[Korea]

Industrial of Korea Buy (024110 KS ) (Maintain)

Policy financing role: Negative in the short term vs. TP: W10,000 opportunities in the medium/long term Upside: 20.6%

Mirae Asset Daewoo Co., Ltd. Heather Kang [email protected]

2Q20 review Net profit of W 316 .6bn (-26% YoY, -37% QoQ) ó For 2Q20, Industrial Bank of Korea (IBK) posted net profit attributable to owners of the parent of W316.6bn, 6% below our estimate (W335.8bn) and 10-12% below consensus estimates. ó Major one-off items included: 1) W161.2bn in additional provisioning due t o a more conservative economic outlook as a result of COVID-19; 2) W40.6bn in provisioning related to compensation for investors in Discovery Asset Management/LIME Asset Management funds; 3) W20.5bn in a reversal of reserves related to fines on the New York branch over transfers to Iran; 4) W6.1bn in reversals of provisions at IBK Capital; and 5) W83bn in performance incentives (seasonal). ó Net interest margin (NIM) contracted 9bps QoQ, and loans grew 5.4% QoQ (+6.0% QoQ for SME loans). ó Net commission income and other non-interest income were robust. ó Efficient cost management: Cost-to-income ratio was 40.3% (-0.6%p YoY, +2.1%p QoQ). ó Credit cost-to-total asset ratio was 62bps (annualized; +14bps YoY, +29bps QoQ).

Policy financing Ultra -low interest rate loans for small/self -employed businesses negative to profitability, but can be leveraged for medium/long-term growth ó IBK has processed W7.4tr (250,000 loans) worth of ultra-low interest rate loans for small/self- employed businesses. While these loans do not pose a risk to asset quality (as they are 100% backed by the government), they caused a roughly 5bps drag on NIM. ó On the bright side, we believe the ultra-low interest rate loan program will help IBK build up its customer base in the medium/long term, as 88% of the program’s users are new customers. ó The program could lead to more business opportunities in areas like pensions and credit cards. ó In 1H20, IBK carried out four share issues to the government, raising more than W1.2tr to fulfill its policy financing role.

Valuation Maintain Buy and TP of W 10,000 ó We expect IBK to reduce the negative impact on shareholder value by implementing different dividend policies for the government vs. regular shareholders. ó Dividends look appealing, with 2020-22 yields projected at 6.6-7.2% for regular shareholders.

Key data Current price (7/27/20, W) 8,290 Market cap (Wbn) 5,608 130 Industrial Bank of Korea KOSPI NP (20F, Wbn) 1,467 Shares outstanding (mn) 837 110 Consensus NP (20F, Wbn) 1,464 Free float (%) 39.8 90 EPS growth (20F, %) -14.8 Foreign ownership (%) 13.2 70 P/E (20F, x) 4.0 Beta (12M) 1.14 50 Market P/E (20F, x) 15.2 52-week low (W) 5,870 30 7.19 11.19 3.20 7.20 KOSPI 2,217.86 52-week high (W) 13,550

Share performance Earnings and valuation metrics (%) 1M 6M 12M (Dec.) 2017 2018 2019 2020F 2021F 2022F Absolute 1.3 -25.3 -38.8 Net interest income (Wbn) 5,260 5,632 5,752 5,592 5,742 6,055 Relative -2.5 -24.4 -43.0 Net non -interest income (Wbn) 340 626 561 593 581 625

OP (Wbn) 2,028 2,396 2,228 2,003 2,083 2,184 NP (Wbn) 1,501 1,754 1,619 1,467 1,510 1,588 EPS (W) 2,282 2,666 2,425 2,067 1,952 2,051 EPS growth (%) 29.4 16.8 -9.1 -14.8 -5.5 5.0 P/E (x) 3.6 3.1 3.4 4.0 4.2 4.0 P/PPOP (x) 1.6 1.4 1.4 1.5 1.5 1.4 P/B (x) 0.28 0.26 0.25 0.26 0.24 0.23 ROE (%) 8.0 8.6 7.4 6.2 5.9 5.9 Dividend yield (%) 7.4 8.3 8.1 6.6 6.9 7.2 Notes: Under consolidated K-IFRS; NP is attributable to owners of the parent Source: Company data, Mirae Asset Daewoo Research estimates

