8 25.4 8.8 10.2 9.4 0.7 0.7 7.4 7.4 051910 LG Chem 22,731 322,000 1.9 -33.1 66.6 -42.2 97.7 29.6 15.0 1.4 1.3 4.9 9.2 068270 Celltrion 20,598 160,500 - - - - 0.0 0.0 055550 19,395 40,900 14.3 5.4 11.3 0.9 5.5 5.5 0.5 0.5 9.3 8.6 017670 SK Telecom 19,298 239,000 4.2 11.4 3.3 -58.6 71.4 14.9 8.7 0.8 0.7 5.7 9.3 051900 LG H&H 19,226 1,231,000 0.9 12.8 9.7 16.5 10.7 24.2 21.8 5.3 4.5 20.3 19.1 005490 POSCO 18,396 211,000 4.7 -21.1 -1.8 55.3 -0.7 7.0 7.1 0.4 0.4 5.9 5.7 000270 Motors 17,816 43,950 1.8 20.5 19.7 54.5 16.7 10.0 8.5 0.6 0.6 6.3 7.0 006400 Samsung SDI 16,950 246,500 0.4 22.3 40.8 14.1 34.5 21.7 16.1 1.3 1.2 6.4 8.0 105560 KB Financial Group 16,495 39,450 10.3 4.1 12.6 3.2 4.8 4.6 0.4 0.4 9.3 8.9 028260 Samsung C&T 16,351 86,200 2.3 -16.8 41.4 -39.5 16.8 15.9 13.6 0.5 0.5 4.2 4.1 015760 KEPCO 16,177 25,200 - 305.3 - - - 26.3 0.2 0.2 - 0.9 096770 SK Innovation 15,026 162,500 4.9 -21.3 14.0 -33.2 22.1 13.8 11.3 0.8 0.7 6.0 7.1 018260 Samsung SDS 14,895 192,500 1.3 13.6 15.8 13.2 15.8 20.9 18.1 2.3 2.1 11.3 12.0 034730 SK Holdings 14,318 203,500 2.5 3.5 23.6 -50.2 14.0 12.9 11.3 0.8 0.7 6.5 6.9 033780 KT&G 13,798 100,500 4.2 12.8 5.6 17.5 5.1 13.0 12.4 1.5 1.5 12.7 12.6 032830 Samsung Life 13,520 67,600 - - - - 0.0 0.0 003550 LG Corp. 12,234 70,900 3.2 17.2 15.4 5.5 15.6 6.3 5.5 0.6 0.6 10.5 11.1 036570 NCsoft 12,075 550,000 1.1 4.9 73.6 31.4 51.5 22.0 14.5 3.7 3.1 21.3 26.5 035720 11,522 137,500 0.1 184.9 132.6 205.6 127.5 73.4 32.3 2.2 2.0 3.0 6.5 010950 S-Oil 10,909 96,900 1.5 20.9 139.4 59.3 237.7 27.5 8.1 1.6 1.4 6.2 18.5 000810 Samsung F&M 10,588 223,500 - - - - 0.0 0.0 066570 LG Electronics 10,097 61,700 1.2 -11.8 30.9 -20.9 81.5 11.4 6.3 0.7 0.7 6.6 11.1 086790 Hana Financial Group 9,773 32,550 11.5 6.2 9.6 8.5 4.0 3.6 0.3 0.3 9.0 8.9 090430 AmorePacific 8,272 141,500 0.8 -15.7 30.9 -9.8 31.4 27.6 21.0 2.1 2.0 6.6 8.1 010130 Korea Zinc 8,246 437,000 2.5 14.1 2.3 26.3 -2.0 12.4 12.6 1.2 1.1 10.2 9.3 251270 8,162 95,200 16.8 50.4 24.2 35.1 34.4 25.5 1.7 1.6 5.3 6.7 009540 KSOE 7,785 110,000 - 215.7 - 27.2 190.7 149.9 0.7 0.7 0.3 0.4 011170 Lotte Chemical 7,541 220,000 4.8 -35.8 23.4 -39.4 33.6 7.9 5.9 0.6 0.5 7.3 9.2 030200 KT 7,102 27,200 4.0 9.5 1.0 18.2 5.3 8.7 8.3 0.5 0.5 6.0 6.0 024110 7,072 12,300 6.0 3.0 3.9 2.0 4.4 4.4 0.4 0.3 8.5 8.1 009150 Samsung Electro-Mechanics 6,752 90,400 1.2 -39.9 36.8 -3.0 -7.6 11.0 11.9 1.2 1.1 12.4 10.3 091990 Celltrion Healthcare 6,527 45,350 - 214.5 745.0 180.7 67.5 24.1 3.6 3.2 5.7 14.8 018880 Hanon Systems 6,219 11,650 - - - - 0.0 0.0 086280 5,831 155,500 2.1 13.5 4.6 23.2 21.9 10.8 8.9 1.2 1.1 11.9 13.1 032640 LG Uplus 5,763 13,200 4.9 -13.0 8.7 -18.0 12.3 14.6 13.0 0.8 0.8 5.7 6.2 267250 5,342 328,000 5.6 78.7 2.1 154.0 4.5 7.8 7.5 0.6 0.6 8.6 8.5 Holdings 034220 LG Display 5,081 14,200 - - - - - 27.3 0.4 0.4 - 1.4 004020 4,991 37,400 2.0 6.1 22.5 53.1 31.9 8.2 6.2 0.3 0.3 3.5 4.3 010140 4,813 7,640 - - - - - 30.7 0.7 0.6 - 2.4 000720 Hyundai E&C 4,582 41,150 1.2 22.4 10.8 49.0 7.3 8.1 7.5 0.7 0.6 8.9 8.9 071050 Korea Investment Holdings 3,923 70,400 - - - - 0.0 0.0 029780 Samsung Card 3,841 33,150 -16.3 3.1 2.8 4.1 10.8 10.4 0.6 0.5 1.5 1.5 023530 Lotte Shopping 3,791 134,000 3.9 16.6 4.2 - 1.1 12.1 11.9 0.3 0.3 2.7 2.6 012750 S1 3,766 99,100 2.7 4.9 7.3 52.9 8.6 23.9 22.0 2.5 2.4 12.1 12.4 271560 Orion 3,665 92,700 0.6 1.3 8.9 36.8 11.4 19.1 17.2 2.3 2.0 12.7 12.5 Source: Mirae Asset Daewoo Research

Mirae Asset Daewoo Research Market Data September 4, 2019

※All data as of close September 03, 2019, unless otherwise noted.

