April 20, 2012

KOREA

Morning

Company News & Analysis Major Indices Close Chg Chg (%) (Buy/TP: W378,000) KOSPI 1,999.86 -4.67 -0.23 Long-term value is being underestimated KOSPI 200 265.58 -0.64 -0.24 KOSDAQ 501.92 -1.71 -0.34 (Buy/TP: W210,000) Raise TP Deserving of a premium Turnover ('000 shares, Wbn) Volume Value (Buy/TP: W400,000) KOSPI 406,776 4,031 Orders expected to bounce back KOSPI 200 60,905 3,152 KOSDAQ 517,641 1,918

Market Cap (Wbn) Value KOSPI 1,150,366 KOSDAQ 108,187

KOSPI Turnover (Wbn) Buy Sell Net Foreign 850 947 -97 Institutional 868 880 -12 Retail 2,141 2,077 64

KOSDAQ Turnover (Wbn) Buy Sell Net Foreign 56 64 -8 Institutional 75 86 -10 Retail 1,783 1,768 15

Program Buy / Sell (Wbn) Buy Sell Net KOSPI 574 543 32 KOSDAQ 12 9 3

Advances & Declines Advances Declines Unchanged KOSPI 289 523 92 KOSDAQ 372 565 66

KOSPI Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Electronics 1,307,000 14,000 336 Hynix 28,800 750 169 SEMCO 104,000 2,500 146 KODEX LEVERAGE 13,645 -50 135 LG Electronics 75,500 -1,900 129

KOSDAQ Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value AHNLAB 119,000 -4,300 126 EG 62,100 -4,500 64 Victek 2,860 370 62 Tera Resource Co., Ltd 1,670 -95 58 Agabang 14,200 -300 51 Note: As of April 19, 2012

This document is a summary of a report prepared by 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.

Company April 20, 2012

Auto parts Hyundai Mobis (012330 KS) Daewoo Securities Co., Ltd. Michael Yun Long-term value is being underestimated +822-768-4169 [email protected] Maintain Buy rating with TP of W378,000 Young-ho Park +822-768-3033 We maintain our Buy rating on Hyundai Mobis with a 12-month target price of [email protected] W378,000. Using a sum-of-the-parts methodology, we derived our target price by

calculating the operating values of Hyundai MobisÊ AS and module divisions relative to their respective benchmarks and adding the results to the companyÊs asset value and net cash holdings.

Buy (Maintain) Recently, Hyundai MobisÊ shares have been sluggish due to: 1) negative sentiment Target Price (12M, W) 378,000 related to the launch of Hyundai Motor Electronics, 2) concerns over potential delays Share Price (04/19/12, W) 283,500 to margin recovery, and 3) a burden on shares owing to speculation that Hyundai- Expected Return (%) 33.3 Automotive Group (HKAG) could switch to a holding company structure. However, EPS Growth (12F, %) 11.2 regardless of these issues, we believe that Hyundai Mobis will remain the key Market EPS Growth (12F, %) 19.3 supplier of HKAGÊs core electronic parts for the foreseeable future. In addition, we P/E (12F, x) 8.2 believe that the companyÊs 1Q earnings will show a rebound. Thus, we believe that Market P/E (12F, x) 9.8 Hyundai MobisÊ share price is attractive. KOSPI 1,999.86 Market Cap (Wbn) 27,597 1Q Preview: OP of W725bn; OP margin of 10.1% Shares Outstanding (mn) 97 Avg Trading Volume (60D, '000) 571 We forecast Hyundai MobisÊ 1Q consolidated revenues to come in at W7.2tr (up Avg Trading Value (60D, Wbn) 164 16.3% YoY). We anticipate that the AS division and the module division will show Dividend Yield (12F, %) 0.7 respective revenue increases of 17.8% YoY and 11.2% YoY. Hyundai Motor (HMC) Free Float (%) 67.8 52-Week Low (W) 261,500 and Kia Motors saw double-digit production increases in 1Q, and, as a result, 52-Week High (W) 416,500 Hyundai MobisÊ module business is believed to have enjoyed double-digit growth as Beta (12M, Daily Rate of Return) 1.2 well. Price Return Volatility (12M Daily, %, SD) 2.7 Foreign Ownership (%) 46.5 We forecast consolidated operating profit to come in at W725bn (up 5.5% YoY, up Major Shareholder(s) 23.5% QoQ) on an OP margin of 10.1%. FX-related losses, which affected some Kia Motors et al. (30.17%) overseas operations in 4Q, should not be in issue, as the relevant currencies Alliance Bernstein L.P.(7.09%) stabilized in 1Q. Also, we forecast profitability improvement for Hyundai MobisÊ NPS (6%) module division, as more of its core parts are being adopted. Price Performance (%) 1M 6M 12M Earnings to further improve in 2Q thanks to K9 and Santa Fe launches Absolute -0.5 -18.2 -21.4 Relative 1.8 -25.9 -15.6 We forecast Hyundai MobisÊ 2Q consolidated revenues and operating profit to come Key Business in at W7.58tr and W764bn, respectively, with an OP margin of 10.1%. The Hyundai Mobis is Hyundai-Kia Automotive companyÊs module division should enjoy benefits from strong seasonality, HMCÊs Group's largest parts and KiaÊs solid global sales, and new car launches (i.e., the K9 and the Santa Fe). supplier. The company also handles Hyundai MotorÊs and Kia Motors' AS Hyundai Mobis should continue to supply new core electronic products (i.e., full LED divisions. lights, AFLS, LDWS, and air suspension systems) that will contribute to mix improvement.

