(64 KS) Smooth sailing Technology Company Update (Maintain) Buy Target Price (12M, W) 22, Share Price (9/6/13, W) 177, Expected Return 24% OP (13F, Wbn) 15 Consensus OP (13F, Wbn) 11 EPS Growth (13F, %) -66.1 Market EPS Growth (13F, %) 23. P/E (13F, x) 16.7 Market P/E (13F, x) 9.9 KOSPI 1,955.31 Market Cap (Wbn) 8,64 Shares Outstanding (mn) 47 Free Float (%) 74.5 Foreign Ownership (%) 26.3 Beta (12M).82 52-Week Low (W) 12,5 52-Week High (W) 179,5 (%) 1M 6M 12M Absolute 7. 26.4 2. Relative 4.4 29.7 16.1 13 12 11 1 9 8 7 Share price KOSPI 8/12 12/12 4/13 8/13 Rechargeable batteries to gain on new product releases in 3Q In 3Q, we forecast s prismatic and polymer battery shipments to grow 13% and 15%, respectively, on the launch of new products by Samsung Electronics (SEC; Galaxy Note 3, Galaxy Gear and tablets) and Apple (iphone and ipad). The overall supply and demand balance for cylindrical batteries (which had been hurt by sluggish laptop sales) appears to be improving thanks to: 1) the increasing mix of non-it segments (power tools, electric bikes, etc.), and 2) Tesla Motor s robust sales. To offset the impact of weak laptop sales, has continuously increased its non-it mix since last year. Now, it currently supplies more than 6% of its cylindrical batteries to non-it segments, aided by higher capacity utilization and better profitability compared to its rivals. Although laptop battery earnings are currently barely above breakeven, we believe non-it batteries are running double-digit margins. We expect equity method gains from Samsung Display (SDC) to modestly decline due to: 1) deteriorating TV panel margins, and 2) weaker OLED smartphone shipments. Typically, 3Q is the strongest quarter, as demand picks up ahead of the strong season in China (National Day) and developed countries. However, this year panel shipments have been muted amid tepid TV sales and high inventory. Moreover, TV panel prices are likely to fall more than 6% in 3Q alone. 3Q13 preview: Revenue of W1.44tr (+1% QoQ), OP of W58.4bn (+81% QoQ) We project 3Q revenue and operating profit of W1.44tr (+1% QoQ, -5% YoY) and W58.4bn (+81% QoQ, -33% YoY), respectively, in line with the market consensus (revenue of W1.43tr and operating profit of W56.8bn). For small-sized rechargeable batteries, we forecast revenue to climb 11% QoQ to W937.5bn and OP margin to gain 1.3%p QoQ. We expect mid- to large-sized rechargeable battery revenue to jump 131% QoQ to W7bn, and operating losses to narrow W5bn QoQ to W38bn. The CRT and PDP units are likely to maintain breakeven levels, similar to 2Q. We estimate SDC equity method gains to slightly fall QoQ to W132bn in 3Q, but net profit should improve to W148bn (+15% QoQ) on operating profit growth. Maintain Buy and TP of W22, Several tailwinds are in store for September, including new product releases by major customers and BMW s unveiling of its i8 model. Unlike previous years, earnings should be robust in 4Q (revenue of W1.39tr and OP of W48bn), backed by the increasing portion of non-it revenue (out of overall rechargeable battery revenue). As such, we expect positive share price momentum to continue throughout the remainder of the year. Our target price represents a sum of the firm s operating value (W3.5tr for small batteries and W2tr for large batteries) and asset value (W3.4tr for SDC and W1.1tr for others). The stock is currently trading at a 214F P/E and P/B of only 11.8x and 1.1x, respectively. Daewoo Securities Co., Ltd. Display Jonathan Hwang +822-768-414 j.hwang@dwsec.com FY (Dec.) 12/1 12/11 12/12 12/13F 12/14F 12/15F Revenue (Wbn) 5,124 5,444 5,771 5,342 5,736 6,239 OP (Wbn) 287 11 187 15 266 397 OP margin (%) 5.6 2. 3.2 2. 4.6 6.4 NP (Wbn) 356 32 1,472 499 71 884 EPS (W) 7,548 6,785 31,192 1,584 15,56 18,734 ROE (%) 6.5 5.3 21.8 6.7 9.2 1.8 P/E (x) 22.3 19.7 4.8 16.7 11.8 9.5 P/B (x) 1.3 1. 1. 1.1 1.1 1. Note: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Source: Company data, 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.