July 28, 2020 Industrial Bank of Korea

Table 1. IBK: 2Q20 review YoY chg. QoQ chg. (Wbn) 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20P (%, %p) (%, %p) Net interest income 1,448.6 1,406.6 1,470.5 1,446.8 1,428.1 1,403.1 1,422.9 -3.2 1.4 Net fee/commission income 117.8 110.5 128.2 112.9 162.7 115.6 138.3 7.9 19.6 Net other income -32.7 91.2 0.2 -39.3 -5.1 -16.0 45.1 19,768.7 TTB Total net operating income 1,533.7 1,608.3 1,598.9 1,520.3 1,585.7 1,502.7 1,606.3 0.5 6.9 SG&A expenses 604.9 580.3 653.7 560.4 615.1 573.4 647.2 -1.0 12.9 PPOP 928.7 1,028.0 945.2 959.9 970.6 929.3 959.1 1.5 3.2 Provisions 522.1 283.6 368.4 450.2 573.7 268.0 532.4 44.5 98.7 OP 406.6 744.4 576.8 509.7 396.9 661.3 426.7 -26.0 -35.5 Non-operating income 6.4 13.3 14.9 8.9 -24.7 11.9 -7.0 TTR TTR Pretax profit 413.0 757.7 591.7 518.6 372.3 673.3 419.7 -29.1 -37.7 NP (owners of the parent) 302.1 553.4 427.0 380.7 258.0 500.0 316.6 -25.9 -36.7

Total assets 289,509 299,229 305,221 311,614 318,111 326,886 344,206 12.8 5.3 Total loans & receivables 214,523 220,723 224,872 230,102 239,321 238,579 244,641 8.8 2.5 Won-denominated loans (bank) 192,989 197,421 201,617 204,555 206,310 210,751 222,064 10.1 5.4 Total credit 206,226 209,972 214,782 218,399 219,994 224,971 235,659 9.7 4.8 Total deposits 109,556 109,611 112,292 112,112 117,991 120,194 129,712 15.5 7.9 Total shareholders' equity 21,094 21,834 22,291 22,749 22,777 23,066 24,179 8.5 4.8

(%) NIM (bank) 1.95 1.90 1.89 1.81 1.74 1.69 1.60 -0.29 -0.09 Cost-to-income ratio 39.4 36.1 40.9 36.9 38.8 38.2 40.3 -0.6 2.1 NPL (substandard & below) ratio 1.32 1.30 1.26 1.36 1.28 1.29 1.18 -0.08 -0.11 NPL coverage ratio 167.6 169.8 173.8 166.9 170.1 168.1 177.8 4.0 9.7 RIA (based on avg. value) 0.11 0.19 0.14 0.12 0.08 0.16 0.09 -0.05 -0.06 ROE (based on avg. value) 1.45 2.59 1.95 1.70 1.14 2.19 1.35 -0.60 -0.85 Credit costs 0.18 0.09 0.12 0.14 0.18 0.08 0.15 0.03 0.07 BIS ratio 14.50 14.55 14.50 14.78 14.47 14.26 14.44 -0.05 0.18 Tier1 ratio 11.90 12.23 12.23 12.19 11.97 12.03 12.30 0.07 0.27 CET1 ratio 10.24 10.48 10.51 10.51 10.30 10.28 10.61 0.09 0.33 Note: ROA, ROE, and credit cost data are non-annualized. NPL coverage ratio is based on the old formula, which includes credit loss reserves. Source: Company data, Mirae Asset Daewoo Research

Table 2. IBK: Earnings forecast revisions Revised Previous % chg. (Wbn) 2020F 2021F 2022F 2020F 2021F 2022F 2020F 2021F 2022F Net interest income 5,592 5,742 6,055 5,567 5,807 6,098 0.4 -1.1 -0.7 Net non-interest income 593 581 625 498 545 601 19.1 6.6 3.9 Total net operating income 6,185 6,322 6,680 6,066 6,351 6,700 2.0 -0.5 -0.3 SG&A expenses 2,431 2,499 2,586 2,456 2,524 2,613 -1.0 -1.0 -1.0 PPOP 3,754 3,824 4,093 3,610 3,827 4,087 4.0 -0.1 0.2 Provisions 1,752 1,741 1,909 1,594 1,740 1,908 9.9 0.1 0.1 OP 2,003 2,083 2,184 2,016 2,087 2,179 -0.7 -0.2 0.2 Non-operating income -8 10 16 14 10 16 N/A N/A N/A Pretax profit 1,994 2,093 2,200 2,030 2,098 2,195 -1.8 -0.2 0.2 NP (owners of the parent) 1,467 1,510 1,588 1,479 1,516 1,586 -0.8 -0.4 0.1 Source: Company data, Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 2 July 28, 2020 Industrial Bank of Korea