Share price FY Revenues OP OP Margin NP EPS EBITDA FCF ROE P/E P/B EV/EBITDA 140 KOSPI (Wbn) (Wbn) (%) (Wbn) (Won) (Wbn) (Wbn) (%) (X) (X) (X) 120 12/10 22,144 2,331 10.5 2,504 25,712 2,800 1,679 28.0 11.1 2.8 9.8 100 12/11 26,295 2,675 10.2 3,023 31,046 2,991 1,130 25.3 9.4 2.1 9.4 80 12/12F 30,007 3,008 10.0 3,362 34,524 3,457 1,475 21.9 8.2 1.7 7.7 60 12/13F 32,417 3,258 10.1 3,654 37,527 3,720 2,000 19.7 7.6 1.4 6.8

40 12/14F 36,072 3,638 10.1 4,011 41,192 4,091 2,354 18.1 6.9 1.2 5.9 4/11 8/11 12/11 4/12 Notes: 2010 figures are based on K-GAAP; 2011~2014F figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests; Source: Company data, KDB Daewoo Securities Research estimates

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. Company April 20, 2012

Auto parts Hyundai Wia (011210 KS) Daewoo Securities Co., Ltd. Michael Yun Deserving of a premium +822-768-4169 [email protected] Raise TP to W210,000; Maintain Buy rating Young-ho Park +822-768-3033 We maintain our Buy rating on Hyundai Wia and raise our 12-month target price to [email protected] W210,000. We have raised our target price because we revised up our 2012 EPS

forecast by 13.7%. In deriving our target price, we applied a target P/E of 15.8x to Hyundai WiaÊs 2012F EPS (W13,371). We arrived at our multiple of 15.8x using a PEG of 0.8x, which is the average PEG of KOSPI-listed manufacturers.