US electric vehicle sales set new record in August In August, sales of electric vehicles (plug-in hybrid electric vehicles and pure electric vehicles combined) reached a record 11,363 units (53% MoM, +141% YoY) in the US. The top sellers were GM s Chevy Volt and Nissan s LEAF, which set record sales of 3,351 units and 2,42 units, respectively. Although Tesla does not release monthly sales of its Model S, the company is estimated to have sold around 2, units in the month, given its current production capacity of 5 units per week. BMW is set to unveil its new i8 plug-in hybrid sports car on September 1 th and showcase it at the Frankfurt Motor Show on the 12 th. The i8 reportedly has a top speed of 25km/h, can accelerate from -1km/h in just 4.5 seconds, and has a fuel efficiency of 39km/l. One downside is that because the vehicle is a plug-in hybrid that runs on both a gas engine and an electric motor (unlike the i3, which is a pure electric vehicle), its battery capacity is 7.2kWh (one third of that of the i3), which allows for an all-electric driving range of only 35km. And although the price has not yet been disclosed, it is likely to carry a hefty price tag (over US$1,). Still, BMW s aggressive push into the EV market is indeed considered a promising development. Table 1. Global EV (lithium ion) battery supply trends Company EV customer Model Battery capacity km per charge Price AESC Nissan LEAF 24.1 kwh 135 km US$31,698 (NEC + Nissan) Renault Fluence 26.6 kwh 185 km US$35, Panasonic Tesla Model S 6. kwh 335 km US$69,9 Tesla Model S 85. kwh 426 km US$79,9 Sanyo Toyota Prius PHEV 4.2 kwh 18 km (Electric) US$32, Ford C-Max Hybrid 1.4 kwh - US$25,995 Ford C-Max Energi 7.6 kwh 32 km (Electric) US$33,745 Audi Q5 Hybrid 1.3 kwh - US $5,9 LG Chemical GM Volt PHEV 16.2 kwh 61 km (Electric) US$43,55 Hyundai Sonata Hybrid 1.4 kwh - US$25,65 Renault Twizy 7.7 kwh 1 km US$9, Renault Fluence 26.6 kwh 185 km US$35, Renault ZOE 22. kwh 15 km US$3,995 Ford Focus Electric 22.5 kwh 122 km US$39,995 BMW i3 EV 21.6 kwh 16 km US$41,35 BMW i8 PHEV 7.2 kwh 35 km (Electric) - Chrysler Fiat 5 EV 19.8 kwh 14 km US$31,8 VW CrossBlue PHEV 9.7 kwh 32 km (Electric) - SK Innovation Kia Ray EV 16.4 kwh 138 km US$4, Mercedes SLS AMG E-Cell 48. kwh 145 km US$5, (expected) BYD BYD e6 75. kwh 195 km US$35, Source: IIT, Figure 1. EV sales trends in the US Figure 2. BMW i8 (to be unveiled on Sep1th) (' units) (%) 14 PHEV (L) EV (L) YoY growth (R) 8 12 1 EV sales in Aug. exceeds 1k/month 6 8 6 4 4 2 2 1/11 7/11 1/12 7/12 1/13 7/13 Source: Electric Drive Transportation Association Source: BMW 2
3Q preview: Revenue of W1.44tr (+1% QoQ), OP of W58.4bn (+81% QoQ) We expect 3Q earnings to be largely in line with the consensus. We forecast small-sized rechargeable battery revenue to climb 11% QoQ to W937.5bn and OP margin to gain 1.3%p QoQ. However, we see SDC equity method gains slightly falling in the quarter. Table 2. Quarterly earnings forecasts (under consolidated K-IFRS) (Wbn, %) 1Q13 2Q13 3Q13F 4Q13F 1Q14F 2Q14F 3Q14F 4Q14F 212 213F 214F Shipments (mn units) CRT.7.8.8.6.4.5.5.3 9.3 2.8 1.7 PDP 1.5 1.6 1.6 1.7 1.4 1.4 1.5 1.5 7. 