Figure 1. IBK: NIM trends (quarterly) Figure 2. IBK: NIM trends (annual)

(%) (%) 3.1 3.10

2.9 2.90 2.7 2.70 2.5 2.50 2.3 2.30 2.1 2.10 1.9 1.90 1.7

1.5 1.70

1.3 1.50 1Q10 4Q11 3Q13 2Q15 1Q17 4Q18 3Q20F 2000 2004 2008 2012 2016 2020F

Source: Company data, Mirae Asset Daewoo Research estimates Source: Company data, Mirae Asset Daewoo Research estimates

Figure 3. IBK: Loan trends Figure 4. IBK: Loan portfolio by category (2Q20)

Large (Wtn) Household corp./public 240 Household (mortgage) (mortgage) sector/other 10.3% Household (general) 3.6% 210 Household SME (general) 180 Large corp./public sector/other 6.6%

150

120

90

60

30 SME 79.5% 0 1Q 05 4Q 05 3Q 06 2Q 07 1Q 08 4Q 08 3Q 09 2Q 10 1Q 11 4Q 11 3Q 12 2Q 13 1Q 14 4Q 14 3Q 15 2Q 16 1Q 17 4Q 17 3Q 18 2Q 19 1Q 20

Source: Company data, Mirae Asset Daewoo Research estimates Source: Company data, Mirae Asset Daewoo Research estimates

Table 3. IBK: Deposit trends (low-cost core deposits) (Wbn, %, %p) 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20P YoY QoQ Core deposits 53,650 54,986 56,148 56,702 61,246 61,991 64,611 68,977 76,191 24.4 10.5 MMDA 9,912 10,050 9,584 10,577 10,327 9,913 10,687 12,069 12,100 17.2 0.3 Other deposits 24,747 20,597 20,295 19,665 19,426 19,660 19,533 19,580 19,480 0.3 -0.5 CDs, covered bills, RPs 5,737 5,224 4,509 5,373 4,214 4,220 3,960 3,925 3,242 -23.1 -17.4 SMF bonds 91,581 97,833 103,143 106,594 108,240 109,689 115,360 112,601 115,702 6.9 2.8 Total deposits 185,627 188,689 193,678 198,911 203,454 205,473 214,152 217,151 226,715 11.4 4.4 Core deposits as % of total 34.2 34.5 33.9 33.8 35.2 35.0 35.2 37.3 38.9 3.8 1.6 Source: Company data, Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 3 July 28, 2020 Industrial Bank of Korea

Table 4. IBK: Non-interest income (Wbn) 2Q20P 1Q20 QoQ (%) 2Q19 YoY (%) Non-interest income 135.4 138.5 -2.2 129.5 4.6 Fee income 165.1 167.3 -1.3 177.4 -6.9 Won-denominated commissions 81.5 80.4 1.4 80.3 1.5 FX-related fees 32.9 31.8 3.5 35.9 -8.4 Bancassurance 5.2 5.9 -11.9 10.2 -49.0 Credit cards 39.5 42.0 -6.0 42.5 -7.1 Fund sales 6.0 7.1 -15.5 8.4 -28.6 Other non-interest income -29.7 -28.8 RR -47.9 RR Securities-related gains 90.8 106.5 -14.7 63.3 43.4 Gains/losses on loan disposals 41.4 41.4 0.0 31.3 32.3 Other -190.7 -204.5 RR -171.4 RR Trust income 28.9 27.8 4.0 28.9 0.0 Source: Company data, Mirae Asset Daewoo Research estimates

Figure 5. IBK: Credit costs and credit cost ratio (consolidated, quarterly)