Buy (Maintain) We believe that Hyundai WiaÊs automotive and machine tool businessesÊ margin Target Price (12M, W) 210,000 improvements will be faster than originally anticipated. This is due to: 1) sales mix Share Price (04/19/12, W) 155,500 improvement at the machine tool unit, 2) the fact that solid top-line growth should Expected Return (%) 35.0 ease increasing fixed cost pressures, and 3) efficiency improvement. EPS Growth (12F, %) 41.9 Market EPS Growth (12F, %) 19.3 1Q Preview: OP of W109bn with OP margin rising to 6.4% P/E (12F, x) 11.6 Market P/E (12F, x) 9.8 We forecast Hyundai WiaÊs consolidated 1Q revenues to climb 13.9% YoY to KOSPI 1,999.86 W1.7tr on the back of capacity expansion (for CV joints and transmissions) at the Market Cap (Wbn) 4,001 automotive division and a rise in orders at the machine tool business. Shares Outstanding (mn) 26 Avg Trading Volume (60D, '000) 320 Meanwhile, we forecast Hyundai WiaÊs operating profit and net profit to increase by Avg Trading Value (60D, Wbn) 44 over 50% each, coming in at W109bn and W81bn, respectively. These figures are at Dividend Yield (12F, %) 0.6 least 10% higher than the market consensus estimates. We anticipate that Hyundai Free Float (%) 59.0 WiaÊs 1Q OP margin will reach 6.4%. Our OP margin estimates for the automotive 52-Week Low (W) 107,500 and machine tool businesses are 6.2% (up 0.9%p QoQ) and 7.0% (up 3.9%p QoQ), 52-Week High (W) 178,500 respectively. Beta (12M, Daily Rate of Return) 1.1 Price Return Volatility (12M Daily, %, SD) 3.5 2012 NP to show growth of 44.7%; Strong 1Q results are just the beginning Foreign Ownership (%) 7.3 Major Shareholder(s) We forecast Hyundai WiaÊs 2012 consolidated net profit to increase by 44.7% to HMC et al. (41%) W344bn. We also project the companyÊs top line to grow at a solid pace (16.8% NPS (7.16%) YoY), thanks to increased capacity and robust new orders. In light of this strong top-

line growth (as well as projections for sales mix improvement), we believe that Price Performance Hyundai WiaÊs operating profit will increase by 38.6% to W467bn on an OP margin (%) 1M 6M 12M Absolute 21.5 9.5 28.5 of 6.3% (up 1.0%p YoY). Hyundai WiaÊs strong earnings should outshine those of its Relative 23.8 1.8 34.3 peers, and we believe that the companyÊs top-line growth and margin improvement Key Business make it deserving of a premium to the auto parts sector. Hyundai Wia is a manufacturer of automotive parts and machine tools.

Share price FY Revenues OP OP Margin NP EPS EBITDA FCF ROE P/E P/B EV/EBITDA 240 KOSPI (Wbn) (Wbn) (%) (Wbn) (Won) (Wbn) (Wbn) (%) (X) (X) (X)

190 12/10 4,435 132 3.0 137 6,289 196 80 15.4 0.0 0.0 2.3 12/11 6,393 337 5.3 238 9,421 416 -437 19.8 15.1 2.8 10.6 140 12/12F 7,465 467 6.3 344 13,371 554 176 21.3 11.6 2.4 8.4 90 12/13F 8,893 565 6.4 395 15,338 659 227 20.2 10.1 2.0 6.8

40 12/14F 10,537 674 6.4 488 18,956 764 436 20.6 8.2 1.6 5.4 4/11 8/11 12/11 4/12 Notes: 2010 figures are based on K-GAAP; 2011~2014F figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests; Source: Company data, KDB Daewoo Securities Research estimates

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. Company April 20, 2012

Shipbuilding Hyundai Heavy Industries (009540 KS) Daewoo Securities Co., Ltd. Ki-jong Sung Orders expected to bounce back +822-768-3263 [email protected] Reiterate our Buy call with TP of W400,000

We reiterate our Buy call on Hyundai Heavy Industries (HHI) with a target price of W400,000. While HHIÊs domestic competitors took large-scale offshore structure

orders in 1Q, HHI showed sluggish orders for not only overseas structures but also merchant vessels and machinery. We attribute this weak performance to company- specific issues. As a result, HHIÊs shares rose less than its competitorsÊ.