6.4 5.8 Small- to mid-sized LIB 274 286 314 33 287 336 351 33 1,95 1,177 1,34 ASP (US$) CRT 29 27 29 28 28 26 28 27 29 28 27 PDP 226 23 228 225 219 216 219 216 257 227 218 Small- to mid-sized LIB 2.6 2.6 2.8 2.8 2.7 2.7 2.8 2.8 2.7 2.7 2.7 Revenue (Wbn) 1,28 1,37 1,435 1,392 1,239 1,427 1,57 1,499 5,771 5,342 5,735 CRT 22 24 23 16 13 13 14 1 37 86 49 PDP 368 48 398 411 316 33 341 357 2,29 1,585 1,344 Small- to mid-sized LIB 772 843 938 898 823 961 1,45 984 3,349 3,451 3,813 Others (EV, ESS, PV) 46 32 76 67 87 122 17 149 87 221 529 Operating profit (Wbn) -33 32 58 48 25 65 12 73 187 15 266 CRT -4-1 -4 PDP -21 2 1 2-4 -3 16-15 -7 Small- to mid-sized LIB 55 8 1 81 69 96 13 96 321 316 391 Other -64-49 -43-35 -4-3 -25-23 -99-191 -118 EV -41-33 -32-3 -3-25 -25-2 -136-1 ESS -15-1 -6-5 5 3-31 3 PV -8-6 -5-5 -5-5 -5-5 -24-2 OP margin (%) -2.8 2.5 4.1 3.4 2.1 4.6 6.5 4.9 3.2 2. 4.6 CRT -18..5.5.5.5.5.5.5 -.3-4.3.5 PDP -5.6.5.2.5-1.2 -.1-1...8-1. -.6 Small- to mid-sized LIB 7.1 9.4 1.7 9. 8.4 1. 12.5 9.7 9.6 9.1 1.2 Net profit (Wbn) 78 129 148 144 16 176 227 2 1,472 499 71 SMD equity-method gains 1 145 132 137 11 151 179 174 452 513 65 Net margin (%) 6.4 9.9 1.3 1.4 8.6 12.4 14.5 13.4 25.5 9.3 12.4 EBITDA (Wbn) 71 161 197 19 169 28 247 221 641 619 845 EBITDA margin (%) 5.9 12.3 13.7 13.7 13.6 14.6 15.7 14.7 11.1 11.6 14.7 Growth (QoQ/YoY) Shipments (%) CRT -36.4 14.3-6. -26.9-23.6 14.3-6. -26.9-2.4-7. -4. PDP -21.1 5.3 2.5 5.6-2.6 5.3 2.5 5.6 2.7-8.7-9.5 Small- to mid-sized LIB 3.2 4.3 9.9-3.6-5.1 16.9 4.5-6.1 1.4 7.5 1.8 ASP (%) CRT -12.1-8.6 8.8-2.7 1.3-8.6 8.8-2.7 5.7-3.2-2. PDP -9.2 1.6-1. -1. -3. -1. 1. -1. -11.9-11.6-4.3 Small- to mid-sized LIB -9.3 1. 5.2.8-3.5. 4.1.3 8.5 -.6 1.8 Revenue (%) -14.6 8.2 9.8-3. -11. 15.2 1.1-4.5 6. -7.4 7.4 CRT -44.4 8.2-1.6-29.9-22.6 4.4 2.3-28.9-14.1-72.1-42.5 PDP -28.7 1.9-2.4 3.1-23. 4.3 3.5 4.5-8.3-21.9-15.2 Small- to mid-sized LIB -6.8 9.2 11.2-4.2-8.4 16.8 8.7-5.8 22. 3.1 1.5 Other (EV, ESS, PV) 53.6-3.5 135.4-11.3 3.2 4.2 39.1-12.5-32.6 154.5 139.5 Operating profit (%) TTR TTB 81.1-17.8-46.9 156.7 55.7-28.1 7.1-43.7 152.7 CRT RR TTB -1.6-29.9-22.6 4.4 2.3-28.9 TTR RR TTB PDP TTR TTB -57.4 152.5 TTR RR RR TTB 83. TTR RR Small- to mid-sized LIB -3.4 45.1 26.2-19.6-14.5 38.6 36. -26.6 23. -1.7 23.8 Other/PB RR RR RR RR RR RR RR RR RR RR RR Net profit (%) 39.5 66.3 14.6-2.7-26.2 65.9 28.6-11.7 359.4-66.1 42.3 SMD equity-method gains -25.7 44.8-9. 4. -26.3 49.5 18.8-3.1 57.4 13.6 17.9 EBITDA (%) -31.4 127.4 22.4-3.3-11.1 23. 18.9-1.7 16.9-3.6 36.6 Note: TTB, TTR, and RR stand for Turn To Black, Turn To Red, and Remain In Red, respectively Source: Company data, 3
Figure 3. LIB market trends Figure 4. EV (Electric-Vehicle) shipment trends (US$bn) 6 IT xev ESS EV poriton 3.7% (mn units) HEV (L) PHEV (L) (%) 7 EV (L) YoY growth (R) 6 5 4 EV portion.9% 6 5 5 4 3 212~22F CAGR: 18.7% IT 2.