May 4, 2021 Korea Equity Strategy Focus on stocks with solid earnings momentum

Mirae Asset Securities Co., Ltd. Myoung -gan Yoo [email protected] Hayeon Son [email protected]

Model portfolio strategy Focus on stocks with strong earnings momentum ó Companies characterized by significant differentials between average and top estimates are more likely to see continued upward revisions after releasing positive results. ó May model portfolio overweight sectors: Chemicals, steel, energy, IT appliances, and semiconductors ó May model portfolio underweight sectors: Software, utilities, telecom services, healthcare, and consumer staples ó Key stocks in overweight sectors: Kumho Petrochemical, POSCO, SK Innovation, SDI, and (SEC)

Global and domestic economic Continued supply chain disruptions in developed markets to benefit East Asia n exports conditions and industrial production ó Developed countries continue to face supply chain disruptions and restocking pressures amid the ongoing normalization of the global economy. ó Meanwhile, East Asian countries, which have faced fewer supply chain disruptions, are exhibiting healthier exports and industrial production than developed economies. ó Korea’s April exports were up 41.1% YoY, the highest rate of growth since Jan. 2011. Exports to developed markets registered strong growth. ó Korea’s 1Q21 GDP was stronger than expected, growing 1.6% QoQ and 1.8% YoY.

Domestic policy updates Household debt management plan and securities lending overhaul for retail investors ó The Korean government has announced a medium-term (2021-23) plan aimed at reining in growing household debt. ó Detailed measures include the reintroduction of the household debt growth target scheme and the implementation of a borrower-based debt service ratio (DSR) rule. ó As of May 3, rule changes supportive to retail investors have been implemented as part of the partial resumption of short selling. Short selling by market makers has been scaled back.

May model portfolio weights vs. KOSPI

(%p) 2.5 2.0 1.5 1.0 0.5 0.0 -0.5 -1.0 -1.5 -2.0

Source: Research

Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including t he US. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES AND DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT. May 4, 2021 Korea Equity Strategy

May model portfolio

In April, consensus estimates continued to be revised higher globally. 12-month forward EPS estimates climbed 4.9% in DMs and 4.8% in EMs, with energy (+12.3%) and materials (+8.5%) stocks seeing the sharpest increases. Meanwhile, defensive plays, including healthcare, utilities, and consumer staples, reported relatively modest revisions.

The 2021 operating profit consensus for Korean companies climbed 6.1% over the past month, with cyclical stocks displaying solid earnings momentum (as in the global market). Energy (+32.6%), steel (+19.8%), chemicals (+14.2%), display (+13.6%), securities (+12.2%), IT appliances (+11.4%), insurance (+10.7%), and machinery (+8.3%) saw particularly solid revisions.

As of today, around 57% of Korean companies (based on market cap) have released their 1Q results. Their combined revenue and operating profit beat consensus estimates by 3.4% and 11.2%, respectively. Notably, 62.6% of them (vs. an average of 34.5% over the past three years) reported positive earnings surprises—i.e., results beating the consensus by 5% or more.

With the market continuing to respond to results announcements, we advise investors to focus on stocks with solid earnings momentum. In our view, companies characterized by significant differentials between average and top estimates are more likely to see continued upward revisions after releasing positive results.

For our May model portfolio, we overweight chemicals, steel, energy, IT appliances, and semiconductors, and highlight Kumho Petrochemical, POSCO, SK Innovation, Samsung SDI, and SEC as our top picks. Meanwhile, we are reducing the weights of software, utilities, telecom services, healthcare, and consumer staples.

Figure 1. May model portfolio weights vs. KOSPI

(%p) 2.5 2.0 1.5 1.0 0.5 0.0 -0.5 -1.0 -1.5 -2.0

Source: Mirae Asset Securities Research

Table 1. Sector/stock selection factors Absolute 12MT P/E, 3Y avg. dividend yield Value Relative 12MF P/E, 12MF P/B (vs. 1Y range) Earnings FQ0 revenue growth, FQ0 OP growth Growth Forecasts 12MF OP growth Profit Chg. in consensus earnings and earnings revision ratios (1M) Momentum Net purchases by foreign/institutional investors (1M), net buying Supply/demand capacity by foreign/institutional investors (1Y) Profit stability NP volatility over the past 12 quarters Risk Share volatility Downside risks to share prices Source: Mirae Asset Securities Research

