Samsung C&T Corporation

(028260 KS) Raising cash to invest in the future

1Q18 review: OP of W209.2bn (+52.3% YoY), far above the consensus

For 1Q18, Samsung C&T Corporation (Samsung C&T) reported revenue of W7.48tr (+11.5% YoY), operating profit of W209.2bn (+52.3% YoY), and net profit attributable to Results Comment controlling interests of W398.6bn (+86.1% YoY), handily beating the market consensus. The sharp increase in operating profit was attributable to improvements in E&C (high- April 26, 2018 tech) and T&I (trading). On the non-operating side, dividend income from affiliates (W235bn), gains from the Geumcheon logistics center sale (W85bn), and income from the Ontario project (W21.7bn) contributed to a surge in net profit YoY. 1) E&C: Revenue and operating profit were W3tr (+10.5% YoY) and W158bn (+73.6% (Maintain) Buy YoY), respectively. Domestic/overseas project margins improved, while new orders totaled W1.5tr (W0.7tr for high-tech, and W0.8tr for increases in existing projects). 2) T&I: Revenue and operating profit were W3.3tr (+16.0% YoY) and W57.7bn (+34.2% Target Price (12M, W) ▲ 190,000 YoY), respectively. The trading business was boosted by strong commodity prices. Organizing fees also increased. Share Price (04/25/18, W) 135,000 Investment points: 1) Cheap valuation; 2) investments in future growth; 3) removal of regulatory overhang Expected Return 41% 1) Samsung C&T looks steeply undervalued, trading at a 47% discount to its NAV. In our view, improving earnings, as well as the increase in the value of holdings in affiliates like Samsung Electronics (SEC) and Samsung BioLogics, are not reflected in OP (18F, Wbn) 1,009 current share prices. For 2018, we forecast that net profit attributable to controlling interests will climb 66.5% YoY to W1.1tr, driven by in-house business earnings growth Consensus OP (18F, Wbn) - and a significant gain in dividend income (W627bn in 2018F; +74.2% YoY) resulting from SEC’s 100% dividend hike. Meanwhile, we note that while the value of the EPS Growth (18F, %) 66.5 company’s in-house businesses and investment assets has jumped more than 69% Market EPS Growth (18F, %) 15.8 since 2015, its market cap has actually changed little. P/E (18F, x) 24.2 2) We expect Samsung C&T to unload its non-operating assets to raise funds to invest Market P/E (18F, x) 9.5 in future growth. At present, the company has around W3tr in cash assets and is in the KOSPI 2,448.81 process of selling its Seocho building (book value of W560bn) and Hanwha General Chemical stake (20%; W1tr). Using the proceeds from the sales, we believe the Market Cap (Wbn) 25,608 company will actively pursue stake acquisitions and M&A deals. Shares Outstanding (mn) 191 th Free Float (%) 47.8 * On April 24 , Biogen announced that it will exercise its call option to acquire an additional stake (up to 50% minus one share) in Samsung Bioepis (by the end of June). Foreign Ownership (%) 11.1 As Biogen has stated that its Bioepis stake was an investment, we think Biogen could Beta (12M) 1.31 consider selling some of the shares acquired through the call option, providing an 52-Week Low 122,000 opportunity for Samsung C&T to purchase a stake in Bioepis. 52-Week High 149,500 3) The sale of Samsung SDI’s 2.1% stake in Samsung C&T was finalized on April 10th, removing a major regulatory overhang related to new circular shareholdings. There (%) 1M 6M 12M are now four circular shareholdings remaining across the Samsung Group, which are Absolute 4.7 -7.8 3.4 tied by Samsung Electro-Mechanics’ (SEMCO) 2.6% stake in Samsung C&T and Relative 3.3 -6.2 -7.2 Samsung F&M’s 1.4% stake in Samsung C&T. However, there are no separate deadlines for selling these shares, as they are not legally required to be untied. Even if 130 Samsung C&T Corporation the group voluntarily decides to unwind the shareholdings, we believe it will be done KOSPI 120 in a way that does not conflict with Samsung C&T’s shareholder interests. 110 Maintain Buy and raise TP to W190,000; ample upside potential 100 We maintain Buy on Samsung C&T and raise our target price by 5.6% to W190,000 90 (from W180,000), reflecting upward adjustments to in-house earnings estimates and