%, xev 43.1%, ESS 28.7% 4 3 3 2 2 2 1 1 1 4 6 8 1 12 14F 16F 18F 2F 9 1 11 12 13F 14F 15F 16F 17F 18F 19F 2F Source: IIT, Source: IIT, Figure 5. SEC Galaxy series LIB capacity comparison Figure 6. Small LIB s OP and share price trends (Wbn) 15 1 IT LIB OPM (L) Galaxy S2, ipad 2 Share price (R) Galaxy S3 New ipad Galaxy S4 Note 3, ipad (W) 22, 2, 18, 16, (mah) 4, 3, 2, Battery capacity +24% +27% 2,6 +1% 2,1 1,65 1,5 2,5 +24% 3,1 +3% 3,2 5 14, 1, 12, 1Q1 1Q11 1Q12 1Q13 1, S1 Galaxy S2 S series S3 S4 Note 1Galaxy Note Note 2 series Note 3 Source: Source: Table 3. Calculation of target price (sum-of-the-parts methodology) (Wbn, W, x) Operating value EBITDA Applied EV/EBITDA EV Notes CRT 19. CRT liquidation to be expedited PDP 74. LGE: 5.7x, Panasonic: 4.9x Small- to mid-sized Rechargeable batteries 77 5. 3,536 LG Chem: 6.7x, Sony: 4.4x, GS Yuasa: 9.4x xev rechargeable batteries - - 2, DCF (WACC=1.7%, stake of 5%) Total operating value (A) 5,536 Investment asset value (Samsung Display) EBITDA Applied EV/EBITDA Samsung Display 9,35 3. 3,366 LGD: 2.1x, Sharp: 6.2x (stake of 15%) Investment asset value (listed) Market cap Discount % Samsung Fine Chemicals 1,228 2. 113 11.5% stake Samsung Engineering 3,432 2. 14 5.1% stake Samsung C&T 9,186 2. 529 7.2% stake Hotel Shilla 2,59 2. 2.1% stake S1 2,516 2. 221 11.% stake Investment asset value (unlisted) Book value Discount % Valuation gains/losses on investment securities 194 2. 155 Excluding Samsung Display Total investment asset value (B) 4,527 Net borrowings (C) 535 Borrowings of W1,468bn; CCE of W933bn Treasury stock (D) 495 3.1mn treasury shares * share price of W164,5 EV (A)+(B)-(C)+(D) 1,23 Value per share 22,12 Note: CCE refers to cash and cash equivalents. Source: estimates 4
Valuation comparison of global peers Table 4. Valuation comparison of and global peers (Wbn, %, x) Market cap Revenue OP NP ROE P/E P/B EV/EBITDA 13F 14F 13F 14F 13F 14F 13F 14F 13F 14F 13F 14F 13F 14F 8,64 5,342 5,736 15 266 499 71 6.7 9.2 16.7 11.8 1.1 1.1 14.4 1.6 LGE 12,28 6,86 67,136 1,51 2,185 515 1,18 4.2 8.8 26.2 12.2 1.2 1.1 6.4 4.9 Panasonic 24,635 8,9 8,22 2,912 3,336 747 1,22 5.4 6.8 31.4 22.2 1.5 1.4 5. 4.7 PDP avg. 5.4 8.3 24.8 15.4 1.3 1.2 8.6 6.7 8,64 5,342 5,736 15 266 499 71 6.7 9.2 16.7 11.8 1.1 1.1 14.4 1.6 LG Chem 2,146 23,945 26,117 1,989 2,498 1,54 1,944 13.7 15.3 14.6 11.6 1.9 1.7 7.6 5.8 Sony 23,282 83,692 86,574 2,462 3,31 59 96 2.5 4.4 41.1 24.8.9.9 4.6 4.2 GS Yuasa 2,234 3,683 3,951 171 229 123 159 8.4 11. 18.1 13.7 1.6 1.4 1.1 8.6 BYD 13,639 9,513 1,458 369 51 171 249 4.2 6. 6.7 4.3 2.5 2.3 16.9 14.5 Simplo Tech 1,598 2,98 2,395 135 151 12 131 17.5 16.8 13.4 12.5 2.3 2.1 7.8 7.1 Dynapack 452 984 1,128 33 37 37 38 11.7 11.8 11.8 12.7 1.6 1.6 6.8 6.1 Battery avg. 9.2 1.6 25.2 18.2 1.7 1.6 9.7 8.1 Source: Bloomberg, estimates Figure 7. Share performances of global LIB makers (-1Y=1) 28 LG Chem 26 Sony GS Yuasa 24 22 2 18 16 14 12 1 8 6 4 9/11 12/11 3/12 6/12 9/12 12/12 3/13 6/13 9/13 Source: Bloomberg, Figure 8. Share performances of global PDP makers (-1Y=1) 3 LGE Panasonic Sony 25 Hitachi Pioneer 2 15 1 5 9/11 12/11 3/12 6/12 9/12 12/12 3/13 6/13 9/13 Source: Bloomberg, Figure 9. P/B band of (Market cap, Wtr) 12 1 8 6 4 2 CRT hits record earnings 95 97 99 1 3 5 7 9 11 13 Source: PDP loses to LCD camp Takes lead in LIB industry Financial Crisis 1.6x 1.3x 1.x.7x.4x Figure 1. P/B-ROE comparison (213F) (P/B, x) 1.6 LG Chem GS Yuasa Panasonic 1.4 LGE 1.2 Hitachi 1. LGD Sony.8 Pioneer (ROE, %).6 2 4 6 8 1 12 14 16 Source: Bloomberg, 5