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Figure 2. April model portfolio performance Figure 3. April model portfolio performance vs. KOSPI

(%) 4 Energy -24.4 Materials -61.9

Industrials -102.1 3 +2.8 -0.4 -1.3 Consumer disc. 10.6

Consumer staples 0.4 2

Healthcare 7.1

+1.1 Financials 11.9 1 IT 27.3

Telcos 3.3 0 (bp) KOSPI Sector effect Stock selection Model portfolio Utilities -1.4 performance effect return -120 -90 -60 -30 0 30 60

Note: Based on 4/30/21 closing prices Source: Mirae Asset Securities Research Source: Mirae Asset Securities Research

Figure 4. April model portfolio: Five best/worst performers Figure 5. Model portfolio cumulative return trend

(%) Performance (1/12=100) 60 210 Model portfolio KOSPI 41.2 40 190 30.8 28.3

20 15.8 15.5 170

0 150

-7.1 -6.3 -4.6 -4.5 -20 130 -18.0 -40 110 KIH L&F F&F HMD 90 NAVER SEMCO Celltrion Motors CJ Logistics

Hyundai Steel 70 12 13 14 15 16 17 18 19 20 21

Source: Mirae Asset Securities Research Source: Mirae Asset Securities Research

Figure 6. May model portfolio: Z-score by sector

(Z-score) 1.0 High preference Low preference 0.8 0.6 0.4 0.2 0.0 -0.2 -0.4 -0.6 -0.8 -1.0

Source: Mirae Asset Securities Research

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Figure 7. May model portfolio weights (by sector) vs. KOSPI Figure 8. May model portfolio weights (by subsector) vs. KOSPI

(%p) Energy 1.0 2.5 2.0 Materials 3.1 1.5 Industrials -0.6 1.0 0.5 Consumer disc. -1.3 0.0 Consumer staples -0.7 -0.5 -1.0

Healthcare -0.7 -1.5 -2.0 Financials 0.1 Steel Retail Autos Banks Telcos Energy Utilities IT 0.8 Display Software Securities Insurance Machinery Chemicals Healthcare IT hardware IT Shipbuilding Hotel/leisure Construction

Telcos -0.8 appliances IT Transportation Semiconductors Media/education

(%p) Consumerstaples Cosmetics/apparel

Utilities -0.8 metals Non-ferrous Trading/capital Trading/capital goods -1.5 -0.5 0.5 1.5 2.5 3.5

Source: Mirae Asset Securities Research Source: Mirae Asset Securities Research

Table 2. May overweight sectors and stocks to watch Stocks Notes

- For 1Q21, we expect to see record quarterly results and an earnings surprise, thanks to robust NB latex spreads. Chemicals Kumho Petrochemical - Earnings should continue to grow, supported by higher commodity rubber (SBR/BR) prices and margins.

- Higher steel prices continue to support earnings growth; 1Q21 operating profit beat the consensus by 20%. Steel POSCO - Steel prices should continue to trend higher, aided by growing demand amid an economic recovery and expectations for Chinese output cuts.

- We expect to see a 1Q21 earnings surprise, backed by inventory valuation gains resulting from higher oil prices and Energy SK Innovation improved refining margins. - Refining market conditions remain favorable; battery and separator materials businesses have strong growth prospects.

- In the US, EV sales and penetration are anticipated to increase rapidly in 2H21, boosted by government subsidies. IT appliances Samsung SDI - We expect to see full-scale improvement in EV battery earnings thanks to the revenue generation of fifth-gen batteries.

- Profitability will likely improve on memory cost improvements stemming from a cost advantage over rivals. Semiconductors SEC - We see potential for additional profit growth if smartphone shipments return to normal on the resolution of foundry capacity shortages. Source: Mirae Asset Securities Research

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May model portfolio (%, %p)

Recommended Sector weight Recommended Sector Subsector Ticker Stock sector weight Diff. MoM (index) stock weight (portfolio) (A) (B) (B-A) Energy 2.3 3.3 1.0 Energy 096770 SK Innovation 2.3 3.3 1.0 3.3 New Materials 10.2 13.3 3.1 Chemicals 011170 Lotte Chemical 6.8 8.9 2.1 3.5 0.2 Chemicals 011780 Kumho Petrochemical 6.8 8.9 2.1 3.2 0.3 Chemicals 011790 SKC 6.8 8.9 2.1 1.6 0.2 Chemicals 298000 Chemical 6.8 8.9 2.1 0.6 New Non-ferrous metals 103140 Poongsan 1.0 0.9 -0.1 0.9 -0.1 Steel 005490 POSCO 2.4 3.5 1.1 3.5 New Industrials 12.4 11.8 -0.6 Construction 000720 Hyundai E&C 2.5 2.1 -0.4 2.1 New Machinery 112610 CS Wind 1.5 1.7 0.2 1.7 0.3 Shipbuilding 009540 KSOE 1.2 1.1 -0.1 1.1 New Trading/capital goods 034730 SK Holdings 4.3 3.9 -0.4 3.2 0.3 Trading/capital goods 047050 POSCO International 4.3 3.9 -0.4 0.7 0.3 Transportation 086280 2.9 3.0 0.1 3.0 New Consumer discretionary 13.1 11.8 -1.3 Autos 005380 Hyundai Motor 6.6 6.3 -0.3 3.7 -0.5 Autos 000270 Kia Motors 6.6 6.3 -0.3 2.6 -1.0 Cosmetics/apparel 090430 AmorePacific 3.9 3.9 0.0 3.4 0.0 Cosmetics/apparel 031430 3.9 3.9 0.0 0.5 New International Hotel/leisure 008770 0.6 0.3 -0.3 0.3 0.1 Media/education 253450 0.9 0.6 -0.3 0.6 0.1 Retail 004170 Shinsegae 1.1 0.7 -0.4 0.7 New Consumer staples 2.3 1.6 -0.7 Consumer staples 033780 KT&G 2.3 1.6 -0.7 1.6 -0.4 Healthcare 7.6 6.9 -0.7 Healthcare 207940 7.6 6.9 -0.7 3.9 -0.6 Healthcare 068270 Celltrion 7.6 6.9 -0.7 2.7 -1.1 Healthcare 048260 Osstem Implant 7.6 6.9 -0.7 0.3 0.1 Financials 8.0 8.1 0.1 Banks 105560 KB Financial Group 4.3 4.4 0.1 2.7 0.0 Banks 086790 4.3 4.4 0.1 1.7 0.2 Korea Investment Securities 071050 1.6 1.8 0.2 1.8 0.5 Holdings Insurance 032830 Samsung Life 2.2 1.9 -0.3 1.9 0.0 IT 41.0 41.8 0.8 Software 035420 NAVER 7.8 6.1 -1.7 2.9 -0.8 Software 035720 7.8 6.1 -1.7 2.7 0.0 Software 067160 AfreecaTV 7.8 6.1 -1.7 0.5 0.3 IT hardware 009150 SEMCO 1.4 1.8 0.4 1.8 0.3 Semiconductors 005930 Samsung Electronics 27.8 28.4 0.6 23.8 -1.6 Semiconductors 000660 SK Hynix 27.8 28.4 0.6 4.6 -0.3 IT appliances 006400 Samsung SDI 3.6 4.5 0.9 4.5 New Display 213420 Duksan Neolux 0.5 1.0 0.5 1.0 0.2 Telcos 1.8 1.0 -0.8 Telcos 017670 SK Telecom 1.8 1.0 -0.8 1.0 -0.2 Utilities 1.2 0.4 -0.8 Utilities 015760 KEPCO 1.2 0.4 -0.8 0.4 -0.1 Note: Based on 4/30/21 closing prices Source: Mirae Asset Securities Research

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Global and domestic economic conditions

Despite positive surprise momentum from US data, UST yields remained stable in April. Real yields fell, with nominal rates following suit, as Fed Chair Powell continued to signal that the central bank’s accommodative stance would remain intact. We believe any further rise in UST yields is unlikely until it is clear that the US is reaching herd immunity and lockdowns are significantly eased. With May and June being historically bearish, there has been some cautious sentiment on equities. But given the current “Goldilocks” environment (improving growth/earnings and stable interest rates), we see limited downside risks to markets.

Developed countries continue to face supply chain disruptions and restocking pressures amid the ongoing normalization of the global economy. The US ISM Manufacturing Index reading for March came in at 64.7, the highest level in 34 years. The Supplier Deliveries Index hit a record high, and the Customers’ Inventories Index reached a record low, indicating that supply chain pressures are continuing. Meanwhile, East Asian countries, which have faced fewer supply chain disruptions, are exhibiting healthier exports and industrial production than developed economies; we expect such dynamics to continue going forward.

Korea’s April exports were up 41.1% YoY, increasing for the sixth straight month and at the fastest pace since Jan. 2011. Daily average exports climbed 29.4% YoY, as there were two additional working days compared to the same period last year. By destination, exports to developed markets continued sharp growth (+43% YoY for both US- and EU-bound exports). Exports to China (+31% YoY), Vietnam (+59.8% YoY), and Japan (+24.0% YoY) also grew at a faster rate.

Korea’s 1Q21 GDP grew for the third consecutive quarter, gaining 1.6% QoQ. YoY growth also turned positive, at 1.8%. By component, facility expenditure and private consumption returned to positive growth (+6.6% and +1.1% QoQ, respectively) and were among the biggest contributors to GDP growth (+0.6%p and +0.5%p, respectively). Government spending, exports, and imports were up 1.7%, 1.9%, and 2.4% QoQ, respectively.

Figure 9. US manufacturing: Customers’ Inventories Index Figure 10. Exports grow across Asia hits record low

(%) (1/19=100) 140 Export volume 80 ISM Manufacturing PMI Euro area US ISM Customers' Inventories 130 China 70 ISM Supplier Deliveries 120 Emerging Asia ex-China 60 110

50 100

90 40 80 30 70

20 60 09 10 11 12 13 14 15 16 17 18 19 20 21 18 19 20 21

Source: Bloomberg, Mirae Asset Securities Research Source: CPB, Mirae Asset Securities Research

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Figure 12. Korea’s 1Q21 GDP growth: Contribution by Figure 11. Korea’s total and daily avg. exports both up YoY component

(%, YoY) (%, %p) Private consumption expenditure 50 Total exports Daily avg. exports Government consumption Gross fixed capital formation 40 5 Net exports Chg. in stocks 30 4 3 20 2 10 1 0 0 -10 -1 -2 -20 -3 -30 -4 -40 -5 12/18 3/19 6/19 9/19 12/19 3/20 6/20 9/20 12/20 3/21 3/19 6/19 9/19 12/19 3/20 6/20 9/20 12/20 3/21

Source: Bloomberg, Mirae Asset Securities Research Source: CEIC, Mirae Asset Securities Research

Domestic policy updates

1. 2021-23 medium-term household debt management plan

Not only is Korea’s household debt large relative to other major countries, but it is also growing rapidly. The Korean government recently announced a medium-term (2021-23) plan aimed at reining in growing household debt. As one measure, the government will reinstate the household debt growth target scheme to improve financial soundness. The 2021 target will be kept at 5-6% in light of the COVID-19 situation, but will be restored to the pre-pandemic level of around 4% in 2022. In 2H21, the government will also mandate banks to set aside additional reserves of 0-2.5% (depending on the household loan growth rate of each bank) within a year. In addition, the DSR rule, which is currently managed by each bank, will be applied at the individual borrower level beginning in Jul. 2021. The borrower- based DSR rule will be expanded gradually and applied to all borrowers by Jul. 2023.

2. Overhaul of securities lending to individual investors

As of May 3, retail investors are allowed to short stocks as part of the partial resumption of short selling. Notably, key rules covering short selling by retail investors have been revised to improve market access and beef up education/protection. Authorities have increased the amount of securities available for lending to retail investors to W2.4tr (vs. W40bn in 2019) to make short selling more accessible, while reducing that available to market makers by half. Market makers are also banned from short selling Mini-KOSPI 200 futures and options and are no longer exempted from the uptick rule. There will be 28 brokerage firms providing stock lending services to retail investors by the end of the year, up from 17 in May. Investors new to short selling first have to complete a training course and mock trade and are subject to borrowing limits set by each brokerage house.

As of Apr. 30, more than 13,000 retail investors have completed the training course, and the stock lending balance has reached W56.3tr, the highest level since the beginning of the year. While the partial resumption of short selling could cause some supply/demand pressures in the near term, we do not expect any significant downward moves, given healthy corporate earnings.

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Figure 13. Household debt/GDP ratios of major countries Figure 14. Domestic household debt/disposable income ratio

(%) (%) 120 4Q19 4Q20 180 Korea household debt/disposable income 102.8 95.2 170 100 91.4 84 86.4 78.8 81.1 160 80 74.7 68 150 60.9 60 140

40 130 120 20 110 0 100 Korea US UK France Hong Kong 09 10 11 12 13 14 15 16 17 18 19 20

Source: IIF, Mirae Asset Securities Research Source: BOK, Mirae Asset Securities Research

Domestic equity market: Money flows and key events

In April, the KOSPI finished higher on economic optimism, a positive outlook for domestic corporate profits, and foreign buying. Retail net buying weakened to W5.8tr in the month (vs. W22.3tr in January, W8.4tr in February, and W6.9tr in March), as individual investors diversified their allocation to other assets with higher expected returns, such as overseas equities and Bitcoin. Retail investors were net buyers of electrical/electronics (+W4.5tr), transportation/equipment (+W1.8tr), and F&B (+W248.5bn) and net sellers of chemicals (-W1.4tr), financials (-W416.9bn), and construction (-W326.4bn).

Foreigners net purchased W0.4tr worth of stocks on the KOSPI in April, marking the first positive monthly net inflow since Nov. 2020. Following some net buying early in the month (+W2.6tr from Apr. 1 to 20), foreign investors turned to net sellers mid-month (-W2.2tr from Arp. 21 to 30), as uncertainty over short selling loomed. Considering the healthy earnings momentum of domestic companies, we think that the foreigner selling is unlikely to continue after the ban on short sales is lifted. Foreigners were net buyers of chemicals (+W1.2tr), financials (+W578.8bn), and telecommunications (+W487.6bn) and net sellers of electric/electronics (-W1.4tr), transportation/equipment (-W882.3bn), and F&B (-W99.7bn).

Institutional investors net sold W5.9tr worth of stocks on the KOSPI in April, of which pension funds accounted for W2.9tr and financial institutions W1.5tr. The intensity of pension funds’ selling appears to be weakening compared to the beginning of the year (monthly net selling: -W8.1tr in January, -W4.3tr in February, and -W3.3tr in March). Pension funds were net buyers of pharmaceuticals (+W230.2bn), construction (+W77.8bn), and non- metallic minerals (+W51.2bn) and net sellers of electric/electronics (-W1.8tr), transportation/ equipment (-W620.8bn), and telecommunications (-W425bn).

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Figure 16. Avg. proportion of daily market turnover by Figure 15. KOSPI purchases by investor type investor type

(Wbn) \ (%) 8,000 Foreign investors 90 Foreign investors Domestic retail Domestic institutions 5,836 80 6,000 Domestic institutions Domestic individuals 70 4,000 60 2,000 386 50 0 40 -2,000 30 -4,000 20 -6,000 -5,847 10 -8,000 0 4/1-4/2 4/5-4/9 4/12-4/16 4/19-4/23 4/26-4/30 MTD 2/20 4/20 6/20 8/20 10/20 12/20 2/21 4/21

Source: Quantiwise, Mirae Asset Securities Research Source: Quantiwise, Mirae Asset Securities Research

Table 3. Key May events Date Events Notes May 3 Partial resumption of short selling KOSPI 200 and KOSDAQ 150 constituents May 11 MSCI semi-annual review MSCI rebalancing (effective May 28) May 11 OPEC Oil Market Report Global oil demand outlook May 17-21 US AACR Watch companies presenting clinical data May 18-21 Davos Forum A major global economic forum Source: Mirae Asset Securities Research

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10 most-traded KOSPI stocks by investor type

Foreign investors Net buying Company Net selling (Wbn) Performance (1M, %) Company Performance (1M, %) (Wbn) 482.5 -7.5 LG Chem 842.7 15.8 SEC (1P) 420.9 0.4 SK Telecom 395.0 10.4 SEC 385.3 0.1 POSCO 203.8 13.8 Kia Motors 314.0 -7.1 143.5 6.8 Samsung SDI 309.5 -0.9 DL E&C 130.9 10.4 SK Hynix 217.2 -3.4 GS E&C 122.6 2.7 Douzone Bizon 120.9 -14.2 NCsoft 120.6 -4.9 Hyundai Motor 116.9 -2.8 SK Innovation 101.3 23.5 SK Biopharm 91.6 5.8 Woori Financial Group 101.1 5.9 Doosan Fuel Cell 89.7 -12.1 Hana Financial Group 93.7 6.7