(Wbn) (%) 800 Provisioning expenses (L) % of total assets (R) 0.5

700 0.4 0.4 600 0.3 500 0.3 400 0.2 300 0.2 200 0.1

100 0.1

0 0.0 1Q07 2Q08 3Q09 4Q10 1Q12 2Q13 3Q14 4Q15 1Q17 2Q18 3Q19

Source: Company data, Mirae Asset Daewoo Research estimates

Figure 6. IBK: NPL ratio

(%) 3.5

3.0

2.5

2.0

1.5 1.18

1.0

0.5

0.0

Source: Company data, Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 4 July 28, 2020 Industrial Bank of Korea

Figure 7. IBK: New NPL formation (quarterly)

(Wbn) (%) 1,000 New NPL formation (L) % of total credit (R) 0.9 900 0.8

800 0.7 700 0.6 600 0.5 500 0.4 400 0.3 300 200 0.2 100 0.1 0 0.0 2Q07 3Q08 4Q09 1Q11 2Q12 3Q13 4Q14 1Q16 2Q17 3Q18 4Q19

Source: Company data, Mirae Asset Daewoo Research estimates

Table 5. IBK: Quarterly earnings (Wbn) 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20P 3Q20F 4Q20F 1Q21F Net interest income 1,401.3 1,429.3 1,448.6 1,406.6 1,470.5 1,446.8 1,428.1 1,403.1 1,422.9 1,375.3 1,390.6 1,396.7 Net fee income 128.0 96.2 117.8 110.5 128.2 112.9 162.7 115.6 138.3 139.6 160.6 131.8 Net other income 36.4 67.8 -32.7 91.2 0.2 -39.3 -5.1 -16.0 45.1 36.0 -26.0 17.0 Total net operating income 1,565.7 1,593.4 1,533.7 1,608.3 1,598.9 1,520.3 1,585.7 1,502.7 1,606.3 1,551.0 1,525.2 1,545.4 SG&A expenses 623.6 529.7 604.9 580.3 653.7 560.4 615.1 573.4 647.2 582.8 627.4 589.4 PPOP 942.1 1,063.6 928.7 1,028.0 945.2 959.9 970.6 929.3 959.1 968.2 897.8 956.0 Provisions 351.9 361.7 522.1 283.6 368.4 450.2 573.7 268.0 532.4 433.9 517.6 341.7 OP 590.2 701.9 406.6 744.4 576.8 509.7 396.9 661.3 426.7 534.3 380.2 614.3 Non-operating income -2.7 -1.3 6.4 13.3 14.9 8.9 -24.7 11.9 -7.0 5.0 -18.0 2.3 Pretax profit 587.5 700.7 413.0 757.7 591.7 518.6 372.3 673.3 419.7 539.3 362.2 616.6 NP (owners of the parent) 421.6 520.3 302.1 553.4 427.0 380.7 258.0 500.0 316.6 389.7 261.0 446.6 Source: Company data, Mirae Asset Daewoo Research estimates

Table 6. IBK: Annual earnings (Wbn) 2013 2014 2015 2016 2017 2018 2019 2020F 2021F 2022F Net interest income 4,256.5 4,511.0 4,630.9 4,876.2 5,260.0 5,632.3 5,752.0 5,592.0 5,741.8 6,054.7 Net fee income 358.4 345.9 405.6 375.4 407.2 451.2 514.2 554.1 551.9 557.1 Net other income -309.9 -299.2 -277.1 -311.1 -67.7 175.2 47.1 39.1 28.7 67.9 Total net operating income 4,305.0 4,557.7 4,759.5 4,940.6 5,599.5 6,258.6 6,313.3 6,185.2 6,322.4 6,679.7 SG&A expenses 2,012.3 2,005.5 2,096.7 2,154.6 2,188.5 2,298.7 2,409.5 2,430.8 2,498.8 2,586.3 PPOP 2,292.7 2,552.2 2,662.8 2,786.0 3,411.0 3,959.9 3,903.8 3,754.4 3,823.6 4,093.4 Provisions 1,150.3 1,163.9 1,163.1 1,253.4 1,382.7 1,563.5 1,675.9 1,751.9 1,740.6 1,909.1 OP 1,142.4 1,388.3 1,499.7 1,532.6 2,028.3 2,396.4 2,227.9 2,002.5 2,083.0 2,184.3 Non-operating income 36.6 -45.0 -30.2 -15.4 -74.7 3.0 12.3 -8.1 10.4 16.1 Pretax profit 1,179.1 1,343.3 1,469.5 1,517.2 1,953.6 2,399.5 2,240.2 1,994.4 2,093.4 2,200.4 NP (owners of the parent) 848.5 1,026.6 1,143.0 1,157.5 1,501.4 1,754.2 1,619.1 1,467.4 1,510.4 1,588.0 Source: Company data, Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 5 July 28, 2020 Industrial Bank of Korea