80 changes in the value of the company’s equity holdings. 4.17 8.17 12.17 4.18 We see ample upside to current share prices, given the valuation of in-house businesses and equity stakes. Looking ahead, we expect the stock to re-rate higher, Mirae Asset Daewoo Co., Ltd. fueled by the resumption of group restructuring and aggressive shareholder returns.

[ Holding Companies/IT Services] FY (Dec.) 12/14 12/15 12/16 12/17 12/18F 12/19F Revenue (Wbn) 5,130 13,345 28,103 29,279 30,895 31,359 Dae-ro Jeong +822-3774-1634 OP (Wbn) 213 37 140 881 1,009 1,122 [email protected] OP margin (%) 4.2 0.3 0.5 3.0 3.3 3.6

Su Yeon Lee NP (Wbn) 456 2,747 107 640 1,065 1,130 +822-3774-7162 EPS (W) 3,632 17,857 561 3,344 5,567 5,907 [email protected] ROE (%) 9.9 25.2 0.6 3.1 4.6 4.7

P/E (x) 43.5 7.8 223.6 37.7 24.2 22.9 P/B (x) 3.6 1.5 1.2 1.0 1.0 1.0 Dividend yield (%) 0.0 0.4 0.4 1.6 1.5 1.5 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.

April 26, 2018 Samsung C&T Corporation

Table 1. 1Q18 review (Wbn, %) 1Q18P % Growth 1Q17 4Q17 Preliminary Consensus QoQ YoY Revenue 6,702.3 7,764.9 7,476.3 6,813.4 -3.7 11.5 OP 137.4 283.2 209.2 160.8 -26.2 52.3 NP (controlling) 214.2 155.6 398.6 237.9 156.1 86.1 OP margin (%) 2.0 3.6 2.8 2.4 -0.9 0.7 Net margin (%) 3.2 2.0 5.3 3.5 3.3 2.1 Source: Mirae Asset Daewoo Research

Table 2. Quarterly and annual earnings (Wbn, %) 1Q17 2Q17 3Q17 4Q17 1Q18P 2Q18F 3Q18F 4Q18F 2016 2017F 2018F Revenue 6,702.3 7,319.2 7,492.6 7,764.9 7,476.3 7,637.2 7,745.0 8,036.9 28,102.7 29,279.0 30,895.3 E&C 2,711.0 3,163.0 3,126.0 2,983.0 2,995.0 3,302.8 3,226.8 2,992.7 12,952.8 11,983.0 12,517.4 T&I 2,870.0 3,004.0 3,195.0 3,487.0 3,329.5 3,050.1 3,249.3 3,668.8 10,538.4 12,556.0 13,297.7 Fashion 465.0 401.0 374.0 509.0 460.0 435.1 407.8 561.9 1,843.0 1,749.0 1,864.9 Leisure 103.0 232.0 198.0 157.0 95.6 247.5 213.8 156.9 677.3 690.0 713.8 F&B 447.0 456.0 472.0 467.0 460.3 481.1 500.9 481.7 1,797.0 1,842.0 1,924.0 Biologics 107.0 63.0 128.0 162.0 135.9 120.5 146.3 174.8 294.5 460.0 577.5 Revenue breakdown 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% E&C 40.4% 43.2% 41.7% 38.4% 40.1% 43.2% 41.7% 37.2% 46.1% 40.9% 40.5% T&I 42.8% 41.0% 42.6% 44.9% 44.5% 39.9% 42.0% 45.6% 37.5% 42.9% 43.0% Fashion 6.9% 5.5% 5.0% 6.6% 6.2% 5.7% 5.3% 7.0% 6.6% 6.0% 6.0% Leisure 1.5% 3.2% 2.6% 2.0% 1.3% 3.2% 2.8% 2.0% 2.4% 2.4% 2.3% F&B 6.7% 6.2% 6.3% 6.0% 6.2% 6.3% 6.5% 6.0% 6.4% 6.3% 6.2% Biologics 1.6% 0.9% 1.7% 2.1% 1.8% 1.6% 1.9% 2.2% 1.0% 1.6% 1.9% Operating profit 137.4 255.4 220.2 283.2 209.2 262.9 278.4 258.3 139.5 896.2 1,008.8 OP margin 2.0% 3.5% 2.9% 3.6% 2.8% 3.4% 3.6% 3.2% 0.5% 3.1% 3.3% E&C 91.0 153.0 105.0 167.0 158.0 135.4 136.7 114.9 34.3 516.0 545.1 OP margin 3.4% 4.8% 3.4% 5.6% 5.3% 4.1% 4.2% 3.8% 0.3% 4.3% 4.4% T&I 43.0 46.0 46.0 15.0 57.7 45.6 47.4 58.8 70.1 150.0 209.5 OP margin 1.5% 1.5% 1.4% 0.4% 1.7% 1.5% 1.5% 1.6% 0.7% 1.2% 1.6% Fashion -1.0 9.0 -13.0 38.0 -0.4 7.3 -9.0 7.3 -45.7 33.0 5.3 OP margin -0.2% 2.2% -3.5% 7.5% -0.1% 1.7% -2.2% 1.3% -2.5% 1.9% 0.3% Leisure -19.0 29.0 47.0 6.0 -24.7 21.4 42.9 11.3 46.6 63.0 50.9 OP margin -18.4% 12.5% 23.7% 3.8% -25.8% 8.6% 20.1% 7.2% 6.9% 9.1% 7.1% F&B 31.0 38.0 26.0 21.0 16.9 37.3 35.3 27.3 109.9 116.0 116.7 OP margin 6.9% 8.3% 5.5% 4.5% 3.7% 7.7% 7.0% 5.7% 6.1% 6.3% 6.1% Biologics -8.0 -20.0 9.0 36.0 1.7 15.9 25.1 38.6 -76.2 17.0 81.3 OP margin -7.5% -31.7% 7.0% 22.2% 1.2% 13.2% 17.2% 22.1% -25.9% 3.7% 14.1% Unallocated profit 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other non-operating 182.0 -64.1 -20.7 -29.5 336.0 33.6 -5.5 141.8 101.3 67.8 505.9 net profit Equity-method gains -39.0 -24.5 -23.7 -36.8 -66.9 -18.2 -16.5 -14.7 -151.0 -124.0 -116.3 Pretax profit 282.3 166.9 175.8 213.0 478.3 278.3 256.4 385.3 89.8 825.0 1,398.4 Net profit 187.6 111.6 139.0 52.4 363.1 186.1 202.8 257.6 20.8 481.1 1,009.7 Net profit 214.2 121.0 158.5 155.6 398.6 201.8 231.3 233.3 107.4 639.8 1,065.1 (controlling) Source: Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 2 April 26, 2018 Samsung C&T Corporation

Table 3. Target price calculation (Wbn)

2018F Notes

Operating value ①

E&C 2,800 5.0x 18F EV/EBITDA

F&B 1,308 8.2x 18F EV/EBITDA

Leisure 2,255 15.1x 18F EV/EBITDA

Fashion 314 6.8x 18F EV/EBITDA

T&I 1,718 8.5x 18F EV/EBITDA

Investment value ② 38,406 Listed subsidiaries 36,788 Based on market value

Unlisted subsidiaries 1,618 Based on book value

Total asset value ① + ② 46,801 Net debt 2,480 As of end-1Q18 Treasury stock 3,540 NAV 47,861

Market cap 25,608 Common shares

Discount to NAV (%) 46.5

No. of shares issued (‘000 189,690 Shares issued shares) NAV per share 252,314 Theoretical target price 189,235 25% discount to NAV per share

Target price 190,000

Current price 135,000 Based on April 25th closing price

Upside potential 40.7% Source: Mirae Asset Daewoo Research

Table 4. Samsung C&T’s stakes in key affiliates (shares, %, W, Wbn) Current share No. of shares Stake Book value Value price Listed subsidiaries 31,778 36,788

SEC (005930 KS) 5,976,362 4.6 2,520,000 15,323 15,060 Samsung BioLogics (207940 KS) 28,742,466 43.4 478,500 9,701 13,753 Samsung Life (032830 KS) 38,688,000 19.3 117,000 4,372 4,526 Samsung SDS (018260 KS) 13,215,822 17.1 243,000 2,227 3,211 Samsung Engineering (028050 KS) 13,668,989 7.0 17,050 150 233 Samsung Heavy Industries (010140 KS) 486,698 0.1 7,420 5 4 Unlisted subsidiaries 892 1,618 SECUI 1,000,000 8.7 14 14 Other 879 1,604 Source: Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 3 April 26, 2018 Samsung C&T Corporation

Figure 1. Discount to NAV

(%) 60

50

40

30

20

10

0

-10

-20

-30 15.10 16.4 16.10 17.4 17.10 18.4

Source: Mirae Asset Daewoo Research

Figure 3. Market cap trend (2015-18): Modest decline from Figure 2. Total asset value trend (2015-17): +68.8% 2015

(Wtr) (Wtr) 50 Operating value 30 SEC 26.6 5.1 25.6 Samsung Biologics 25 23.8 23.9 40 4.4 Samsung Life 4.5 4.8 Other investment assets 20 30 13.8 3.6 10.7 5.2 4.4 15 20 4.3 4.3 5.0 15.2 15.1 10 10.8 10 7.5 5

5.8 6.6 7.9 8.4 0 0 2015 2016 2017 2018F 2015 2016 2017 2018F

Source: Mirae Asset Daewoo Research Source: Mirae Asset Daewoo Research

Figure 4. Annual dividend income trend Figure 5. Cash & cash equivalents

(Wbn) (Wbn) 700 SEC 6,000 Cash assets Samsung Life 13.7 13.7 600 26.4 33.0 Samsung SDS 5,000 Others 77.4 77.4 Hanwha General 500 1,000 4,000 Chemical stake (20%) 400 Sale of Seocho Building 700 13.7 9.9 3,000 300 46.4 16.6 509.5 508.0 2,000 3,759 200 6.6 3,094 3,032 69.6 289.9 2,133 100 1,000 125.5 0 0 2016 2017 2018F 2019F 2015 2016 2017 1H18F

Source: DART, Mirae Asset Daewoo Research Source: DART, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 4 April 26, 2018 Samsung C&T Corporation

Table 5. Samsung Group’s circular shareholdings: Reduced from 7 to 4 No Affiliate Affiliate Affiliate Affiliate Affiliate Affiliate Notes . 1 2 3 4 5 6 Samsung Samsung → SEC → SEMCO → C&T C&T 4.2% 23.7% 2.6%

Samsung Samsung Samsung → → SEC → SEMCO → SEMCO C&T Life C&T → Samsung 19.3% 7.6% 23.7% 2.6% C&T Samsung Samsung Samsung Samsung → → → SEC → SEMCO → C&T Life F&M C&T 19.3% 15.0% 1.3% 23.7% 2.6% Samsung Samsung Samsung → SEC → → C&T SDI C&T 4.2% 19.6% 2.1% Samsung SDI

Samsung Samsung Samsung Samsung → Samsung → → SEC → → C&T Life SDI C&T C&T

19.3% 7.6% 19.6% 2.1% :’ untied on Samsung Samsung Samsung Samsung Samsung → → → SEC → → April 10th C&T Life F&M SDI C&T 19.3% 15.0% 1.3% 19.6% 2.1% Samsung Samsung Samsung Samsung → → → Samsung F&M C&T Life F&M C&T → Samsung 19.3% 15.0% 1.4% C&T Source: FTC, Mirae Asset Daewoo Research

Table 6. Potential changes in major shareholders’ stakes in the event of treasury stock cancellation (shares, %, Wbn) Shareholder No. of shares Stake ratio Value Shareholder No. of shares Stake ratio Value

Lee Jae-yong 32,674,500 17.2 4,411 Lee Jae-yong 32,674,500 20.0 4,411

Lee Boo-jin 10,456,450 5.5 1,412 Lee Boo-jin 10,456,450 6.4 1,412 Controlling family Controlling family Lee Seo-hyun 10,456,450 5.5 1,412 Lee Seo-hyun 10,456,450 6.4 1,412 (1) (1) Lee Kun-hee 5,425,733 2.9 732 Lee Kun-hee 5,425,733 3.3 732

Subtotal 59,013,133 31.1 7,967 Subtotal 59,013,133 36.1 7,967

SEMCO 5,000,000 2.6 675 SEMCO 5,000,000 3.1 675

Samsung F&M 2,617,297 1.4 353 Samsung F&M 2,617,297 1.6 353

Samsung Life Samsung Life Public Welfare 2,000,000 1.1 270 Public Welfare 2,000,000 1.2 270

Foundation Foundation Affiliates Samsung Affiliates Samsung (2) Foundation of 1,144,086 0.6 154 (2) Foundation of 1,144,086 0.7 154

Culture Culture Samsung Samsung Welfare 80,946 0.0 11 Welfare 80,946 0.0 11

Foundation Foundation Subtotal 10,842,329 5.7 1,464 Subtotal 10,842,329 6.6 1,464

Controlling family + affiliates (3) =1) + (2) 69,855,462 36.8 9,430 Controlling family + affiliates (3) =1) + (2) 69,855,462 42.7 9,430

Treasury shares (4) 26,225,503 13.8 3,540 Treasury shares (4) 0 0 0

(5) = (3) + (4) 96,080,965 50.7 12,971 (5) = (3) + (4) 69,855,462 42.7 9,430

Total shares issued 189,690,043 100.0 25,608 Total shares issued 163,464,540 100.0 22,068

Note: Based on April 25th closing price

Source: Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 5 April 26, 2018 Samsung C&T Corporation

Figure 6. Samsung Group’s structure

Lee Jae-yong and affiliates

31.1%

Samsung C&T [028260 KS]

100% Samsung Welstory

43.4% 4.7% 19.3% 20.8% 5.4% Samsung BioLogics 31.5% SEC 8.3% Samsung Life [207940 KS] [005930 KS] [032830 KS] 93.3% 1.5% (50.1%)

Samsung Bioepis 17.0%

22.6% Samsung SDS Cheil Worldwide 25.2% Samsung F&M 15.0.% [018260 KS] [030000 KS] [000810 KS] 17.1%

23.7% SEMCO 2.3% Samsung Heavy 16.9% Samsung Securities 29.4% [009150 KS] [010140 KS] [016360 KS]

7.0% 19.6% Samsung SDI 11.7% Samsung Engineering Samsung Card 71.9% [006400 KS] [028050 KS] [029780 KS]

15.2% 84.8% Hotel Shilla 5.1% Samsung Asset 100% Samsung Display [008770 KS] Management 7.7%

11.0% S1 5.4% [012750 KS]

Source: DART, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 6 April 26, 2018 Samsung C&T Corporation

Samsung C&T Corporation (028260 KS/Buy/TP: W190,000)

Comprehensive Income Statement (Summarized) Statement of Financial Condition (Summarized) (Wbn) 12/16 12/17 12/18F 12/19F (Wbn) 12/16 12/17 12/18F 12/19F Revenue 28,103 29,279 30,895 31,359 Current Assets 13,359 12,321 13,066 10,895 Cost of Sales 24,771 25,627 26,622 26,847 Cash and Cash Equivalents 2,699 2,993 3,412 666 Gross Profit 3,332 3,652 4,273 4,512 AR & Other Receivables 4,599 4,399 4,553 4,824 SG&A Expenses 3,192 2,771 3,265 3,389 Inventories 1,313 1,533 1,587 1,681 Operating Profit (Adj) 140 881 1,009 1,122 Other Current Assets 4,748 3,396 3,514 3,724 Operating Profit 140 881 1,009 1,122 Non-Current Assets 31,100 36,728 37,313 38,734 Non-Operating Profit -50 -56 389 337 Investments in Associates 5,700 5,742 5,943 6,297 Net Financial Income -80 -86 0 0 Property, Plant and Equipment 5,281 4,986 4,556 4,190 Net Gain from Inv in Associates -151 -124 -116 -67 Intangible Assets 1,601 1,311 1,311 1,311 Pretax Profit 90 825 1,398 1,459 Total Assets 44,459 49,049 50,380 49,628 Income Tax 69 344 389 399 Current Liabilities 14,705 14,458 14,630 12,724 Profit from Continuing Operations 21 481 1,010 1,060 AP & Other Payables 2,679 2,794 2,891 3,064 Profit from Discontinued Operations 0 0 0 0 Short-Term Financial Liabilities 5,416 5,434 5,504 5,626 Net Profit 21 481 1,010 1,060 Other Current Liabilities 6,610 6,230 6,235 4,034 Controlling Interests 107 640 1,065 1,130 Non-Current Liabilities 8,648 9,439 9,679 10,101 Non-Controlling Interests -87 -159 -55 -70 Long-Term Financial Liabilities 3,657 2,594 2,594 2,594 Total Comprehensive Profit 1,399 4,163 1,010 1,060 Other Non-Current Liabilities 4,991 6,845 7,085 7,507 Controlling Interests 1,476 4,362 1,163 1,221 Total Liabilities 23,353 23,898 24,309 22,825 Non-Controlling Interests -77 -201 -153 -161 Controlling Interests 18,302 22,557 23,531 24,334 EBITDA 639 1,361 1,439 1,488 Capital Stock 19 19 19 19 FCF (Free Cash Flow) 871 634 1,467 -735 Capital Surplus 10,468 10,468 10,468 10,468 EBITDA Margin (%) 2.3 4.6 4.7 4.7 Retained Earnings 5,230 5,755 6,730 7,533 Operating Profit Margin (%) 0.5 3.0 3.3 3.6 Non-Controlling Interests 2,804 2,594 2,539 2,469 Net Profit Margin (%) 0.4 2.2 3.4 3.6 Stockholders' Equity 21,106 25,151 26,070 26,803