Other Major Indices Economic Indicators Close Net Chg 1D (%) YTD (%) Close 1D ago 1M ago 1Y ago MSCI Korea* 394.86 0.03 0.01 -7.94 USD/KRW 1,211.90 1,209.60 1,188.50 1,113.30 KOSPI 1,965.69 -3.50 -0.18 -2.20 JPY100/KRW 1,141.20 1,139.57 1,106.04 1,001.75 KOSDAQ 620.02 0.21 0.03 -7.37 EUR/KRW 1,328.91 1,329.59 1,316.80 1,291.09 Dow Jones* 26,403.28 13.19 3Y Treasury 1.23 1.23 1.26 1.92 S&P 500* 2,926.46 1.88 0.06 16.59 3Y Corporate 1.73 1.74 1.77 2.40 NASDAQ* 7,962.88 -10.51 -0.13 19.46 DDR4 8Gb* 3.38 3.39 3.63 7.49 Philadelphia Semicon* 1,504.93 9.10 0.61 29.14 NAND MLC 64G* 2.44 2.48 2.47 3.11 FTSE 100* 7,281.94 74.76 1.04 8.13 Oil (Dubai)* 57.62 59.62 60.33 75.85 Nikkei 225 20,625.16 4.97 0.02 5.44 Gold* 1,523.00 1,530.50 1,429.70 1,200.00 Hang Seng* 25,626.55 -98.18 -0.38 1.97 Customer deposits (Wbn)* 23,230 24,027 24,299 24,767 Taiwan (Weighted) 10,558.21 -76.64 -0.72 10.51 Equity type BC (Wbn)(Aug. 30) 78,440 78,031 79,586 82,170 Note: * as of September 02, 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 200 16.62 Samsung Electronics 153.98 Samsung Electronics 51.37 KODEX Leverage 19.78 Kakao 9.33 KODEX Top5PlusTR 30.47 KODEX Top5PlusTR 30.48 KODEX 200 19.49 Celltrion 7.11 Hyundai Motor 14.74 29.62 HDC-OP 9.34 Hotel Shilla 6.52 Samsung SDI 13.29 Amore Pacific 29.32 KODEX KOSDAQ150 INVERSE 4.69 6.31 Amore Pacific 11.93 LG Household & Health Care 16.42 CJ Cheiljedang 4.66 NC Soft 4.49 KT&G 9.66 SEMCO 14.82 KEPCO 3.56 KODEX Leverage 3.47 HDC-OP 9.25 Samsung SDI 14.17 Daewoo Securities 3.55 Hyundai Elevator 2.83 SK C&C 8.51 Celltrion 13.66 Samsung C&T 3.18 TIGER200 2.74 SK Energy 8.30 11.95 TIGER200 2.96 S-Oil 2.36 Hana Financial Group 7.95 SK C&C 9.46 Hynix 2.74 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 KG Inicis 6.99 Nepes 6.00 Paradise 7.42 KMW 8.87 Dongjin Semichem 4.93 Celltrion Healthcare 5.58 4.44 CJ ENM 5.69 Paradise 4.20 Heng Sheng Group 4.71 KG Inicis 3.57 TESNA 4.65 CJ ENM 2.87 Medy-tox 4.21 Heng Sheng Group 3.43 JC Chemical 2.65 Vidente 2.10 Seojin System 3.35 Neo Pharm. 2.75 LB Semicon 2.38 ViroMed 1.60 KRTNet Corporation 3.22 Emerson Pacific 1.48 Koh Young 2.23 Soulbrain 1.47 Dasan Networks 2.96 PUM-TECH KOREA 1.04 PearlAbyss 1.91 RFHIC 1.34 OE Solutions 2.88 Dongjin Semichem 1.01 BH,LTD. 1.78 AfteecaTV 1.21 KMW 2.80 IDIS 0.86 ViroMed 1.77 SM 1.21 ABL Bio 2.60 W.I.C 0.86 SK Materials 1.75 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 43,250 -550 258,193 Celltrion Healthcare 45,350 -150 6,527 Hynix 77,000 -600 56,056 CJ ENM 157,000 -600 3,443 Samsung Electronics (P) 36,200 -200 29,788 ViroMed 181,500 500 3,096 Hyundai Motor 128,500 -2,500 27,456 KMW 73,300 1,000 2,913 NAVER 150,500 500 24,804 PearlAbyss 194,100 400 2,528 Hyundai Mobis 249,000 -3,500 23,731 Medy-tox 359,200 -8,100 2,089 LG Chem 322,000 500 22,731 SK Materials 178,700 -3,100 1,885 Celltrion 160,500 4,000 20,598 Hugel 359,200 -4,300 1,875 Shinhan Financial Group 40,900 50 19,395 Studio Dragon 65,500 2,600 1,839 SK Telecom 239,000 0 19,298 HLB 46,500 -1,100 1,824 Source: