Low-end cosmetics continue aggressive advance Overweight (Maintain) Sector Update June 11, 213 Daewoo Securities Co., Ltd. Retail/ Mina Kim +822-78-413 mina.kim@dwsec.com Low-end cosmetics remained popular in 1H, but competition continues to stiffen The domestic cosmetics market continued to grow in 1H (estimated at +15% YoY) led by the low-end segment. However, the competitive landscape has worsened, as many companies have increased promotions to revive sagging consumption. In the high-end space, door-to-door and department store channels have both struggled. Low-end segment to outgrow high-end; ODMs to outgrow brands in 2H We expect low-end cosmetics to further expand their market share in 213 (to 14.4% from 13.2% in 2) on the back of continued, solid growth in 213 (1% YoY vs. 23% YoY in 2). However, top-line growth will likely be primarily confined to top-tier makers, and intensifying competition should push up marketing expenses. We project high-end cosmetics to continue to lose ground to the low-end segment given depressed economic conditions and the growing shift towards more rational consumption. Sales volume has been on an uptrend, fueled by aggressive promotions. In 1Q, the ODM supplier Cosmax posted a 24% YoY domestic revenue growth, suggesting intensifying competition among brand makers is a boon for ODM manufacturers and their volume growth. Looking ahead, we believe the low-end segment, which had been pioneered by smaller, standalone firms, will become a focused target market for large corporate brands (Innisfree, Etude House, The Face Shop, etc.), leading to a more challenging competitive environment for smaller firms. LG H&H is our top pick for cosmetics given its strong earnings visibility We believe LG Household & Health Care (LG H&H) is poised for continued growth on the back of cosmetics market share gains, premium-brand positioning for household goods, and the launch of new beverage products. In the cosmetics market, the company has expanded its market share by releasing new brands and employing a multi-brand strategy, all while maintaining its established brands. LG H&H s The Face Shop brand has been gaining ground in the low-end segment, and many advances are being made overseas. In contrast, we think Amorepacific is unlikely to see sharp growth for some time due to the weakness of door-to-door and department store channels. Looking forward, we believe the stock s performance will rest on: 1) the revival of door-to-door channels, 2) expansion into the low-end market, and 3) continued growth overseas. Korea s cosmetics market (Wtr) CAGR.2% 1 8 4 2 1 11 13F 14F 15F Source: Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including the U.S.
June 11, 213 Figure 1. Market breakdown for cosmetics market Source: Low-end cosmetics remained popular in 1H, but competition continues to stiffen The domestic cosmetics market continued to grow in 1H (estimated at +15% YoY) led by the low-end segment. However, the competitive landscape has worsened, as many companies have increased promotions to revive sagging consumption. In the high-end space, door-to-door and department store channels have both struggled. The low-end segment is growing rapidly driven by single-brand shops. Last year, the segment is projected to have expanded by 23% YoY to W1.4tr, while the entire cosmetics market is expected to have expanded by 5.7% YoY to W9.5tr. We believe the low-end segment continued a robust growth in 1H, on the back of 1) growing consumer preference for low-priced goods, 2) aggressive promotions, and 3) launch of new products (e.g., CC cream in 1H13). Meanwhile, although aggressive promotions are one of the growth factors, selling at steep discounts of 3~5% should depress margins. In 1Q, most of the domestic cosmetics companies recorded weak margins despite strong sales growth. Able C&C s revenue climbed 11% YoY, but operating profit contracted 3% YoY in 1Q due to larger marketing expenses (advertising spending, in particular). We believe this trend will continue for a while. In the department store channel, sales growth of moderately-priced brands, namely Kiehl s, appears to be outpacing growth of high-priced brands (particularly foreign brands). Last year, sales of high-priced and medium-priced brands are projected to have declined by 5~1% and 15~2% YoY, respectively. While high-priced brands are maintaining strong customer loyalty, customers of medium-priced brands appear to have moved away from products selling at department stores to medium- to low-end products. Figure 2. Number of brand shops for low-end cosmetics (Wtn) Brand Name 211 2 Growth H&B Thg Face Shop 98 1,24 5.8% 1 Multi brand shop Missha 483 4 32.5% Single brand shop Skinfood 4 518.% 8 Specialty Innisfree 44 53 8.4% Home shopping Tonymoly 39 418 35.3% Online Etude House 352 39.5% 4 Door-to-door Nature Republic 199 242 21.% Disc. store the SAEM 94 4 31.9% 2 Dept. store It's Skin 75 14 38.7% Banila Co. 58 4 1.3% Holika Holika 4 5 21.7% 1 11 13F 14F 15F Total 3,58 4,89 1.% 2
June 11, 213 Low-end segment to outgrow high-end; ODMs to outgrow brands in 2H We expect low-end cosmetics to further expand their market share in 213 (to 14.4% from 13.2% in 2) on the back of continued, solid growth in 213 (1% YoY vs. 23% YoY in 2). However, top-line growth will likely be primarily confined to top-tier makers, and intensifying competition should push up marketing expenses. We project high-end cosmetics to continue to lose ground to the low-end segment given depressed economic conditions and the growing shift towards more rational consumption. Sales volume has been on an uptrend, fueled by aggressive promotions. In 1Q, the ODM supplier Cosmax posted a 24% YoY domestic revenue growth, suggesting intensifying competition among brand makers is a boon for ODM manufacturers and their volume growth. Looking ahead, we believe the low-end segment, which had been pioneered by smaller, standalone firms, will become a focused target market for large corporate brands (Innisfree, Etude House, The Face Shop, etc.), leading to a more challenging competitive environment for smaller firms. Meanwhile, Korean cosmetics companies are expected to continue aggressive overseas expansion efforts. Amorepacific s overseas sales, which accounted for 1% of total revenue in 1Q13, are projected to climb to 27% of total revenue in 215. At LG H&H, overseas sales as a percentage of total revenue are forecast to improve from 1% in 1Q13 to 17% in 215. Amorepacific is expected to strengthen its global presence based on a diversified product portfolio. As for LG H&H, its low-priced brand The Face Shop is anticipated to spearhead the company s global outreach. Figure 3. 1Q13 revenue for low-end cosmetics Figure 4. 1Q13 operating profit for low-end cosmetics (Wbn) 1Q 1Q13P (Wbn) 18 1Q 1Q13P 1 8 11% 15% 48% 15 -% 4% 4 2 87 97 7 88 53 79 9 3 1-3% 11 17 Able C&C Etude Innisfree Able C&C Etude Innisfree Source: Company data Source: Company data Figure 5. LG H&H s overseas sales Figure. Amorepacific s overseas sales (Wbn) 1,2 (Wbn) 1,2 1, 98 1, 992 8 CAGR 3.% 8 CAGR 3.8% 4 28 44 4 291 354 443 2 182 2 1 11 15F 1 11 15F Source: LG H&H, Source: Amorepacific, 3
June 11, 213 LG H&H is our top pick for cosmetics given its strong earnings visibility We believe LG H&H is poised for continued growth on the back of cosmetics market share gains, premium-brand positioning for household goods, and the launch of new beverage products. In the cosmetics market, the company has expanded its market share by releasing new brands and employing a multi-brand strategy, all while maintaining its established brands. LG H&H s The Face Shop brand has been gaining ground in the lowend segment, and many advances are being made overseas. We forecast overseas revenue to expand at more than a 3% CAGR in the next couple of years, driven by The Face Shop (China and Japan) and Ginza Stefany (Japan), contributing 17% of overall revenue by 215. We select LG H&H as our top pick in the sector given the firm s wellbalanced business portfolio, as well as upside to market share thanks to timely brand launches. We present a target price of W74,, which we derived by applying a target P/E of 37x (three-year average multiple) to our 213F EPS. Amorepacific needs to improve eroding competitiveness We do not think Amorepacific is likely to see sharp growth for some time due to the weakness of door-to-door and department store channels. Looking forward, we believe the stock s performance will depend on: 1) the revival of door-to-door channels, 2) expansion into the low-end market, and 3) continued growth overseas. The slowdown in door-to-door channels is macro-driven, caused by sluggish local economies and the advent of diverse retail channels (online retail in particular). This suggests a recovery may not emerge for some time. However, potential positive catalysts over the long term include the firm s push into the low-end market through its multi-brand shop Aritaum and drugstores, as well as overseas growth based on a well-diversified product portfolio. We present a target price of W1,2,, which we derived by applying a target P/E of 24x (three-year average multiple) to our 213F EPS. Figure 7. P/E band for LG H&H Figure 8. P/E band for Amorepacific (W') 8 3.x 33.x (W') 1, 7 3.x 1,4 32.x 27.x 24.x 1,2 1, 28.x 24.x 5 8 2.x 1.x 4 / 9/ / 3/13 /13 Source: / 9/ / 3/13 /13 Source: 4
June 11, 213 LG H&H (519 KS/TP: W74,) Comprehensive Income Statement (Summarized) Statement of Financial Condition (Summarized) (Wbn) / /13F /14F /15F (Wbn) / /13F /14F /15F Revenue 3,89 4,317 4,949 5,77 Current Assets 792 1,1 1,584 2,93 Cost of Sales 1,93 2,87 2,38 2,88 Cash and Cash Equivalents 5 327 24 995 Gross Profit 1,993 2,23 2,581 2,989 AR & Other Receivables 38 435 499 572 SG&A Expenses 1,548 1,719 1,97 2,274 Inventories 317 382 438 53 Operating Profit (Adj) 44 511 5 715 Other Current Assets 18 18 18 Operating Profit 44 528 19 715 Non-Current Assets 1,972 1,94 1,919 1,898 Non-Operating Profit -15-3 -13 4 Investments in Associates 35 85 135 185 Net Financial Income 3 29 2 23 Property, Plant and Equipment 1,7 921 838 753 Net Gain from Inv in Associates 5 5 4 5 Intangible Assets 841 839 839 839 Pretax Profit 43 52 597 72 Total Assets 2,74 3,1 3,52 3,991 Income Tax 118 138 14 199 Current Liabilities 94 1,41 1,15 1,17 Profit from Continuing Operations 3 35 433 521 AP & Other Payables 348 557 2 9 Profit from Discontinued Operations Short-Term Financial Liabilities 41 41 41 41 Net Profit 3 35 433 521 Other Current Liabilities 17 9 9 7 Controlling Interests 34 355 422 58 Non-Current Liabilities 553 49 421 373 Non-Controlling Interests 8 9 11 13 Long-Term Financial Liabilities 3 29 219 19 Total Comprehensive Profit 271 35 433 521 Other Non-Current Liabilities 2 2 22 24 Controlling Interests 24 347 422 57 Total Liabilities 1,493 1,51 1,52 1,549 Non-Controlling Interests 7 1 14 Controlling Interests 1,22 1,489 1,844 2,278 EBITDA 554 1 71 8 Capital Stock 89 89 89 89 FCF (Free Cash Flow) 21 4 431 499 Capital Surplus 97 97 97 97 EBITDA Margin (%) 14.2 14.3 14.2 14.3 Retained Earnings 1,1 1,47 1,73 2,197 Operating Profit Margin (%) 11.4.2.5. Non-Controlling Interests 7 17 132 14 Net Profit Margin (%) 7.8 8.2 8.5 8.9 Stockholders' Equity 1,272 1,595 1,97 2,442 Cash Flows (Summarized) Forecasts/Valuations (Summarized) (Wbn) / /13F /14F /15F / /13F /14F /15F Cash Flows from Op Activities 275 479 491 58 P/E (x) 38.3 3.2 25.4 21.1 Net Profit 3 5 597 79 P/CF (x) 28.2 23.3 2.7 17.8 Non-Cash Income and Expense 27 13 114 1 P/B (x) 9.2.9 5.4 4.3 Depreciation 1 97 95 9 EV/EBITDA (x) 2. 15.3 13.5 11.3 Amortization 8 2 EPS (W) 17,154 2,5 23,88 28,42 Others -29-9 CFPS (W) 23,282 25,971 29,197 34,8 Chg in Working Capital -22-2 -5-7 BPS (W) 71,81 87,82 111,13 14,233 Chg in AR & Other Receivables -29-49 -4-73 DPS (W) 3,75 3,5 3,5 3,5 Chg in Inventories -7-5 -5-5 Payout ratio (%) 2.7 15.4 13 1.8 Chg in AP & Other Payables -7 111 3 7 Dividend Yield (%).... Income Tax Paid -85-3 Revenue Growth (%).7 1.8 14. 14.7 Cash Flows from Inv Activities -37-88 -74-77 EBITDA Growth (%) 19.7 11.2 13.7 15.8 Chg in PP&E -14-1 -3-3 Operating Profit Growth (%) 2.4 18.5 17.3 15.5 Chg in Intangible Assets -5 EPS Growth (%) 14.8 1.9 18.8 2.3 Chg in Financial Assets 1 2-1 -1 Accounts Receivable Turnover (x) 11.1 1.7 1. 1. Others -27-73 -44-47 Inventory Turnover (x).5.4.1.1 Cash Flows from Fin Activities 9-7 -11-11 Accounts Payable Turnover (x) 19. 11.9 8.4 8.7 Chg in Financial Liabilities 18-5 -5-5 ROA (%).2.4 13.1 13.9 Chg in Equity ROE (%) 27. 2.4 25.3 24. Dividends Paid -59 - - ROIC (%) 17.5 15.7 1.4 19. Others -41-11 Liability to Equity Ratio (%) 117.4 94.7 77.2 3.4 Increase (Decrease) in Cash -27 22 297 371 Current Ratio (%) 84.3 1 143.3 178 Beginning Balance 92 5 327 24 Net Debt to Equity Ratio (%) 51.1 22.2.3-17 Ending Balance 5 327 24 995 Interest Coverage Ratio (x) 13.5 14.7 18.5 23.1 Source: Company data, estimates 5
June 11, 213 Amorepacific (943 KS/TP: W1,2,) Comprehensive Income Statement (Summarized) Statement of Financial Condition (Summarized) (Wbn) / /13F /14F /15F (Wbn) / /13F /14F /15F Revenue 2,85 3,2 3,453 3,83 Current Assets 84 1,71 1,272 1,53 Cost of Sales 847 928 1,2 1,133 Cash and Cash Equivalents 171 395 527 98 Gross Profit 2,2 2,194 2,433 2,73 AR & Other Receivables 19 25 22 253 SG&A Expenses 1,38 1,821 2,23 2,27 Inventories 27 23 291 325 Operating Profit (Adj) 34 373 41 454 Other Current Assets 33 17 18 18 Operating Profit 34 373 41 454 Non-Current Assets 2,222 2,274 2,391 2,281 Non-Operating Profit -4 22 3 39 Investments in Associates 5 25 45 5 Net Financial Income -1-15 -23-32 Property, Plant and Equipment 1,77 1,89 1,94 2,49 Net Gain from Inv in Associates 2 2 2 2 Intangible Assets 1 1 1 1 Pretax Profit 31 38 44 494 Total Assets 3,2 3,345 3,3 3,811 Income Tax 92 11 113 Current Liabilities 417 485 51 437 Profit from Continuing Operations 28 28 328 37 AP & Other Payables 251 349 378 414 Profit from Discontinued Operations Short-Term Financial Liabilities 23 23 23 23 Net Profit 28 28 328 37 Other Current Liabilities 144 Controlling Interests 27 28 329 39 Non-Current Liabilities 25 252 254 457 Non-Controlling Interests -1-1 -1 Long-Term Financial Liabilities 5 Total Comprehensive Profit 249 28 328 37 Other Non-Current Liabilities 12 392 421 457 Controlling Interests 25 281 33 39 Total Liabilities 82 737 77 894 Non-Controlling Interests -2-1 -2-2 Controlling Interests 2,334 2,592 2,87 2,898 EBITDA 4 424 4 514 Capital Stock 35 35 35 35 FCF (Free Cash Flow) 18 182 5 157 Capital Surplus 721 721 721 721 EBITDA Margin (%) 1.4 13. 