August 20, 2015

KOREA

Company News & Analysis Major Indices Close Chg Chg (%) Sungwoo Hitech (015750/Buy/TP: W10,500) Lower TP KOSPI 1,914.55 -24.83 -1.28 Key overseas operations’ earnings deteriorate KOSPI 200 231.59 -2.68 -1.14 KOSDAQ 656.71 -13.84 -2.06

Turnover ('000 shares, Wbn) Volume Value KOSPI 389,843 5,077 KOSPI 200 77,250 3,544 KOSDAQ 430,493 2,887

Market Cap (Wbn) Value KOSPI 1,196,328 KOSDAQ 182,390

KOSPI Turnover (Wbn) Buy Sell Net Foreign 1,337 1,631 -295 Institutional 1,127 838 289 Retail 2,559 2,596 -38

KOSDAQ Turnover (Wbn) Buy Sell Net Foreign 274 244 31 Institutional 192 179 13 Retail 2,423 2,469 -46

Program Buy / Sell (Wbn) Buy Sell Net KOSPI 1,141 1,247 -106 KOSDAQ 72 50 22

Advances & Declines Advances Declines Unchanged KOSPI 224 600 43 KOSDAQ 264 771 48

KOSPI Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Samsung Electronics 1,139,000 -15,000 248 KODEX LEVERAGE 9,050 -200 190 KODEX 200 23,120 -240 160 Hynix 33,050 50 151 KOREA AEROSPACE 86,000 -3,800 138

KOSDAQ Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Celltrion 70,100 -3,500 109 KICA 10,500 1,090 86 ilShinbiobase Co., Ltd. 3,855 770 81 Sansung P&C 51,500 -3,300 68 Daum Communications 125,200 -1,200 61 Note: As of August 20, 2015

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.

Sungwoo Hitech (015750 KQ) Key overseas operations’ earnings deteriorate

Auto 2Q15 review: OP falls 33% YoY Sungwoo Hitech’s (Sungwoo) 2Q15 consolidated earnings came in weaker than our Results Comment estimates, with revenue of W852bn (+0.3% YoY, +0.2% QoQ ) and operating profit of August 20, 2015 W40bn (-32.9% YoY, -20.4% QoQ). The earnings miss was mostly attributable to Sungwoo’s operations in China; Hyundai Motor’s (HMC) and Motors’ (Kia) operations

there have gone south, leading to Sungwoo’s Beijing and Yancheng operations posting (Maintain) Buy respective net profit declines of 66% YoY and 85% YoY in the quarter. Besides China, Sungwoo’s Europe earnings significantly declined, in step with HMC’s and Kia’s sales mix Target Price (12M, W) 10,500 deterioration. In sum, weak earnings from Sungwoo’s two key regions—China and Europe—could not offset losses in India and at other new operations (WMU, Mexico). Share Price (08/19/15, W) 8,540 Meanwhile, Sungwoo’s net profit fell 75% YoY in 2Q15 due to huge equity-method losses from its two subsidiaries due to debt write-offs (MGL, construction company) and Expected Return 23% goodwill amortization (Lee & Han, formerly EXR Korea). Fortunately, we believe the write-offs from MGL are almost over, and that the goodwill amortization was a one-off OP (15F, Wbn) 170 event. Consensus OP (15F, Wbn) 199 China slowdown to continue to materialize in 2H EPS Growth (15F, %) -25.8 Given Sungwoo’s high dependency on (HMG) in China, we believe Market EPS Growth (15F, %) 25.1 that Sungwoo’s China earnings will see further downside, as we do not anticipate much P/E (15F, x) 6.3 of a rebound in HMC’s and Kia’s China sales over the next one to two quarters. In Market P/E (15F, x) 11.0 addition, HMC and Kia recently announced price cuts, and also plan to launch new KOSDAQ 670.55 models at more competitive prices, which will hurt parts makers. Market Cap (Wbn) 512 On the other hand, Sungwoo is preparing new plants in Mexico and China for HMG , Shares Outstanding (mn) 60 though their earnings contribution will take at least a year to materialize, and the plants Free Float (%) 54.7 will continue to make losses in the meantime. The only bright spot ahead appears to be Foreign Ownership (%) 21.4 Europe, where we forecast HMC’s and Kia’s new model launches in 2H will improve Beta (12M) 0.56 52-Week Low 8,150 Sungwoo’s earnings. On an annual basis, we forecast Sungwoo’s operating profit to 52-Week High 17,950 decline 11.7% YoY.