Industrial Bank of Korea (024110 KS)

Income statement (summarized) Balance sheet (summarized) (Wbn) 2019 2020F 2021F 2022F (Wbn) 2019 2020F 2021F 2022F Interest income 9,489 8,723 8,587 9,050 Cash & dues 11,267 20,591 21,549 22,116 Interest expenses 3,737 3,131 2,845 2,995 Securities 57,931 64,291 67,281 69,053 Net interest income 5,752 5,592 5,742 6,055 Net loans & receivables 239,321 256,948 275,126 290,707 Net fees & commissions 514 554 552 557 Tangible assets 2,155 2,232 2,320 2,412 Net other non-interest income 47 39 29 68 Other assets 7,437 12,479 12,974 13,488 Total net operating income 6,313 6,185 6,322 6,680 Total assets 318,111 356,540 379,250 397,777 G&A expenses 2,409 2,431 2,499 2,586 Deposits 117,991 132,053 136,870 139,192 PPOP 3,904 3,754 3,824 4,093 Borrowings 30,750 38,352 43,813 47,611 Total provisioning expenses 1,676 1,752 1,741 1,909 Debentures 123,988 127,981 146,206 158,881 OP 2,228 2,003 2,083 2,184 Other liabilities 22,605 33,276 25,966 24,101 Net non-operating income 12 -8 10 16 Total liabilities 295,334 331,662 352,854 369,785 Pretax profit 2,240 1,994 2,093 2,200 Capital stock 3,376 3,872 3,872 3,872 Income tax 626 520 576 605 Hybrid securities 2,730 3,060 3,060 3,060 NP 1,619 1,467 1,510 1,588 Capital surplus 688 1,019 1,019 1,019 NP attributable to owners 1,619 1,467 1,510 1,588 Retained earnings 15,347 16,376 17,894 19,489 Normalized NP 1,619 1,467 1,510 1,588 Capital adj. 0 0 0 0 Other comprehensive income 521 435 435 435 Core income 6,266 6,146 6,294 6,612 Minority interests 115 116 116 116 Core PPOP 3,857 3,715 3,795 4,025 Total shareholders' equity 22,777 24,879 26,396 27,992

DuPont analysis (%) 2019 2020F 2021F 2022F Key ratios/growth metrics (%) 2019 2020F 2021F 2022F Interest income 3.12 2.59 2.33 2.33 Growth (YoY) Interest expenses 1.23 0.93 0.77 0.77 Won-denominated loan growth (bank) 6.9 10.7 7.2 5.8 Net interest income 1.89 1.66 1.56 1.56 Net loan & receivables growth 11.6 7.4 7.1 5.7 Net commission income 0.17 0.16 0.15 0.14 Deposit growth 7.7 11.9 3.6 1.7 Net other non-interest income 0.02 0.01 0.01 0.02 Shareholders' equity growth 8.0 9.2 6.1 6.0 Total net operating income 2.08 1.83 1.72 1.72 Total asset growth 9.9 12.1 6.4 4.9 G&A expenses 0.79 0.72 0.68 0.67 Net interest income growth 2.1 -2.8 2.7 5.5 PPOP 1.29 1.11 1.04 1.05 Net commission income growth 14.0 7.7 -0.4 0.9 Total provisioning expenses 0.55 0.52 0.47 0.49 PPOP growth -1.4 -3.8 1.8 7.1 Net non-operating income 0.00 0.00 0.00 0.00 OP growth -7.0 -10.1 4.0 4.9 Pretax profit 0.74 0.59 0.57 0.57 NP growth -7.7 -9.4 2.9 5.1 Income tax 0.21 0.15 0.16 0.16 Profitability NP attributable to minority interests 0.00 0.00 0.00 0.00 NIS (bank) 1.76 1.56 1.52 1.52 ROA 0.53 0.44 0.41 0.41 NIM (bank) 1.83 1.60 1.58 1.58 Leverage (x) 13.9 14.2 14.4 14.3 PPOP margin 1.3 1.1 1.0 1.1 ROE 7.42 6.19 5.92 5.87 ROA 0.5 0.4 0.4 0.4 Asset quality (%) 2019 2020F 2021F 2022F ROE 7.4 6.2 5.9 5.9 NPL ratio 1.28 1.25 1.24 1.23 Liquidity Broad NPL ratio 2.99 2.85 2.79 2.73 Won-denominated LDR ex-CDs (bank) 0.0 0.0 0.0 0.0 NPL coverage ratio 170.1 182.1 185.8 188.7 Loan/assets 75.2 72.1 72.5 73.1 Reserves/total credit 2.1 2.0 2.3 2.3 Capital adequacy Credit costs/total loans 0.70 0.68 0.63 0.66 Total CAR 14.6 14.3 14.7 14.9 Credit costs/total credit 0.76 0.72 0.67 0.70 Tier 1 CAR 12.2 12.0 12.6 12.8 Per share items (W) 2019 2020F 2021F 2022F Tier 2 CAR 2.3 2.2 2.1 2.0 EPS (reported) 2,425 2,067 1,952 2,051 Operating efficiency EPS (normalized) 2,425 2,067 1,952 2,051 Cost-to-income ratio 38.2 39.3 39.5 38.7 BPS 33,567 31,974 33,934 35,994 Cost-to-asset ratio 0.8 0.7 0.7 0.7 DPS (common) 670 550 570 600 Dividends PPOP/share 5,846 5,289 4,942 5,286 Dividend payout ratio 23.6 27.7 28.1 28.3 Source: Company data, Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 6 July 28, 2020 Industrial Bank of Korea

