June 23, 2015

KOREA

Sector News & Analysis Major Indices Close Chg Chg (%) Retail (Overweight) KOSPI 2,081.20 26.04 1.27 Short-term investment strategy KOSPI 200 254.52 3.53 1.41 KOSDAQ 739.82 5.21 0.71

Turnover ('000 shares, Wbn) Volume Value KOSPI 325,895 5,218 KOSPI 200 81,994 3,606 KOSDAQ 542,064 4,141

Market Cap (Wbn) Value KOSPI 1,296,186 KOSDAQ 201,032

KOSPI Turnover (Wbn) Buy Sell Net Foreign 1,218 1,230 -13 Institutional 1,115 971 144 Retail 2,865 2,983 -118

KOSDAQ Turnover (Wbn) Buy Sell Net Foreign 233 241 -8 Institutional 187 198 -11 Retail 3,716 3,684 33

Program Buy / Sell (Wbn) Buy Sell Net KOSPI 985 985 0 KOSDAQ 52 57 -5

Advances & Declines Advances Declines Unchanged KOSPI 534 264 72 KOSDAQ 646 351 61

KOSPI Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Electronics 1,321,000 40,000 265 KODEX LEVERAGE 10,990 270 224 KODEX INVERSE 7,920 -110 150 GENEONE 14,150 2,150 135 KODEX 200 25,390 335 125

KOSDAQ Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Celltrion 82,800 -2,000 152 EMLSI 9,910 0 140 Medipost 118,100 -10,000 132 Bio-Smart 18,250 2,050 108 Nowcom 37,400 3,400 71 Note: As of June 23, 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.

Retail (Overweight/Maintain)

Short-term investment strategy

¢ Convenience store operators to continue to show stable growth

Sector Update ¢ For Emart and Lotte Himart, near-term earnings expectations should be lowered, but June 22, 2015 underlying competitiveness is getting stronger ¢ Approach with caution given uncertainty of downtown duty-free bid results ¢ Home shopping sector to gradually pick up in 2H Daewoo Securities CCo.,o., Ltd.

[Retail] Increasing volatility Aiden Lee +822-768-3297 Recently, retail stocks have been experiencing intense volatility. Share performances have [email protected] become more differentiated due to a number of factors, including: 1) the outbreak of MERS,

which has dealt huge blows to department stores and hypermarkets while providing a boost to online retailers; 2) expectations regarding the bidding for downtown duty-free licenses; and 3) the earnings stability of convenience store operators.

Convenience stores facing limited risks

At present, we believe the safest bets are BGF Retail and GS Retail. Convenience store operators are less vulnerable to the current headwinds affecting most of the retail industry. We expect the convenience store segment to continue to show steady growth and remain largely free of downside risks. As a pure convenience store player, BGF Retail should deliver the most stable earnings growth. Our expectations for the company’s cash deployment also remain intact. GS Retail is more exposed to earnings volatility because of its supermarket business and entry into the hotel business. However, we remain upbeat on the stock, as we see limited risks of further deterioration in the retailer’s non-convenience store businesses.

For Emart and Lotte Himart, focus on enhanced competitiveness

Emart has suffered a significant loss in revenue due to the MERS situation. After two months of solid growth, revenue is likely to fall dramatically YoY in June due to the MERS outbreak as well as a high base of comparison, dragging down overall revenue growth for 2Q. While expectations for 2Q earnings should be lowered, our call for a long-term rally remains intact. One silver lining is the fact that consumers have become more familiar with Emart Mall amid rising MERS concerns. For online shopping sites specializing in groceries, such as Emart Mall, a critical challenge is getting consumers to place their first orders.

The MERS outbreak has also taken a toll on Lotte Himart, crippling sales at both its shop-in- shop locations and stand-alone stores. However, we still believe Lotte Himart boasts the strongest earnings momentum in 2Q among domestic retailers. The company’s gross margin also remains on an upward trend. We believe revenue and margins are improving simultaneously thanks to an increase in the number of stock-keeping units (reaching 14,000 in 2015, vs. 7,200 in 2013 and 8,300 in 2014).