(%)(%)(%) 1M1M1M 6M6M6M 12M12M12M Lower TP to W10,500 Absolute 4.4 -28.2 -45.3 We lower our 12-month target price on Sungwoo by 31.4% to W10,500 (from Relative 20.4 -34.8 -54.1 W15,300), as we lower our 2015F and 2016F EPS by 30.8% and 15.3%, respectively. As mentioned, the remainder of 2015 looks unattractive; concerns in China will likely 160 Sungwoo Hitech KOSDAQ 140 continue throughout the year, and until new plants commence operations, their losses 120 will eat away at earnings. 100 80 60 40 8.14 12.14 4.15 8.15

Daewoo Securities CCo.,o., Ltd. FY (Dec.) 12/12 12/13 12/14 12/15F 12/16F 12/17F Revenue (Wbn) 3,011 3,106 3,273 3,485 4,017 4,289 [Auto/Auto Parts/Tire] OP (Wbn) 200 213 193 170 218 250

Michael Yun OP margin (%) 6.6 6.9 5.9 4.9 5.4 5.8 +822-768-4169 NP (Wbn) 134 131 110 82 131 145 [email protected] EPS (W) 2,231 2,178 1,833 1,361 2,175 2,424 ROE (%) 19.0 16.5 12.6 8.7 13.0 13.1 Young-ho Park +822-768-3033 P/E (x) 4.4 5.9 6.4 6.3 3.9 3.5 [email protected] P/B (x) 0.8 0.9 0.8 0.5 0.5 0.4 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

Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including t he U.S. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.

Key Universe Valuations August 20, 2015

※All data as of close August 19, 2015, unless otherwise noted.

