June 20, 2019 Korea Morning Focus

Company News & Analysis Major Indices Close Chg Chg (%) Koh Young Technology (098460/Trading Buy/TP: W97,000) Downgrade KOSPI 2,124.78 26.07 1.24 rating & Lower TP KOSPI 200 275.31 3.95 1.46 Expectations on new ventures matter more KOSDAQ 717.71 2.85 0.40

Turnover ('000 shares, Wbn) Volume Value KOSPI 847,570 4,985 KOSPI 200 67,908 3,042 KOSDAQ 968,532 4,251

Market Cap (Wbn) Value KOSPI 1,414,680 KOSDAQ 245,238

KOSPI Turnover (Wbn) Buy Sell Net Foreign 1,515 1,215 300 Institutional 1,083 914 169 Retail 2,361 2,821 -460

KOSDAQ Turnover (Wbn) Buy Sell Net Foreign 417 441 -23 Institutional 235 242 -7 Retail 3,574 3,541 32

Program Buy / Sell (Wbn) Buy Sell Net KOSPI 1,130 929 201 KOSDAQ 383 385 -2

Advances & Declines Advances Declines Unchanged KOSPI 537 277 78 KOSDAQ 722 460 106

KOSPI Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value 45,350 1,000 423 Hynix 67,200 3,800 408 KODEX Leverage 12,420 325 279 KODEX 200 Futures 7,385 -190 176 Inverse 2X Nano Medics 9,720 650 165

KOSDAQ Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Crystal New Material 2,345 205 156 iA 819 27 119 Heungu 7,000 1,000 108 Emerson Pacific 15,500 800 66 KMW 38,900 -2,050 64 Note: As of June 19, 2019

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Koh Young Technology (098460 KQ) Expectations on new ventures matter more 2Q19 preview: Earnings likely to miss consensus MedTech For 2Q19, we forecast Koh Young Technology (Koh Young) to post revenue of W59.6bn (-8.8% YoY), below the consensus. Due to weaker downstream capex, revenue is likely to decline for both solder paste inspection (SPI) equipment (-10.0% YoY) and Earnings Preview automated optical inspection (AOI) equipment (-14% YoY). Still, we view our revenue June 20, 2019 estimate as decent, given the high base of comparison (quarterly record set in 2Q18). We see operating profit coming in at W10bn (-21.2% YoY), which is also below the consensus. OP margin should fall 2.7%p YoY to 16.8%, as slower top-line growth is likely to push up cost pressures. More than just an equipment maker: Turning core technology into solutions (Downgrade) Trading Buy and platforms 1) High valuation reflects strong core technology: Koh Young’s core technology is its Target Price (12M, W) ▼ 97,000 3D sensing technology, developed by Korea’s first generation of robotics engineers. The biggest advantage of 3D measurement technology is its ability to measure data Share Price (06/19/19, W) 87,500 with high reproducibility and precision. Leveraging the competitiveness of its core technology, Koh Young has developed full-fledged solutions and platforms. Expected Return 11% 2) Solutions based on core technology to support mainstay businesses: We believe Koh Young is well-positioned to strengthen its dominance in the surface mount technology (SMT) inspection market. In 2018, we believe the AOI equipment business (the company’s key growth driver) grew more than 40%, supported by rising demand OP (19F, Wbn) 41 for high-precision inspection, and held a market share of over 30%. In 2019, the Consensus OP (19F, Wbn) 49 company will likely expand its equipment portfolio to mid-end products in order to gain market share. The company also offers smart factory solutions based on AI and EPS Growth (19F, %) -5.4 3D measurement data, with compelling features (auto programming, integration with Market EPS Growth (19F, %) -21.3 PCB manufacturing equipment, etc.) that competitors are unable to mimic. Such solutions are becoming more advanced over time, further raising entry barriers. P/E (19F, x) 29.9 Market P/E (19F, x) 12.1 3) Platforms based on core technology form new businesses: We believe 2019 will KOSDAQ 717.71 be the year in which Koh Young’s new ventures begin to take off. In particular, the company’s machine optical inspection (MOI) equipment business has been expanding Market Cap (Wbn) 1,198 its client base, after receiving its first purchase order from a global auto parts supplier Shares Outstanding (mn) 14 in March. Also worth noting is the company’s surgical robot business. Following confirmatory clinical trials and fee discussions, we believe the company will begin to Free Float (%) 77.1 generate related revenue in 2H19. Foreign Ownership (%) 56.8 Beta (12M) 0.94 Downgrade to Trading Buy and cut TP to W97,000 52-Week Low 74,100 We cut our target price on Koh Young to W97,000 (from W102,000), reflecting our 52-Week High 115,000 earnings revisions. With our target price implying 11% upside potential, we downgrade our rating to Trading Buy. The stock is trading at a 12-month forward P/E of 28.2x, a (%) 1M 6M 12M premium to global peers (27.3x for the ROBO index). Absolute -4.6 7.6 -11.1 With demand for high-precision inspection rising across industries, we believe Koh Relative -5.1 0.8 1.0 Young’s long-term growth story remains intact, supported by its ability to leverage its core technologies to build solutions and platforms. That said, customers’ capex cuts 140 Koh Young Technology are increasing uncertainties over near-term earnings in core businesses. We thus KOSDAQ believe the company’s new ventures will matter more to its share performance than its 120 core businesses for some time. 100 In our view, 1) the growth of mid-end AOI equipment (core businesses) and 2)