Domestic institutions Net buying Performance Company Net selling (Wbn) Performance (1M, %) Company (Wbn) (1M, %) SEC 2463.7 0.1 Samsung Biologics 282.5 7.5 NAVER 633.3 -4.6 LG Display 168.9 6.8 SK Hynix 607.7 -3.4 Samsung C&T 149.7 9.2 Hyundai Mobis 435.1 -7.5 Hyundai Eng. & Constr. 131.5 14.4 Celltrion 313.1 -18.0 LG Chem 96.4 15.8 Kakao 300.2 -77.2 Korea Zinc 87.9 9.2 NCsoft 259.8 -4.9 84.5 0.4 SK Telecom 212.3 10.4 SK Biopharm 83.8 5.8 SEMCO 206.8 -4.5 Woori Financial Capital 82.9 9.7 Lotte Chemical 182.4 1.0 Shinsegae 73.1 8.4

Domestic retail Net buying Company Net selling (Wbn) Performance (1M, %) Company Performance (1M, %) (Wbn) LG Chem 941.7 15.8 SEC 2731.6 0.1 Samsung Biologics 325.8 7.5 SK Hynix 810.3 -3.4 Hyundai Eng. & Constr. 201.0 14.4 Hyundai Mobis 805.1 -7.5 SK Telecom 163.2 10.4 Kakao 719.8 -77.2 LG Display 159.2 6.8 NAVER 699.0 -4.6 SK Innovation 148.3 23.5 SEC (1P) 486.6 0.4 Korea Zinc 106.0 9.2 Kia Motors 445.5 -7.1 Samsung C&T 105.6 9.2 Celltrion 324.6 -18.0 Shinsegae 103.8 8.4 Hyundai Motor 303.7 -2.8 Shinhan Financial Group 102.1 6.8 Samsung SDI 240.5 -0.9

Pension funds Net buying Performance Company Net selling (Wbn) Performance (1M, %) Company (Wbn) (1M, %) SEC 1440.4 0.1 Samsung Biologics 225.1 7.5 NAVER 382.7 -4.6 SK Bioscience 96.9 26.1 SK Hynix 254.7 -3.4 LG Display 89.8 6.8 Hyundai Mobis 213.7 -7.5 HMM 81.8 35.2 Woori Financial Group 151.6 5.9 SK Biopharm 80.5 5.8 NCsoft 141.6 -4.9 Samsung C&T 71.7 9.2 SK Telecom 133.5 10.4 Hyundai E&C 65.7 14.4 Kakao 132.2 -77.2 Netmarble 53.8 0.4 Celltrion 120.0 -18.0 AmoreG 47.7 13.3 Samsung Electro-Mechanics 107.5 -4.5 42.0 15.5 Source: Infomax, Mirae Asset Securities Research

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Appendix 1

Important disclosures and disclaimers 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 Securities Co., Ltd. (“Mirae Asset Securities”) 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 Securities, 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 Securities except as otherwise stated herein.

Disclaimers This report was prepared by Mirae Asset Securities, 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 Securities 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 Korean language. 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 Securities 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 Securities 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 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 Securities, 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 Securities 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 Securities may make investment decisions that are inconsistent with the opinions and views expressed in this research report. Mirae Asset Securities, 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 Securities 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 Securities. 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 United Kingdom: This report is being distributed by Mirae Asset Securities (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. United States: Mirae Asset Securities 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 Securities 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 Securities. 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. Hong Kong: 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. India: This report is being distributed by Mirae Asset Capital Markets (India) Private Limited (“MACM”) in India to the customers based in India and is personal information only for those authorised recipient(s). MACM is inter alia a Securities and Exchange Board of India (“SEBI”) registered Research Analyst in India and is not registered outside India. MACM and Mirae Asset, Korea are group entities. MACM makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy, completeness or correctness of the information and opinions contained herein. The user assumes the entire risk of any use made of this information. This report has been provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Recipient must read the entire Appendix 1 to the report carefully for Important Disclosures & Disclaimers. 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 Securities 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 Securities and its affiliates to any registration or licensing requirement within such jurisdiction.

Mirae Asset Securities Research 11 May 4, 2021 Korea Equity Strategy

Mirae Asset Securities International Network

Mirae Asset Securities 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

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Mirae Asset Securities Research 12