15F Earnings growth Mkt Cap Price P/E (x) P/B (x) ROE (%) Ticker Company Div Yield OP EPS (Wbn) (W) (%) 15F 16F 15F 16F 15F 16F 15F 16F 15F 16F 005930 Samsung Electronics 167,774 1,139,000 1.4 8.7 6.2 -6.9 8.5 9.0 8.3 1.0 0.9 12.6 12.3 015760 KEPCO 33,190 51,700 2.1 56.6 4.5 266.6 -47.6 3.4 6.4 0.5 0.5 16.9 7.9 005380 Hyundai Motor 32,821 149,000 2.4 -11.9 8.0 -7.1 2.1 6.2 6.1 0.7 0.6 11.4 10.7 000660 SK Hynix 24,060 33,050 1.2 13.1 0.6 8.5 2.8 5.2 5.1 1.1 0.9 22.9 19.4 017670 SK Telecom 20,832 258,000 3.9 3.5 7.3 5.2 5.1 11.0 10.5 1.2 1.1 12.8 12.6 032830 Samsung Life 20,100 100,500 - - - - 0.0 0.0 012330 19,907 204,500 1.6 -10.7 11.1 -10.7 15.1 6.5 5.7 0.8 0.7 12.4 12.8 055550 Shinhan Financial Group 19,893 41,950 - - - - 0.0 0.0 090430 AmorePacific 19,876 340,000 0.3 42.2 37.5 56.2 35.3 39.6 29.3 7.1 5.8 19.2 21.7 018260 Samsung SDS 18,996 245,500 0.2 14.3 13.8 12.4 12.2 40.9 36.5 4.2 3.8 10.8 11.0 000270 Kia Motors 18,849 46,500 2.5 -4.4 25.0 -0.3 14.9 6.3 5.5 0.8 0.7 13.0 13.7 034730 SK Holdings 18,012 256,000 0.8 23.2 9.0 356.4 4.3 22.0 21.1 3.7 3.2 22.7 19.8 035420 NAVER 17,174 521,000 0.2 12.7 34.4 32.0 35.5 28.6 21.1 5.3 4.2 28.8 29.4 005490 POSCO 15,955 183,000 4.4 -9.6 30.8 124.5 65.9 11.4 6.8 0.4 0.4 3.4 5.5 033780 KT&G 15,377 112,000 3.1 14.8 -6.3 22.9 -10.5 15.2 16.9 2.3 2.2 17.1 14.1 051910 LG Chem 14,646 221,000 1.8 53.5 26.1 61.5 35.5 11.6 8.6 1.3 1.1 11.2 13.8 105560 KB Financial Group 14,140 36,600 - - - - 0.0 0.0 000810 Samsung F&M 12,696 268,000 - - - - 0.0 0.0 051900 LG Household & Health Care 12,182 780,000 0.6 34.8 20.3 34.4 22.6 29.4 24.0 6.8 5.5 26.1 26.0 003550 LG Corp. 9,819 56,900 1.8 23.9 10.0 22.8 7.3 9.7 9.0 0.8 0.7 8.3 8.3 035250 Kangwon Land 9,681 45,250 2.4 16.8 12.2 25.3 14.2 21.5 18.8 3.1 2.8 15.8 16.4 010130 Korea Zinc 9,256 490,500 1.3 3.2 17.4 9.4 17.6 16.9 14.4 1.8 1.6 11.3 12.0 096770 SK Innovation 8,784 95,000 3.4 - -29.2 - -27.6 6.5 8.9 0.5 0.5 8.8 6.0 086790 Hana Financial Group 8,347 28,200 - - - - 0.0 0.0 034220 LG Display 7,979 22,300 2.2 47.1 -34.0 49.0 -33.1 5.9 8.9 0.6 0.6 11.3 7.0 030200 KT 7,820 29,950 1.7 - 2.1 - -15.8 10.0 11.9 0.7 0.6 7.3 5.8 011170 Lotte Chemical 7,781 227,000 0.4 348.5 0.4 696.9 6.9 6.6 6.2 1.0 0.9 16.7 15.3 024110 Industrial Bank of Korea 7,651 13,750 - - - - 0.0 0.0 023530 Lotte Shopping 7,637 242,500 0.6 11.3 12.6 37.8 13.4 10.1 8.9 0.4 0.4 4.4 4.8 035720 Daum Kakao 7,505 125,200 0.1 -42.7 105.4 -75.3 115.3 82.9 38.5 2.9 2.7 3.6 7.4 000830 Samsung C&T 7,342 47,000 1.3 -19.4 12.2 61.9 9.6 17.2 15.7 0.5 0.5 3.3 3.5 088350 Hanwha Life 7,296 8,400 - - - - 0.0 0.0 021240 Coway 7,227 93,700 2.9 21.1 12.9 30.7 11.9 22.2 19.8 6.1 5.3 31.0 31.8 004020 7,099 53,200 1.4 10.8 4.8 44.4 -4.6 5.6 5.9 0.4 0.4 7.8 7.0 009240 Hanssem 6,943 295,000 0.3 35.1 34.9 35.3 34.3 59.2 44.1 14.6 11.3 30.8 31.8 19745. 009540 Hyundai Heavy Industries 6,711 88,300 - - - - 12.8 0.4 0.4 - 3.4 0 139480 Emart 6,690 240,000 0.6 -2.7 25.8 111.3 -18.2 10.9 13.4 0.9 0.9 8.7 6.7 086280 6,638 177,000 1.1 3.7 12.3 -16.5 30.0 14.8 11.4 2.2 1.9 15.3 17.5 010950 S-Oil 6,620 58,800 4.6 - -24.6 - -22.9 7.2 9.4 1.2 1.1 17.8 12.2 066570 LG Electronics 6,620 40,450 1.5 -40.8 56.2 31.8 84.9 13.9 7.5 0.6 0.6 4.5 7.9 006400 Samsung SDI 5,522 80,300 1.2 -73.3 859.1 - 45.4 25.8 17.7 0.5 0.5 1.9 2.7 051600 KEPCO KPS 5,445 121,000 - - - - 0.0 0.0 001800 Orion 5,432 909,000 0.7 17.2 9.4 26.9 14.7 26.2 22.8 3.8 3.3 15.7 15.9 032640 LG Uplus 5,152 11,800 2.4 26.4 0.7 80.3 3.9 12.5 12.0 1.2 1.1 9.5 9.3 097950 CJ CheilJedang 5,136 390,500 0.6 45.4 11.4 201.6 19.3 20.3 17.0 1.7 1.6 9.1 10.1 007070 GS Retail 4,974 64,600 0.9 69.0 25.0 67.0 24.3 26.8 21.5 2.7 2.5 10.6 12.1 161390 4,744 38,300 1.0 -21.0 13.2 -12.4 12.7 7.7 6.9 1.0 0.8 12.9 13.0 036570 NCsoft 4,682 213,500 1.8 12.7 22.1 19.7 15.1 17.0 14.8 2.8 2.5 18.8 18.8 004800 Hyosung 4,600 131,000 0.8 -1.9 -4.4 9.4 -4.9 15.7 16.5 1.5 1.4 10.1 8.8 008770 Hotel Shilla 4,337 110,500 0.4 39.1 87.5 67.2 124.2 36.0 16.0 5.3 4.0 15.8 28.7 Source: KDB Daewoo Securities Research

Market Data August 20, 2015

※All data as of close August 20, 2015, unless otherwise noted.