80 recognition of the value of MOI and surgical robots (new businesses) will be critical for shares to move higher in 2H19. 60 6.18 10.18 2.19 6.19

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[MedTech/Healthcare Solutions] FY (Dec.) 12/16 12/17 12/18 12/19F 12/20F 12/21F Revenue (Wbn) 172 203 238 240 286 332 Choong-hyun Kim, CFA +822-3774-1740 OP (Wbn) 33 44 46 41 56 66 [email protected] OP margin (%) 19.2 21.7 19.3 17.1 19.6 19.9 NP (Wbn) 30 27 42 40 45 59 EPS (W) 2,173 1,950 3,091 2,924 3,289 4,339 ROE (%) 20.6 16.8 21.9 16.7 16.6 18.8 P/E (x) 20.8 42.3 26.7 29.9 26.6 20.2 P/B (x) 3.7 6.0 4.8 4.5 3.9 3.4 Dividend yield (%) 0.9 0.8 0.8 0.7 0.7 0.7 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 June 20, 2019

※All data as of close June 18, 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 270,730 45,350 3.1 -54.2 38.9 -46.7 34.7 14.1 10.5 1.2 1.1 8.8 11.1 000660 SK Hynix 48,922 67,200 2.2 -85.3 94.0 -85.4 87.6 21.6 11.5 1.0 0.9 4.8 8.5 005380 Hyundai Motor 29,914 140,000 2.9 61.8 9.5 143.0 11.5 10.8 9.7 0.5 0.5 5.2 5.6 068270 Celltrion 27,142 211,500 - - - - 0.0 0.0 051910 LG Chem 24,601 348,500 1.7 -21.5 56.7 -24.3 68.0 24.5 14.6 1.5 1.4 6.4 10.1 055550 Shinhan Financial Group 21,813 46,000 12.5 3.1 10.5 0.7 6.3 6.2 0.6 0.5 9.4 8.8 051900 LG H&H 21,350 1,367,000 12.8 9.7 15.7 10.6 27.0 24.4 5.8 5.0 20.0 18.9 012330 21,301 223,500 1.6 9.1 10.2 27.0 7.4 9.1 8.4 0.7 0.6 7.5 7.6 017670 SK Telecom 21,236 263,000 3.8 7.2 4.4 -51.8 65.3 14.1 8.5 0.8 0.8 6.6 10.3 005490 POSCO 21,099 242,000 4.5 -16.7 1.8 69.3 2.3 7.4 7.2 0.5 0.4 6.5 6.3 105560 KB Financial Group 19,129 45,750 9.7 3.8 10.8 4.0 5.6 5.4 0.5 0.5 9.3 9.0 035420 NAVER 18,129 110,000 0.3 -15.1 26.3 -31.4 68.6 40.7 24.2 2.6 2.4 8.2 12.5 028260 Samsung C&T 17,831 94,000 2.1 5.4 20.1 -4.2 20.7 14.1 11.7 0.7 0.6 5.2 5.9 000270 Motors 17,167 42,350 1.9 20.5 19.7 54.5 16.7 9.6 8.2 0.6 0.6 6.3 7.0 018260 Samsung SDS 16,830 217,500 1.3 11.6 16.5 12.7 15.4 23.7 20.5 2.6 2.4 11.3 12.0 034730 SK Holdings 16,816 239,000 2.0 13.3 12.9 -32.3 20.1 11.1 9.2 0.9 0.8 8.9 9.8 032830 Samsung Life 16,740 83,700 - - - - 0.0 0.0 015760 KEPCO 16,434 25,600 ------0.2 0.3 - - 006400 Samsung SDI 16,125 234,500 0.4 16.8 45.7 5.7 41.3 22.3 15.8 1.3 1.2 6.0 7.9 096770 SK Innovation 14,748 159,500 5.0 -29.5 18.8 -40.7 27.9 15.3 11.9 0.8 0.7 5.3 6.7 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 