(64 KS/Buy/TP: W22,) Comprehensive Income Statement (Summarized) Statement of Financial Condition (Summarized) (Wbn) 12/12 12/13F 12/14F 12/15F (Wbn) 12/12 12/13F 12/14F 12/15F Revenue 5,771 5,342 5,736 6,239 Current Assets 2,415 2,484 2,533 2,481 Cost of Sales 4,863 4,483 4,634 4,939 Cash and Cash Equivalents 947 1,23 963 777 Gross Profit 98 859 1,12 1,3 AR & Other Receivables 74 693 746 811 SG&A Expenses 721 754 836 93 Inventories 559 55 592 644 Operating Profit (Adj) 187 15 266 397 Other Current Assets 18 177 191 28 Operating Profit 187 15 266 397 Non-Current Assets 8,48 9,14 9,784 1,735 Non-Operating Profit 1,843 551 645 737 Investments in Associates 4,5 4,534 5,139 5,836 Net Financial Income 4 19 23 24 Property, Plant and Equipment 1,971 2,263 2,369 2,621 Net Gain from Inv in Associates 2,239 516 65 697 Intangible Assets 171 15 125 17 Pretax Profit 2,29 657 911 1,134 Total Assets 1,895 11,588 12,317 13,216 Income Tax 543 143 182 227 Current Liabilities 2,4 2,26 2,128 2,253 Profit from Continuing Operations 1,487 513 729 97 AP & Other Payables 744 733 789 858 Profit from Discontinued Operations Short-Term Financial Liabilities 659 72 72 72 Net Profit 1,487 513 729 97 Other Current Liabilities 61 592 638 694 Controlling Interests 1,472 499 71 884 Non-Current Liabilities 1,327 1,838 2,86 2,36 Non-Controlling Interests 15 14 19 23 Long-Term Financial Liabilities 474 777 777 777 Total Comprehensive Profit 1,325 231 447 625 Other Non-Current Liabilities 81 997 1,223 1,443 Controlling Interests 1,321 22 431 65 Total Liabilities 3,331 3,865 4,214 4,56 Non-Controlling Interests 4 11 15 2 Controlling Interests 7,373 7,527 7,891 8,424 EBITDA 641 616 845 1,13 Capital Stock 241 241 241 241 FCF (Free Cash Flow) 657-174 115 57 Capital Surplus 1,258 1,259 1,259 1,259 EBITDA Margin (%) 11.1 11.5 14.7 16.2 Retained Earnings 4,987 5,413 6,55 6,867 Operating Profit Margin (%) 3.2 2. 4.6 6.4 Non-Controlling Interests 191 197 212 232 Net Profit Margin (%) 25.5 9.4 12.4 14.2 Stockholders' Equity 7,565 7,724 8,13 8,656 Cash Flows (Summarized) Forecasts/Valuations (Summarized) (Wbn) 12/12 12/13F 12/14F 12/15F 12/12 12/13F 12/14F 12/15F Cash Flows from Op Activities 565 521 668 759 P/E (x) 4.8 16.7 11.8 9.5 Net Profit 1,487 513 729 97 P/CF (x) 3.7 8.3 6.5 5.6 Non-Cash Income and Expense -833 127 116 16 P/B (x) 1. 1.1 1.1 1. Depreciation 424 48 554 598 EV/EBITDA (x) 11.5 14.4 1.6 9.1 Amortization 31 31 25 18 EPS (W) 31,192 1,584 15,56 18,734 Others -415 28 82 83 CFPS (W) 4,827 21,398 27,332 31,794 Chg in Working Capital -8 5 5-27 BPS (W) 156,232 159,925 168,164 179,847 Chg in AR & Other Receivables 11 66-53 -66 DPS (W) 1,5 1,5 1,6 1,8 Chg in Inventories 2 21-42 -52 Payout ratio (%) 4.6 13.5 1.1 9.2 Chg in AP & Other Payables 36-17 56 69 Dividend Yield (%) 1..9.9 1. Income Tax Paid -81-124 -182-227 Revenue Growth (%) 6. -7.4 7.4 8.8 Cash Flows from Inv Activities -473-758 -625-832 EBITDA Growth (%) 16.9-4. 37.3 19.9 Chg in PP&E -418-773 -66-85 Operating Profit Growth (%) 69.9-43.6 152.4 49.3 Chg in Intangible Assets EPS Growth (%) 359.7-66.1 42.3 24.4 Chg in Financial Assets Accounts Receivable Turnover (x) 7.9 8. 