13.5 13.3 Retained Earnings 1,592 1,841 2, 2,45 Operating Profit Margin (%).8 11.9 11.9 11.8 Non-Controlling Interests 1 15 17 19 Net Profit Margin (%) 9.5 9 9.5 9. Stockholders' Equity 2,344 2,8 2,893 2,917 Cash Flows (Summarized) Forecasts/Valuations (Summarized) (Wbn) / /13F /14F /15F / /13F /14F /15F Cash Flows from Op Activities 28 4 383 422 P/E (x) 31.1 22.5 19.1 17.1 Net Profit 28 28 328 38 P/CF (x) 22. 19 1.4 14.7 Non-Cash Income and Expense 24 83 75 78 P/B (x) 3.8 2. 2.3 2 Depreciation 51 5 EV/EBITDA (x) 15.7.3 1.8 9.4 Amortization EPS (W) 39, 4,53 47,1 53,433 Others -2 CFPS (W) 53,793 47,97 55,73 2,175 Chg in Working Capital - 48-19 -24 BPS (W) 32,71 349,7 397,45 45,985 Chg in AR & Other Receivables -1-13 -22-27 DPS (W),5,5,5,5 Chg in Inventories -41 5-28 -35 Payout ratio (%) 1.7 13. 11. 1.3 Chg in AP & Other Payables 22 5 29 3 Dividend Yield (%).5.7.7.7 Income Tax Paid -79 Revenue Growth (%) 11.5 9. 1. 11.9 Cash Flows from Inv Activities -245-143 -27-2 EBITDA Growth (%) 2.5-9 9.9 1.4 Chg in PP&E -223-2 -2-2 Operating Profit Growth (%) -2.3 2.3 1.1 1.7 Chg in Intangible Assets -17 EPS Growth (%) -17. 3.8 17.5.1 Chg in Financial Assets 15-48 -2-25 Accounts Receivable Turnover (x) 17.7 1.7 1 1.1 Others -2 15 13 19 Inventory Turnover (x) 11. 11.8.5.5 Cash Flows from Fin Activities -37-45 -45-45 Accounts Payable Turnover (x) 17.3 1.4 9.5 9.8 Chg in Financial Liabilities 8 2 ROA (%) 9.2 8.8 9.4 9.8 Chg in Equity ROE (%).1 11.4.8 Dividends Paid -45-45 -45-45 ROIC (%) 14.2 13.8 15.8 17.8 Others 1-2 Liability to Equity Ratio (%) 29.1 28.3 2. 3.7 Increase (Decrease) in Cash -17 225 131 171 Current Ratio (%) 192.7 22.7 24.7 35.2 Beginning Balance 188 171 395 527 Net Debt to Equity Ratio (%) -1-21. -24.7-31.2 Ending Balance 171 395 527 98 Interest Coverage Ratio (x) 171.4 19 29.1 231.4 Source: Company data,
June 11, 213 Important Disclosures & Disclaimers Disclosures As of the publication date, Daewoo Securities Co., Ltd and/or its affiliates do not have any special interest with the subject company and do not own 1% or more of the subject company's shares outstanding. 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 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. (W) LG H&H 1,, 8,, 4, 2, /11 /11 / / /13 (W) Amorepacific 2,, 1,5, 1,, 5, /11 /11 / / /13 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 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. 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. 7
June 11, 213 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-(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 15-71 Korea Two International Finance Centre Suites 25-2 8 Finance Street, Central Hong Kong Lexington Avenue Suite 31 New York, NY 2 United States Tel: 82-2-78-32 Tel: 85-2-2514-134 Tel: 1-2-47-2 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 Battery road, #11-1 Singapore, 4999 7th Floor, Yusen Building 2-3-2 Marunouchi, Chiyoda-ku Tokyo 1-5 Japan Tel: 44-2-7982-81 Tel: 5-71-9845 Tel: 81-3- 3211-5511 Beijing Representative Office Shanghai Representative Office Ho Chi Minh Representative Office Suite 22, Twin Towers (East) B- Jianguomenwai Avenue Chaoyang District, Beijing 2 China Unit 13, 28 th Floor, Hang Seng Bank Tower 1 Lujiazui Ring Road Pudong New Area, Shanghai 2 China Centec Tower 72-74 Nguyen Thi Minh Khai Street Ward, District 3, Ho Chi Minh City Vietnam Tel: 8-1-57-999 Tel: 8-21-513-392 Tel: 84-8-391-8