066570 LG Electronics 13,223 80,800 0.9 7.1 20.0 23.7 39.9 9.5 6.8 0.9 0.8 10.3 12.9 003550 LG Corp. 13,201 76,500 3.0 17.2 15.4 5.5 15.6 6.8 5.9 0.7 0.6 10.5 11.1 000810 Samsung F&M 12,886 272,000 - - - - 0.0 0.0 086790 Hana Financial Group 11,184 37,250 8.6 8.1 9.5 8.2 4.5 4.2 0.4 0.4 9.0 9.1 251270 10,724 125,500 44.5 59.7 57.2 39.0 35.9 25.8 2.2 2.0 6.6 8.5 036570 NCsoft 10,238 466,500 1.3 32.4 26.4 49.5 17.4 16.4 13.9 3.1 2.6 23.9 23.1 035720 10,180 122,000 0.1 167.0 116.1 127.8 160.4 87.3 33.5 1.9 1.8 2.2 5.6 090430 AmorePacific 10,026 171,500 0.8 6.0 20.7 6.9 22.4 28.2 23.1 2.5 2.3 7.8 8.9 010950 S-Oil 9,142 81,200 3.1 60.1 77.0 99.7 139.4 18.4 7.7 1.4 1.2 7.7 16.5 011170 Lotte Chemical 8,877 259,000 4.1 -34.3 31.9 -35.0 35.1 8.7 6.4 0.7 0.6 7.8 9.9 010130 Korea Zinc 8,831 468,000 2.4 8.9 6.0 19.1 2.4 14.1 13.7 1.3 1.2 9.7 9.3 091990 Celltrion Healthcare 8,471 58,900 - 192.4 1119.2 156.4 60.8 23.7 4.5 3.9 8.2 18.6 009540 HHI 8,457 119,500 - 594.6 - - - 71.0 0.7 0.7 - 1.0 024110 Industrial Bank of Korea 8,078 14,050 7.5 4.5 5.4 3.6 5.0 4.8 0.4 0.4 8.6 8.3 030200 KT 7,442 28,500 3.9 2.0 3.0 28.2 5.6 8.4 8.0 0.5 0.5 6.5 6.6 009150 Samsung Electro-Mechanics 7,186 96,200 1.1 -19.1 28.9 -17.5 31.2 13.8 10.5 1.4 1.2 10.7 12.6 018880 Hanon Systems 6,406 12,000 - - - - 0.0 0.0 032640 LG Uplus 6,331 14,500 4.5 -2.9 11.7 2.0 18.2 12.9 10.9 0.9 0.8 7.0 7.9 000720 Hyundai E&C 6,236 56,000 0.9 22.4 10.8 21.0 1.6 13.5 13.3 1.0 0.9 7.3 7.0 034220 LG Display 6,119 17,100 - - - - - 19.2 0.4 0.4 - 2.3 086280 Hyundai Glovis 6,094 162,500 2.0 8.8 2.2 20.2 8.7 11.6 10.7 1.3 1.2 11.8 11.7 004020 5,625 42,150 1.8 2.5 16.1 42.1 23.3 9.9 8.1 0.3 0.3 3.3 3.8 Hyundai Heavy Industries 267250 5,366 329,500 5.6 78.7 2.1 154.0 4.5 7.9 7.5 0.6 0.6 8.6 8.5 Holdings 010140 SamsungHvyInd 5,053 8,020 - - - - - 65.4 0.7 0.7 - 1.2 128940 Hanmi Pharmaceutical 4,784 412,000 0.1 37.5 -0.2 141.7 -12.3 79.5 90.7 6.1 5.8 8.2 6.8 023530 Lotte Shopping 4,583 162,000 3.2 6.5 3.9 - 10.5 11.4 10.3 0.4 0.4 3.4 3.7 097950 CJ CheilJedang 4,479 297,500 1.2 15.4 12.7 -64.8 23.7 15.6 12.6 0.9 0.9 6.3 7.3 029780 Samsung Card 4,403 38,000 -16.3 3.1 2.8 4.1 12.4 11.9 0.6 0.6 1.5 1.5 071050 Korea Investment Holdings 4,352 78,100 - - - - 0.0 0.0 Source: Mirae Asset Daewoo Research

Mirae Asset Daewoo Research Market Data June 20, 2019

※All data as of close June 19, 2019, unless otherwise noted.