Cash Flows (Summarized) Forecasts/Valuations (Summarized) (Wbn) 12/16 12/17 12/18F 12/19F 12/16 12/17 12/18F 12/19F Cash Flows from Op Activities 1,355 1,312 1,467 -735 P/E (x) 223.6 37.7 24.2 22.9 Net Profit 21 481 1,010 1,060 P/CF (x) 34.5 19.3 16.6 16.6 Non-Cash Income and Expense 675 770 550 497 P/B (x) 1.2 1.0 1.0 1.0 Depreciation 500 480 430 366 EV/EBITDA (x) 49.9 23.0 22.7 23.8 Amortization 0 0 0 0 EPS (W) 561 3,344 5,567 5,907 Others 175 290 120 131 CFPS (W) 3,639 6,537 8,155 8,136 Chg in Working Capital 715 -160 27 -2,161 BPS (W) 105,657 127,899 132,991 137,189 Chg in AR & Other Receivables 188 172 -135 -237 DPS (W) 550 2,000 2,000 2,000 Chg in Inventories 84 -207 -54 -95 Payout ratio (%) 431.4 68.0 32.4 30.8 Chg in AP & Other Payables 107 24 63 110 Dividend Yield (%) 0.4 1.6 1.5 1.5 Income Tax Paid -254 -187 -389 -399 Revenue Growth (%) 110.6 4.2 5.5 1.5 Cash Flows from Inv Activities -812 280 -826 -1,453 EBITDA Growth (%) 100.9 113.0 5.7 3.4 Chg in PP&E -377 -605 0 0 Operating Profit Growth (%) 278.4 529.3 14.5 11.2 Chg in Intangible Assets -47 -5 0 0 EPS Growth (%) -96.9 496.1 66.5 6.1 Chg in Financial Assets -2,585 -4,819 -826 -1,453 Accounts Receivable Turnover (x) 7.1 7.5 7.9 7.7 Others 2,197 5,709 0 0 Inventory Turnover (x) 20.8 20.6 19.8 19.2 Cash Flows from Fin Activities 122 -1,117 -21 -204 Accounts Payable Turnover (x) 13.9 14.2 14.7 14.1 Chg in Financial Liabilities 1,018 -1,045 70 123 ROA (%) 0.0 1.0 2.0 2.1 Chg in Equity 429 0 0 0 ROE (%) 0.6 3.1 4.6 4.7 Dividends Paid -87 -96 -91 -327 ROIC (%) 0.4 6.9 13.6 15.1 Others -1,238 24 0 0 Liability to Equity Ratio (%) 110.6 95.0 93.2 85.2 Increase (Decrease) in Cash 632 295 419 -2,747 Current Ratio (%) 90.8 85.2 89.3 85.6 Beginning Balance 2,066 2,699 2,993 3,412 Net Debt to Equity Ratio (%) 24.3 18.7 16.6 26.8 Ending Balance 2,699 2,993 3,412 666 Interest Coverage Ratio (x) 0.7 5.1 0.0 0.0 Source: Company data, Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 7 April 26, 2018 Samsung C&T Corporation

APPENDIX 1

Important Disclosures & Disclaimers 2-Year Rating and Target Price History

Company (Code) Date Rating Target Price (W) Samsung C&T Corporation Samsung C&T Corporation (028260) 04/26/2018 Buy 190,000 200,000 01/29/2018 Buy 180,000 150,000

100,000

50,000

0 Apr 16 Apr 17 Apr 18

Stock Ratings Industry Ratings Buy : Relative performance of 20% or greater Overweight : Fundamentals are favorable or improving Trading Buy : Relative performance of 10% or greater, but with volatility Neutral : Fundamentals are steady without any material changes Hold : Relative performance of -10% and 10% Underweight : Fundamentals are unfavorable or worsening Sell : Relative performance of -10% Ratings and Target Price History (Share price (─), Target price (▬), Not covered (■), Buy (▲), Trading Buy (■), Hold (●), Sell (◆)) * Our investment rating is a guide to the relative return of the stock versus the market over the next 12 months. * Although it is not part of the official ratings at Mirae Asset Daewoo Co., Ltd., we may call a trading opportunity in case there is a technical or short-term material development. * The target price was determined by the research analyst through valuation methods discussed in this report, in part based on the analyst’s estimate of future earnings. * The achievement of the target price may be impeded by risks related to the subject securities and companies, as well as general market and economic conditions.

Equity Ratings Distribution & Investment Banking Services Buy Trading Buy Hold Sell Equity Ratings Distribution 74.13% 15.92% 9.95% 0.00% Investment Banking Services 75.00% 11.11% 13.89% 0.00% * Based on recommendations in the last 12-months (as of March 31, 2018)

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 Samsung C&T Corporation as an underlying asset, and 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 division. 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 Korea Exchange. 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 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 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 it 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

Mirae Asset Daewoo Research 8 April 26, 2018 Samsung C&T Corporation

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 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.

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Mirae Asset Daewoo Research 9 April 26, 2018 Samsung C&T Corporation

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