Other Major Indices Economic Indicators Close Net Chg 1D (%) YTD (%) Close 1D ago 1M ago 1Y ago MSCI Korea* 336.37 -0.67 -0.20 -13.01 USD/KRW 1,185.10 1,184.70 1,146.30 1,018.00 KOSPI 1,914.55 -24.83 -1.28 -0.62 JPY100/KRW 956.50 952.45 923.65 989.17 KOSDAQ 656.71 -13.84 -2.06 18.60 EUR/KRW 1,317.71 1,306.61 1,242.30 1,356.03 Dow Jones* 17,348.73 -162.61 -0.93 -2.72 3Y Treasury 1.71 1.73 1.78 2.58 S&P 500* 2,079.61 -17.31 -0.83 1.04 3Y Corporate 1.96 1.97 2.00 2.96 NASDAQ* 5,019.05 -40.30 -0.80 6.18 DDR2 1Gb* 1.15 1.15 1.19 1.60 Philadelphia Semicon* 618.32 -5.69 -0.91 -9.96 NAND 16Gb* 1.53 1.54 1.66 2.38 FTSE 100* 6,403.45 -122.84 -1.88 -2.20 Oil (Dubai)* 48.74 48.73 56.72 100.07 Nikkei 225 20,033.52 -189.11 -0.94 15.08 Gold* 1,128.10 1,117.10 1,131.90 1,295.10 Hang Seng* 23,167.85 -307.12 -1.31 -2.89 Customer deposits (Wbn)* 21,007 20,963 24,291 15,441 Taiwan (Weighted) 8,029.81 7.97 0.10 -13.42 Equity type BC (Wbn)(Aug. 18) 78,206 78,212 77,387 78,076 Note: * as of August 19, 2015 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 Hyundai Motor 25.20 Samsung Electronics 45.43 Kia Motors 33.92 KODEX LEVERAGE 39.10 Hyundai Development E&C 10.12 Hynix 39.65 Hanmi Pharm 15.07 Hyundai Development E&C 12.14 GS Retail 9.28 Kia Motors 26.54 Samsung Electronics 14.47 Hotel Shilla 7.80 Hanmi Science 8.04 POSCO 16.06 Hyundai Mobis 12.83 OCI 5.71 Honam Petrochemical 6.85 15.08 AmorePacific 9.46 LS 5.20 Daewoo Securities 4.95 Hyundai Mobis 12.82 KEPCO 9.05 SAMSUNG SDS 4.72 Samsung Corp. 4.85 CHEIL INDUSTRIES 10.83 KODEX FTSE CHINA A50 8.54 KODEX INVERSE 4.33 Daou Tech. 4.68 LG Uplus 10.11 LG Household & Health Care 8.14 Daou Tech. 3.60 Kolon Ind. 4.30 KT 9.35 POSCO 8.02 SamlipGenFood 3.33 SK Energy 4.27 AmorePacific 9.25 Amore Pacific 7.95 IS DONGSEO 3.11 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 Medy-tox 9.42 Celltrion 19.94 Binex 3.36 INICIS 3.33 Dongsuh 6.02 GemVax 3.43 Daum Communications 3.21 Dongsuh 2.96 CJ E&M 4.39 CJ O Shopping 3.17 Korea Information Service 2.78 ViroMed 2.75 YG Entertainment 3.57 Korea Information Service 2.13 Easy Bio System 2.62 PEPTRON 2.19 Techno Semichem 3.07 Interpark 2.04 CJ O Shopping 2.55 COSON 2.06 Daum Communications 2.67 Sansung P&C 1.75 GemVax 2.30 Wemade 1.69 KEBT 2.18 SM 1.65 CJ E&M 2.06 Webzen 1.65 ISPLUS 2.09 OCI Materials 1.41 Medipost 2.00 Sansung P&C 1.56 Com2us 2.08 KT Music 1.28 Huons 1.87 Jenexine 1.38 Access Bio 2.02 Binex 1.25 KT Music 1.71 Romanson 1.26 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 1,139,000 -15,000 167,774 Celltrion 70,100 -3,500 7,853 KEPCO 51,700 1,100 33,190 Daum Communications 125,200 -1,200 7,505 Hyundai Motor 149,000 1,000 32,821 Dongsuh 42,400 500 4,227 Hynix 33,050 50 24,060 Medy-tox 514,000 14,300 2,907 SK Telecom 258,000 1,000 20,832 CJ E&M 74,600 -5,400 2,889 Samsung Electronics (P) 900,000 -3,000 20,550 LOEN 89,400 1,300 2,261 Samsung Life Insurance 100,500 -3,000 20,100 ViroMed 141,300 -5,700 2,006 Hyundai Mobis 204,500 -4,000 19,907 Paradise 20,200 -600 1,837 Shinhan Financial Group 41,950 -500 19,893 EO Technics 113,000 -5,700 1,387 Amore Pacific 340,000 -6,000 19,876 Com2us 111,900 -900 1,309 Source: Korea Exchange