Buy (Maintain) However, we expect HHIÊs order performance to pick up through 2H. The company Target Price (12M, W) 400,000 is waiting on bidding results for large-scale onshore and offshore plant projects. Share Price (04/19/12, W) 314,500 Furthermore, we expect HHI to receive large-sized containership orders. Expected Return (%) 27.2 Despite still-lurking euro zone issues and a global economic slowdown, we expect EPS Growth (12F, %) -4.1 Market EPS Growth (12F, %) 19.3 HHIÊs annual order performance to be on an upward trend going forward. With P/E (12F, x) 12.8 productivity normalizing, HHIÊs 1Q results are likely to beat the market consensus. Market P/E (12F, x) 9.8 HHIÊs shares still look attractive, in light of: 1) the companyÊs solid fundamentals, 2) KOSPI 1,999.86 its strong medium- to long-term competitiveness, and 3) projections for order and Market Cap (Wbn) 23,902 earnings improvements. We believe that the gap between HHIÊs shares and those Shares Outstanding (mn) 76 of its competitors should narrow through 2H alongside a recovery of orders. Avg Trading Volume (60D, '000) 358 Avg Trading Value (60D, Wbn) 114 Global capital flowing into energy investments Dividend Yield (12F, %) 1.3 Free Float (%) 59.3 With oil prices staying high, investments in energy development (especially by 52-Week Low (W) 235,500 global financial firms) are expanding. Given that even mid- and small-sized banks and 52-Week High (W) 549,000 Asian banks are entering the ship financing business, the offshore structure-related Beta (12M, Daily Rate of Return) 1.6 financing market is likely to grow. Indeed, we believe that the number and scale of Price Return Volatility (12M Daily, %, SD) 3.3 Foreign Ownership (%) 19.7 big-project bids made by HHI YTD have increased YoY. Major Shareholder(s) Mong-Jun Jung et al. (21.31%) 1Q Preview: Revenues and OP forecast at W6.19tr and W492bn Treasury shares (19.36%) For 1Q, we project HHI to post revenues of W6.19tr (down 1.8% YoY), an operating NPS (5.08%) profit of W492bn (down 50.3% YoY), and a pretax profit of W535bn (down 52.1% Price Performance YoY) under non-consolidated K-IFRS. We estimate OP margin at 8.0%, down 7.7%p (%) 1M 6M 12M Absolute -4.1 10.2 -38.1 YoY but up 2.0%p QoQ. Relative -1.8 2.4 -32.3 These results would beat both our expectations and the market consensus. We Key Business Hyundai Heavy Industries is diversifying its project the solar PV unit to swing to positive in 1Q in light of the dissipation of business areas to include , massive inventory write-offs (made during 3Q~4Q11). As for the merchant vessel offshore structures, construction unit, the proportion of revenues related to low-margin orders (taken during equipment, engines, and electro electric 2009~2010) is likely to be smaller than competitorsÊ. Still, since input of low-cost systems. The company owns and Hyundai Samho Heavy raw materials was only minimal, the unitÊs margin improvement should be limited. Industries.

Share price FY Revenues OP OP Margin NP EPS EBITDA FCF ROE P/E P/B EV/EBITDA 110 KOSPI (Wbn) (Wbn) (%) (Wbn) (Won) (Wbn) (Wbn) (%) (X) (X) (X) 100 90 12/10 22,405 3,439 15.4 3,761 49,489 3,932 258 31.8 9.0 2.5 9.3 80 12/11 25,020 2,613 10.4 1,946 25,605 3,116 721 13.6 10.0 1.4 7.4 70 12/12F 27,404 2,207 8.1 1,866 24,549 2,565 2,303 12.0 12.8 1.5 10.0 60 50 12/13F 30,867 3,141 10.2 2,524 33,215 3,510 2,050 14.5 9.5 1.3 6.9 40 12/14F 34,789 3,749 10.8 3,191 41,982 4,129 2,569 16.1 7.5 1.1 5.4 4/11 8/11 12/11 4/12 Notes: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Source: Company data, KDB Daewoo Securities Research estimates

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.

Market Data April 20, 2012

※All data as of close April 19, 2012, unless otherwise noted.