In the near term, 2Q earnings expectations for Emart and Lotte Himart should be adjusted slightly lower. However, we believe their underlying competitiveness is strengthening. With the MERS epidemic recently showing signs of retreating, a more positive view may be warranted for 3Q.

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

Key Universe Valuations June 23, 2015

※All data as of close June 22, 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 194,582 1,321,000 1.2 12.8 10.3 1.9 9.4 9.6 8.7 1.2 1.0 13.6 13.2 000660 SK Hynix 32,141 44,150 0.9 21.5 10.4 14.8 13.7 6.6 5.8 1.4 1.1 24.0 21.9 015760 KEPCO 29,562 46,050 1.3 26.4 5.4 199.5 -56.7 3.7 8.5 0.5 0.5 14.0 5.5 005380 Hyundai Motor 28,856 131,000 2.6 -4.8 11.5 1.5 5.2 5.0 4.8 0.6 0.5 12.3 11.7 090430 AmorePacific 23,062 394,500 0.3 45.8 25.3 56.8 24.5 45.8 36.8 8.2 6.8 19.2 20.2 032830 Samsung Life 21,500 107,500 - - - - 0.0 0.0 035420 NAVER 21,096 640,000 0.2 25.0 29.0 41.3 35.0 32.9 24.3 6.4 5.1 30.5 30.6 017670 SK Telecom 20,671 256,000 3.9 7.8 11.2 9.5 9.5 10.5 9.6 1.2 1.1 13.0 13.1 018260 Samsung SDS 20,157 260,500 0.2 17.2 19.8 9.2 20.7 44.7 37.1 4.4 4.0 10.3 11.3 005490 POSCO 20,140 231,000 3.5 2.6 18.0 180.1 29.5 11.5 8.9 0.5 0.4 4.2 5.3 012330 19,566 201,000 1.6 4.6 11.5 5.0 10.9 5.4 4.9 0.7 0.6 14.5 14.1 055550 19,347 40,800 - - - - 0.0 0.0 000270 Motors 18,566 45,800 2.5 7.0 20.6 11.7 13.5 5.5 4.9 0.7 0.7 14.1 14.3 051910 LG Chem 18,324 276,500 1.4 39.4 26.3 53.9 29.5 15.3 11.8 1.5 1.4 10.6 12.4 105560 KB Financial Group 14,508 37,550 - - - - 0.0 0.0 000810 Samsung F&M 14,165 299,000 - - - - 0.0 0.0 033780 KT&G 12,645 92,100 3.7 3.3 -9.2 5.3 -7.7 14.5 15.8 2.0 1.9 14.9 12.8 034730 SK C&C 12,078 274,500 0.7 23.2 9.0 356.4 4.3 23.6 22.7 4.0 3.5 22.7 19.8 096770 SK Innovation 11,836 128,000 2.5 - 16.4 - 10.8 10.1 9.1 0.7 0.7 7.6 7.9 051900 LG Household & Health Care 11,682 748,000 0.6 32.9 21.7 33.0 24.3 28.5 22.9 6.3 5.1 25.3 25.3 000830 Samsung C&T 10,467 67,000 0.9 -19.4 12.2 61.9 9.6 24.6 22.4 0.8 0.8 3.3 3.5 010130 Korea Zinc 10,020 531,000 1.2 6.5 16.8 12.2 16.9 17.8 