8.4 8.4 Others -55 15 35 18 Inventory Turnover (x) 1.1 9.6 1. 1.1 Cash Flows from Fin Activities 88 294-13 -113 Accounts Payable Turnover (x) 1.9 9.5 9.9 1. Chg in Financial Liabilities 187 324 ROA (%) 15.3 4.6 6.1 7.1 Chg in Equity 2 1 ROE (%) 21.8 6.7 9.2 1.8 Dividends Paid -76-67 -67-72 ROIC (%) 5.4 3.4 7.9 11.1 Others -25-31 -36-42 Liability to Equity Ratio (%) 44. 5. 52. 52.7 Increase (Decrease) in Cash 189 76-6 -187 Current Ratio (%) 12.5 122.6 119. 11.1 Beginning Balance 758 947 1,23 963 Net Debt to Equity Ratio (%) 2.1 5.4 5.9 7.6 Ending Balance 947 1,23 963 777 Interest Coverage Ratio (x) 7.6 2.9 6.4 9.5 Source: Company data, estimates 6
APPENDIX 1 Important Disclosures & Disclaimers Disclosures As of the publication date, Daewoo Securities Co., Ltd. has acted as a liquidity provider for equity-linked warrants backed by shares of as an underlying asset, and other than this, Daewoo Securities has no other special interests in the covered companies. As of the publication date, Daewoo Securities Co., Ltd. issued equity-linked warrants with as an underlying asset, and other than this, Daewoo Securities has no other special interests in the covered companies. Of the equity-linked warrants covered in this report, Daewoo Securities Co., Ltd. has acted as a liquidity provider for equity-linked warrants backed by shares of as underlying assets. (W) 25, 2, 15, 1, 5, 9/11 3/12 9/12 3/13 8/13 Stock Ratings Industry Ratings Buy Relative performance of 2% or greater Overweight Fundamentals are favorable or improving Trading Buy Relative performance of 1% or greater, but with volatility Neutral Fundamentals are steady without any material changes Hold Relative performance of -1% and 1% Underweight Fundamentals are unfavorable or worsening Sell Relative performance of -1% * 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 Daewoo Securities, 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. 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 and regulations thereof. Opinions expressed in this publication about the subject securities and companies accurately reflect the personal views of the Analysts primarily responsible for this report. Daewoo Securities Co., Ltd. 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. No part of the compensation of the Analysts was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report but, like all employees of Daewoo Securities, the Analysts receive compensation that is impacted 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 Daewoo Securities Co., Ltd. except as otherwise stated herein. Disclaimers This report is published by Daewoo Securities Co., Ltd. ( 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 from sources believed to be reliable and in good faith, but such information has not been independently verified and 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. If this report is 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. Daewoo, its affiliates and their directors, officers, employees and agents do not accept any liability for any loss arising from the use hereof. This report is for general information purposes only and it is not and should not be construed as an offer or a solicitation of an offer to effect transactions in any securities or other financial instruments. 