Appendix 1

Important disclosures and disclaimers Two-year rating and TP history

Company Date Rating TP (W) (W) Industrial Bank of Korea Industrial Bank of Korea (024110) 04/21/20 Buy 10,000 25,000 03/05/20 Buy 11,500 20,000 02/03/20 Buy 14,000 10/22/19 Buy 16,000 15,000 01/22/19 Buy 19,500 10,000 12/04/18 Buy 20,500 07/05/18 Buy 21,000 5,000

0 Jul 18 Jul 19 Jul 20

Stock ratings Sector ratings Buy Expected 12-month performance: +20% or greater Overweight Expected to outperform the market over 12 months Trading Buy Expected 12-month performance: +10% to +20% Neutral Expected to perform in line with the market over 12 months Hold Expected 12-month performance: -10% to +10% Underweight Expected to underperform the market over 12 months Sell Expected 12-month performance: -10% or worse

Rating and TP history: Share price (─), TP (▬), Not Rated ( ■), Buy (▲), Trading Buy (■), Hold (●), Sell ( ◆) * Our investment rating is a guide to the expected return of the stock over the next 12 months. * Outside of the official ratings of Mirae Asset Daewoo Co., Ltd., analysts may call trading opportunities should technical or short-term material developments arise. * The TP was determined by the research analyst through valuation methods discussed in this report, in part based on estimates of future earnings. * TP achievement may be impeded by risks related to the subject securities and companies, as well as general market and economic conditions.

Ratings distribution and investment banking services Buy Trading Buy Hold Sell Ratings distribution 76.22% 11.59% 11.59% 0.60% Investment banking services 75.00% 10.00% 15.00% 0% * Based on recommendations in the last 12 months (as of June 30, 2020)

Disclosures As of the publication date, Mirae Asset Daewoo Co., Ltd. has acted as a liquidity provider for equity-linked warrants backed by shares of Industrial Bank of Korea as an underlying asset; other than this, Mirae Asset Daewoo has no other special interests in the covered companies.

Analyst certification The research analysts who prepared this report (the “Analysts”) are registered with the Korea Financial Investment Association and are subject to Korean securities regulations. They are neither registered as research analysts in any other jurisdiction nor subject to the laws or regulations thereof. Each Analyst responsible for the preparation of this report certifies that (i) all views expressed in this report accurately reflect the personal views of the Analyst about any and all of the issuers and securities named in this report and (ii) no part of the compensation of the Analyst was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report. Mirae Asset Daewoo Co., Ltd. (“Mirae Asset Daewoo”) policy prohibits its Analysts and members of their households from owning securities of any company in the Analyst’s area of coverage, and the Analysts do not serve as an officer, director, or advisory board member of the subject companies. Except as otherwise specified herein, the Analysts have not received any compensation or any other benefits from the subject companies in the past 12 months and have not been promised the same in connection with this report. Like all employees of Mirae Asset Daewoo, the Analysts receive compensation that is determined by overall firm profitability, which includes revenues from, among other business units, the institutional equities, investment banking, proprietary trading, and private client divisions. At the time of publication of this report, the Analysts do not know or have reason to know of any actual, material conflict of interest of the Analyst or Mirae Asset Daewoo except as otherwise stated herein.