Other Major Indices Economic Indicators Close Net Chg 1D (%) YTD (%) Close 1D ago 1M ago 1Y ago MSCI * 407.71 6.15 1.53 13.82 USD/KRW 1,136.60 1,138.90 1,124.40 1,089.90 KOSPI 1,999.86 -4.67 -0.23 9.50 JPY100/KRW 1,397.77 1,406.22 1,346.18 1,322.77 KOSDAQ 501.92 -1.71 -0.34 -0.96 EUR/KRW 1,491.22 1,495.03 1,482.02 1,551.31 Dow Jones* 13,032.75 -82.79 -0.63 6.67 3Y Treasury 3.49 3.49 3.62 3.71 S&P 500* 1,385.14 -5.64 -0.41 8.46 3Y Corporate 4.22 4.23 4.41 4.51 NASDAQ* 3,031.45 -11.37 -0.37 14.45 DDR2 1Gb* 1.29 1.29 1.34 1.35 Philadelphia Semicon* 419.51 -3.69 -0.87 13.81 NAND 16Gb* 2.18 2.17 2.31 3.75 FTSE 100* 5,745.29 -21.66 -0.38 0.80 Oil (Dubai)* 114.77 115.44 121.75 115.31 Nikkei 225 9,588.38 -78.88 -0.82 12.01 Gold* 1,638.80 1,650.30 1,655.80 1,492.30 Hang Seng* 20,780.73 218.42 1.06 10.08 Customer deposits (Wbn)* 17,972 18,239 18,973 17,155 Taiwan (Weighted) 7,622.69 17.69 0.23 9.64 Equity type BC (Wbn)(Apr. 17) 97,282 97,269 98,721 99,463 Note: * as of April 18, 2012 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 27.20 Samsung Electronics (P) 25.06 SEMCO 29.35 LG Chem 34.66 LG Chem 15.35 Hyundai Motor 20.60 Kia Motors 24.19 LG Electronics 30.25 KT&G 9.21 LG Electronics 17.45 Samsung Heavy Ind. 18.62 16.20 8.35 S-Oil 12.14 Hyundai Heavy Industries 18.31 LG Display 15.83 Amore Pacific 7.62 DSME 10.80 Samsung SDI 15.72 Hyundai Mobis 12.95 POSCO 5.93 Kia Motors 10.10 Samsung Electronics (P) 15.33 KB Financial Group 12.72 KB Financial Group 5.50 Hyundai Heavy Industries 9.49 GS Construction 10.65 KT 11.62 NCsoft 5.32 Hyundai Eng. & Cosnt. 9.20 Glovis 9.02 KODEX LEVERAGE 11.21 Woori Investment Securities 4.87 Hynix 9.07 OCI 8.77 Woori Investment Securities 10.48 GS Holdings 4.75 SEMCO 8.54 Hyundai Motor 8.33 SK Energy 10.37 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 Daum Communications 3.86 6.51 Melfas 2.79 Celltrion 9.52 Paradise 3.42 NEPES 1.97 Digitech systems 2.08 CJ O Shopping 3.67 Duk San Hi Metal 1.79 NEOWIZ Games 1.91 Com2us 1.53 SM 1.71 ATTO 0.93 CJ E&M 1.90 Innox 1.49 e-LITECOM 1.37 Partrion 0.92 Kornic Systems 1.38 Medy-tox 1.46 Daum Communications 1.34 UBIVELOX 0.74 ICD 0.95 Paradise 1.27 Insun ENT 1.28 HNK Machine Tool 0.71 Soribada 0.92 NEPES 1.24 TERA SEMICON 1.26 Medipost 0.60 Silicon Works 0.75 HaanSoft 1.09 Interflex 0.92 AHNLAB 0.55 CJ O Shopping 0.75 Uju Electronics 1.05 GOLFZON 0.85 Sung Kwang Bend 0.54 Com2us 0.54 Pyeong Hwa Automotive 0.94 SBS Contents Hub 0.82 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 1,307,000 14,000 192,520 Celltrion 35,000 -800 4,081 Hyundai Motor 259,500 -4,000 57,161 Daum Communications 124,200 1,600 1,673 POSCO 380,000 -500 33,130 Semiconductor 22,150 -400 1,291 Kia Motors 80,000 -500 32,429 AHNLAB 119,000 -4,300 1,191 Hyundai Mobis 283,500 -500 27,596 CJ O Shopping 188,200 -3,300 1,167 Hyundai Heavy Industries 314,500 -1,000 23,902 POSCO ICT 7,800 10 1,068 LG Chem 347,500 500 23,029 CJ E&M 27,100 -900 1,027 Hynix 28,800 750 19,987 SK Broadband 3,415 -45 1,010 Shinhan Financial Group 41,500 -850 19,679 Dongsuh 33,100 450 986 94,500 1,900 18,900 SFA Engineering 54,500 500 978 Source:

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