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 and regulations or subject Daewoo and its affiliates to registration or licensing requirements in any jurisdiction should receive or make any use hereof. Information and opinions contained herein are subject to change without notice and 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 Daewoo. 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. 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. The price and value of the investments referred to in this report and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur. 7
Distribution United Kingdom: This report is being distributed by Daewoo Securities (Europe) Ltd. in the United Kingdom only to (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2 (Financial Promotion) Order 25 (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: This report is distributed in the U.S. by Daewoo Securities (America) Inc., a member of FINRA/SIPC, and is only intended for major institutional investors as defined in Rule 15a-6(b)(4) under the U.S. Securities Exchange Act of 1934. All U.S. persons that receive this document by their acceptance thereof represent and warrant that they are a major institutional investor and have not received this report under any express or implied understanding that they will direct commission income to 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 Daewoo Securities (America) Inc., which accepts responsibility for the contents of this report in the U.S. 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 document has been approved for distribution in Hong Kong by Daewoo Securities (Hong Kong) Ltd., 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 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 Daewoo and its affiliates to any registration or licensing requirement within such jurisdiction. KDB Daewoo Securities International Network Daewoo Securities Co. Ltd. (Seoul) Daewoo Securities (Hong Kong) Ltd. Daewoo Securities (America) Inc. Head Office 34-3 Yeouido-dong, Yeongdeungpo-gu Seoul 15-716 Korea Two International Finance Centre Suites 25-212 8 Finance Street, Central Hong Kong 32 Park Avenue, 31st Fl. New York, NY 122 United States Tel: 82-2-768-326 Tel: 85-2-2514-134 Tel: 1-212-47-1 Daewoo Securities (Europe) Ltd. Daewoo Securities (Singapore) Pte. Ltd. Tokyo Representative Office Tower 42, Level 41 25 Old Broad Street London EC2N 1HQ United Kingdom 6 Battery Road, #11-1 Singapore, 4999 7th Floor, Yusen Building 2-3-2 Marunouchi, Chiyoda-ku Tokyo 1-5 Japan Tel: 44-2-7982-816 Tel: 65-6671-9845 Tel: 81-3- 3211-5511 Beijing Representative Office Shanghai Representative Office Ho Chi Minh Representative Office Suite 262, Twin Towers (East) B-12 Jianguomenwai Avenue Chaoyang District, Beijing 122 China Unit 13, 28 th Floor, Hang Seng Bank Tower 1 Lujiazui Ring Road Pudong New Area, Shanghai 212 China Centec Tower 72-74 Nguyen Thi Minh Khai Street Ward 6, District 3, Ho Chi Minh City Vietnam Tel: 86-1-6567-9699 Tel: 86-21-513-6392 Tel: 84-8-391-6 8