Disclaimers This report was prepared by Mirae Asset Daewoo, a broker-dealer registered in the Republic of Korea and a member of the . Information and opinions contained herein have been compiled in good faith and from sources believed to be reliable, but such information has not been independently verified and Mirae Asset Daewoo makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein or of any translation into English from the . In case of an English translation of a report prepared in the Korean language, the original Korean language report may have been made available to investors in advance of this report. The intended recipients of this report are sophisticated institutional investors who have substantial knowledge of the local business environment, its common practices, laws, and accounting principles, and no person whose receipt or use of this report would violate any laws or regulations or subject Mirae Asset Daewoo or any of its affiliates to registration or licensing requirements in any jurisdiction shall receive or make any use hereof. This report is for general information purposes only and is not and shall not be construed as an offer or a solicitation of an offer to effect transactions in any securities or other financial instruments. The report does not constitute investment advice to any person, and such person shall not be treated as a client of Mirae Asset Daewoo by virtue of receiving this report. This report does not take into account the particular investment objectives, financial situations, or needs of individual clients. The report is not to be relied upon in substitution for the exercise of independent judgment. Information and

Mirae Asset Daewoo Research 7 July 28, 2020 Industrial Bank of Korea

opinions contained herein are as of the date hereof and are subject to change without notice. The price and value of the investments referred to in this report and the income from them may depreciate or appreciate, and investors may incur losses on investments. Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur. Mirae Asset Daewoo, its affiliates, and their directors, officers, employees, and agents do not accept any liability for any loss arising out of the use hereof. Mirae Asset Daewoo may have issued other reports that are inconsistent with, and reach different conclusions from, the opinions presented in this report. The reports may reflect different assumptions, views, and analytical methods of the analysts who prepared them. Mirae Asset Daewoo may make investment decisions that are inconsistent with the opinions and views expressed in this research report. Mirae Asset Daewoo, its affiliates, and their directors, officers, employees, and agents may have long or short positions in any of the subject securities at any time and may make a purchase or sale, or offer to make a purchase or sale, of any such securities or other financial instruments from time to time in the open market or otherwise, in each case either as principals or agents. Mirae Asset Daewoo and its affiliates may have had, or may be expecting to enter into, business relationships with the subject companies to provide investment banking, market-making, or other financial services as are permitted under applicable laws and regulations. No part of this document may be copied or reproduced in any manner or form or redistributed or published, in whole or in part, without the prior written consent of Mirae Asset Daewoo. For further information regarding company-specific information as it pertains to the representations and disclosures in this Appendix 1, please contact [email protected] or +1 (212) 407-1000.