15.2 2.0 1.8 11.6 12.3 003550 LG Corp. 10,008 58,000 1.7 18.0 4.2 18.5 5.9 8.1 7.7 0.7 0.7 9.4 9.2 011170 Lotte Chemical 9,631 281,000 0.4 274.4 6.8 578.2 9.9 9.7 8.8 1.3 1.1 14.4 13.8 009540 9,462 124,500 - 213.9 - 256.9 51.2 14.3 0.6 0.5 1.2 4.2 003600 SK Holdings 9,181 195,500 1.3 91.8 -14.6 - -41.3 6.7 11.4 0.7 0.7 12.0 6.5 034220 LG Display 9,035 25,250 2.0 77.8 -34.9 93.5 -34.2 5.2 7.8 0.7 0.6 14.3 8.5 066570 LG Electronics 8,313 50,800 1.2 -16.1 28.7 112.9 53.8 10.8 7.0 0.7 0.7 7.0 10.0 086790 8,184 27,650 - - - - 0.0 0.0 006400 Samsung SDI 8,183 119,000 0.8 95.2 103.4 - 15.3 23.2 20.1 0.7 0.7 3.1 3.5 004020 8,077 69,300 1.1 10.8 4.8 44.4 -4.6 7.3 7.7 0.6 0.5 7.8 7.0 035250 7,916 37,000 2.9 15.3 12.3 23.6 14.4 17.8 15.6 2.5 2.3 15.6 16.3 086280 7,913 211,000 0.9 13.7 14.1 7.7 12.8 13.7 12.2 2.4 2.1 19.1 18.3 010950 S-Oil 7,881 70,000 4.0 - 2.0 - -4.4 10.6 11.1 1.4 1.3 14.6 12.6 024110 7,845 14,100 - - - - 0.0 0.0 030200 KT 7,546 28,900 2.8 - 2.9 - -42.6 6.7 11.7 0.6 0.6 10.3 5.5 023530 Lotte Shopping 7,085 225,000 0.7 11.3 12.6 37.8 13.4 9.4 8.3 0.4 0.4 4.4 4.8 088350 Hanwha Life 6,775 7,800 - - - - 0.0 0.0 001800 Orion 6,722 1,125,000 0.5 14.4 8.3 23.5 13.3 33.3 29.4 4.7 4.2 15.3 15.4 021240 Coway 6,710 87,000 3.0 18.3 14.3 24.9 14.5 21.5 18.8 5.0 4.5 27.8 27.8 139480 Emart 6,481 232,500 0.6 6.3 15.8 32.4 19.7 16.9 14.1 0.9 0.8 5.4 6.1 035720 Daum 6,408 107,000 0.2 33.4 37.8 -51.5 52.3 36.1 23.7 2.4 2.2 6.9 9.8 009240 Hanssem 6,048 257,000 0.4 35.1 34.9 35.3 34.3 51.6 38.4 12.7 9.8 30.8 31.8 097950 CJ CheilJedang 5,603 426,000 0.5 43.4 9.0 219.6 17.9 20.9 17.8 1.9 1.7 9.6 10.5 161390 5,314 42,900 0.9 -12.5 12.7 -4.5 14.2 7.9 7.0 1.0 0.9 13.9 14.0 002380 KCC 5,118 486,500 1.8 13.3 3.2 -22.5 3.7 20.3 19.6 0.8 0.8 4.1 4.1 051600 KEPCO KPS 5,063 112,500 - - - - 0.0 0.0 004800 4,987 142,000 0.7 -1.9 -4.4 9.4 -4.9 17.0 17.8 1.6 1.5 10.1 8.8 012630 Hyundai Development 4,862 64,500 0.8 63.4 15.2 194.9 20.1 24.0 19.9 2.0 1.9 9.0 10.0 000720 Hyundai E&C 4,733 42,500 1.4 14.7 18.9 31.6 25.8 8.6 6.8 0.8 0.7 9.7 11.1 Source: KDB Daewoo Securities Research