Other Major Indices Economic Indicators Close Net Chg 1D (%) YTD (%) Close 1D ago 1M ago 1Y ago MSCI Korea* 421.27 2.37 0.57 -1.79 USD/KRW 1,185.00 1,186.30 1,189.80 1,104.40 KOSPI 2,124.78 26.07 1.24 5.71 JPY100/KRW 1,092.12 1,092.81 1,083.06 999.23 KOSDAQ 717.71 2.85 0.40 7.22 EUR/KRW 1,326.67 1,331.21 1,329.42 1,283.64 Dow Jones* 26,465.54 353.01 1.35 13.45 3Y Treasury 1.48 1.49 1.67 2.16 S&P 500* 2,917.75 28.08 0.97 16.24 3Y Corporate 2.00 2.01 2.15 2.80 NASDAQ* 7,953.88 108.86 1.39 19.32 DDR4 8Gb* 3.39 3.39 3.74 8.61 Philadelphia Semicon* 1,406.16 58.30 4.33 20.67 NAND MLC 64G* 2.35 2.35 2.42 3.60 FTSE 100* 7,443.04 85.73 1.17 10.53 Oil (Dubai)* 59.92 60.74 72.46 70.97 Nikkei 225 21,333.87 361.16 1.72 9.06 Gold* 1,346.60 1,338.70 1,275.70 1,276.20 Hang Seng* 27,498.77 271.61 1.00 9.42 Customer deposits (Wbn)* 23,947 24,694 25,161 27,926 Taiwan (Weighted) 10,775.34 208.60 1.97 12.78 Equity type BC (Wbn)(Jun. 17) 80,158 80,290 80,787 80,865 Note: * as of June 18, 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 Samsung Electronics 110.96 Hana Financial Group 41.58 KODEX Leverage 64.85 KODEX 200 Futures Inverse 2X 14.28 Hynix 74.21 Netmarble 14.00 Hynix 41.35 LG Electronics 8.67 Celltrion 23.80 Amore Pacific 9.85 Samsung Electronics 20.68 NAVER 8.14 Hotel Shilla 23.50 Kia Motors 9.36 Hana Financial Group 16.78 Korean Air Lines 6.60 Woori Financial Group 10.20 LG Display 7.21 Hanwha Chemical 12.83 Korea Zinc 6.47 KB Financial Group 9.58 LG Innotek 6.34 LG Innotek 12.01 Hotel Shilla 5.73 NAVER 8.48 Dongbu Hannong Chemical 5.47 Hyundai Eng. & Cosnt. 11.34 Samsung F&M Insurance 5.64 Korea Zinc 7.20 SK Energy 5.40 Celltrion 8.43 LG Uplus 5.53 LG Electronics 6.70 Woongjin Coway 5.13 KODEX KOSDAQ150 INVERSE 8.29 Kumho Petrochemical 4.05 Samsung SDI 6.62 NHN 4.53 SEMCO 7.99 Dongbu Insurance 4.01 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 PearlAbyss 5.88 Emerson Pacific 12.69 Celltrion Healthcare 11.10 Shinhan 5th SPAC 10.07 ViroMed 5.51 KMW 9.67 NHN KCP 4.15 OE Solutions 5.71 Wi-Sol 3.31 Nepes 7.89 KG Inicis 3.42 ECOPROBM 5.36 Kolon Life Science 3.02 Power Logics 5.38 2.99 PearlAbyss 4.94 Energy Solutions 2.46 Celltrion Healthcare 4.74 BH,LTD. 2.36 Solid Technologies 4.08 ECHO 2.36 Koentec 4.11 Shinheung SEC 2.23 KMW 2.84 Kaon Media 2.17 ECOPROBM 4.04 INNOX Advanced Materials 1.99 ABL Bio 2.83 Solid Technologies 2.16 WebCash 3.05 ViroMed 1.88 SM 2.71 Studio Dragon 2.15 MC Nex 2.82 TESNA 1.85 LTC 2.17 Deutsch Motors 2.12 LB Semicon 2.48 HLB 1.61 Kolon Life Science 2.06 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 45,350 1,000 270,730 Celltrion Healthcare 58,900 1,200 8,471 Hynix 67,200 3,800 48,922 SillaJen 56,000 600 3,950 Samsung Electronics (P) 37,050 650 30,488 CJ ENM 180,000 2,500 3,947 Hyundai Motor 140,000 -1,000 29,914 ViroMed 191,500 6,200 3,056 Celltrion 211,500 3,500 27,142 PearlAbyss 224,700 700 2,926 LG Chem 348,500 3,000 24,601 HLB 70,300 -1,300 2,758 Shinhan Financial Group 46,000 400 21,813 Medy-tox 420,200 2,400 2,444 LG Household & Health Care 1,367,000 36,000 21,350 Studio Dragon 72,000 2,400 2,020 Hyundai Mobis 223,500 0 21,301 Hugel 413,200 -100 1,801 SK Telecom 263,000 -1,000 21,236 Celltrion 51,700 300 1,762 Source: Korea Exchange