Distribution : This report is being distributed by (UK) Ltd. in the United Kingdom only to (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), and (ii) high net worth companies and other persons to whom it may lawfully be communicated, falling within Article 49(2)(A) to (E) of the Order (all such persons together being referred to as “Relevant Persons”). This report is directed only at Relevant Persons. Any person who is not a Relevant Person should not act or rely on this report or any of its contents. : Mirae Asset Daewoo is not a registered broker-dealer in the United States and, therefore, is not subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. This report is distributed in the U.S. by Mirae Asset Securities (USA) Inc., a member of FINRA/SIPC, to “major U.S. institutional investors” in reliance on the exemption from registration provided by Rule 15a-6(b)(4) under the U.S. Securities Exchange Act of 1934, as amended. All U.S. persons that receive this document by their acceptance hereof represent and warrant that they are a major U.S. institutional investor and have not received this report under any express or implied understanding that they will direct commission income to Mirae Asset Daewoo or its affiliates. Any U.S. recipient of this document wishing to effect a transaction in any securities discussed herein should contact and place orders with Mirae Asset Securities (USA) Inc. Mirae Asset Securities (USA) Inc. accepts responsibility for the contents of this report in the U.S., subject to the terms hereof, to the extent that it is delivered to a U.S. person other than a major U.S. institutional investor. Under no circumstances should any recipient of this research report effect any transaction to buy or sell securities or related financial instruments through Mirae Asset Daewoo. The securities described in this report may not have been registered under the U.S. Securities Act of 1933, as amended, and, in such case, may not be offered or sold in the U.S. or to U.S. persons absent registration or an applicable exemption from the registration requirements. : This report is distributed in Hong Kong by Mirae Asset Securities (HK) Limited, which is regulated by the Hong Kong Securities and Futures Commission. The contents of this report have not been reviewed by any regulatory authority in Hong Kong. This report is for distribution only to professional investors within the meaning of Part I of Schedule 1 to the Securities and Futures Ordinance of Hong Kong (Cap. 571, Laws of Hong Kong) and any rules made thereunder and may not be redistributed in whole or in part in Hong Kong to any person. All other jurisdictions: Customers in all other countries who wish to effect a transaction in any securities referenced in this report should contact Mirae Asset Daewoo or its affiliates only if distribution to or use by such customer of this report would not violate applicable laws and regulations and not subject Mirae Asset Daewoo and its affiliates to any registration or licensing requirement within such jurisdiction.

Mirae Asset Daewoo Research 8 July 28, 2020 Industrial Bank of Korea

Mirae Asset Daewoo International Network

Mirae Asset Daewoo Co., Ltd. () Mirae Asset Securities (HK) Ltd. Mirae Asset Securities (UK) Ltd. One-Asia Equity Sales Team Units 8501, 8507-8508, 85/F 41st Floor, Tower 42 Mirae Asset Center 1 Building International Commerce Centre 25 Old Broad Street, 26 Eulji-ro 5-gil, Jung-gu, Seoul 04539 1 Austin Road West London EC2N 1HQ Korea Kowloon United Kingdom Hong Kong Tel: 82-2-3774-2124 Tel: 852-2845-6332 Tel: 44-20-7982-8000

Mirae Asset Wealth Management (Brazil) Mirae Asset Securities (USA) Inc. Mirae Asset Wealth Management (USA) Inc. CCTVM 810 Seventh Avenue, 37th Floor 555 S. Flower Street, Suite 4410, Rua Funchal, 418, 18th Floor, E-Tower Building New York, NY 10019 Los Angeles, California 90071 Vila Olimpia USA USA Sao Paulo - SP 04551-060 Brazil Tel: 1-212-407-1000 Tel: 1-213-262-3807 Tel: 55-11-2789-2100

PT. Mirae Asset Sekuritas Mirae Asset Securities (Singapore) Pte. Ltd. Mirae Asset Securities () LLC Equity Tower Building Lt. 50 6 Battery Road, #11-01 7F, Saigon Royal Building Sudirman Central Business District Singapore 049909 91 Pasteur St. Jl. Jend. Sudirman, Kav. 52 -53 Republic of Singapore District 1, Ben Nghe Ward, Ho Chi Minh City Jakarta Selatan 12190 Vietnam Indonesia Tel: 62-21-515-3281 Tel: 65-6671-9845 Tel: 84-8-3911-0633 (ext.110) Mirae Asset Investment Advisory (Beijing) Co., Mirae Asset Securities Mongolia UTsK LLC Beijing Representative Office Ltd #406, Blue Sky Tower, Peace Avenue 17 2401B, 24th Floor, East Tower, Twin Towers 2401A, 24th Floor, East Tower, Twin Towers 1 Khoroo, Sukhbaatar District B12 Jianguomenwai Avenue, Chaoyang District B12 Jianguomenwai Avenue, Chaoyang District Ulaanbaatar 14240 Beijing 100022 Beijing 100022 Mongolia China

Tel: 976-7011-0806 Tel: 86-10-6567-9699 Tel: 86-10-6567-9699 (ext. 3300) Shanghai Representative Office Ho Chi Minh Representative Office 38T31, 38F, Shanghai World Financial Center 7F, Saigon Royal Building 100 Century Avenue, Pudong New Area 91 Pasteur St. Shanghai 200120 District 1, Ben Nghe Ward, Ho Chi Minh City China Vietnam

Tel: 86-21-5013-6392 Tel: 84-8-3910-7715

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