Market Data June 23, 2015

※All data as of close June 23, 2015, unless otherwise noted.

Other Major Indices Economic Indicators Close Net Chg 1D (%) YTD (%) Close 1D ago 1M ago 1Y ago MSCI Korea* 391.33 5.33 1.38 1.20 USD/KRW 1,099.90 1,104.00 1,094.40 1,019.60 KOSPI 2,081.20 26.04 1.27 8.03 JPY100/KRW 891.51 899.50 904.13 998.73 KOSDAQ 739.82 5.21 0.71 33.61 EUR/KRW 1,247.78 1,254.59 1,215.66 1,386.10 Dow Jones* 18,119.78 103.83 0.58 1.61 3Y Treasury 1.80 1.79 1.87 2.69 S&P 500* 2,122.85 12.86 0.61 3.14 3Y Corporate 2.02 2.02 2.11 3.12 NASDAQ* 5,153.97 36.97 0.72 9.04 DDR2 1Gb* 1.19 1.19 1.19 1.80 Philadelphia Semicon* 728.22 4.85 0.67 6.04 NAND 16Gb* 1.72 1.72 1.86 2.84 FTSE 100* 6,825.67 115.22 1.72 4.24 Oil (Dubai)* 61.38 61.55 62.75 111.26 Nikkei 225 20,809.42 381.23 1.87 19.53 Gold* 1,183.70 1,201.50 1,204.00 1,316.20 Hang Seng* 27,080.85 320.32 1.20 13.51 Customer deposits (Wbn)* 21,019 20,799 20,492 14,612 Taiwan (Weighted) 9,391.14 49.37 0.53 1.26 Equity type BC (Wbn)(June. 19) 75,173 74,909 76,307 79,616 Note: * as of June 22, 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 Samsung Electronics 100.98 SKD&D 33.78 SKD&D 52.68 Samsung Electronics 20.02 30.86 Hynix 33.55 KODEX LEVERAGE 43.38 Hyundai Motor 16.25 POSCO 21.01 Shinsegae 24.08 Shinsegae 21.08 Honam Petrochemical 15.07 KEPCO 17.55 LG Display 23.58 emart 15.23 LG Display 14.03 TIGER200 12.14 emart 17.04 Samsung Corp. 15.17 SBS 12.28 LG Household & Health Care 9.80 LG Electronics 15.43 Shinhan Financial Group 14.52 Hyundai Mobis 11.97 Honam Petrochemical 7.72 Shinhan Financial Group 9.53 Samsung Securities 12.88 KODEX INVERSE 11.14 Yuhan 7.27 CJ CGV 7.61 Daewoo Securities 12.03 LG Household & Health Care 11.00 Hanwha Chemical 7.09 Hyundai Heavy Industries 7.55 Hynix 9.86 TIGER200 8.70 SK Energy 6.23 GKL 7.25 Hyundai Heavy Industries 9.36 Yuhan 7.91 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 SEEGENE 6.00 Medy-tox 13.86 LiHOM-CUCHEN 7.94 KREIT 10.80 OSSTEM IMPLANT 4.97 Paradise 7.66 YG Entertainment 3.96 MEDIANA 4.15 Dongsuh 3.57 Celltrion 7.12 Com2us 3.20 Kolon Life Science 3.57 Easy Bio System 2.58 ATTO 3.46 Macrogen 3.12 SEEGENE 2.56 Nowcom 2.57 GemVax 2.33 Easy Bio System 2.73 KH Vatec 2.43 CJ O Shopping 2.26 Com2us 2.30 INICIS 2.66 Estech Pharma 2.34 AHNLAB 2.20 Komipharm 2.13 CJ E&M 2.27 Nowcom 2.21 KREIT 1.66 Daum Communications 2.10 GemVax 2.21 Celltrion 2.15 iNtRON Bio 1.63 Spigen Korea 2.04 Changhae Ethanol 2.03 ViroMed 1.85 Daou Data Systems Corp. 1.45 PATI Games 1.60 THERAGEN ETEX 1.79 OSSTEM IMPLANT 1.83 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 1,321,000 40,000 194,582 Celltrion 82,800 -2,000 9,255 Hynix 44,150 300 32,141 Daum Communications 107,000 400 6,408 KEPCO 46,050 -150 29,562 Dongsuh 32,300 2,200 3,220 Hyundai Motor 131,000 -1,000 28,856 Medy-tox 535,300 0 3,028 181,500 9,500 24,503 CJ E&M 73,400 300 2,843 Amore Pacific 394,500 500 23,062 ViroMed 189,800 2,700 2,695 Samsung Electronics (P) 1,009,000 19,000 23,039 Paradise 25,600 100 2,328 107,500 3,000 21,500 LOEN 74,900 2,100 1,894 NHN 640,000 9,000 21,096 Sansung P&C 103,900 -100 1,864 SK Telecom 256,000 7,000 20,671 OCI Materials 131,500 1,500 1,387 Source: