DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. 24 November 2016 Asia Pacific/South Korea Equity Research Automobile Manufacturers Kia Motors (000270.KS / 000270 KS) Rating (from OUTPERFORM) NEUTRAL Price (23 Nov 16, W) 36,750 Target price (W) (from 50,000) 40,000 Upside/downside (%) 8.8 Mkt cap (W/US$ bn) 14,897 / 12.68 Enterprise value (W bn) 13,086 Number of shares (mn) 405.36 Free float (%) 64.1 52-wk price range (W) 55,900-36,650 ADTO-6M (US$ mn) 34.2 *Stock ratings are relative to the relevant country benchmark. ¹Target price is for 12 months. Research Analysts Michael Sohn 82 2 3707 3739 [email protected]Jung Il Lee 822 3707 3796 [email protected]DOWNGRADE RATING Rising uncertainty with weakening sales mix ■ Downgrade to NEUTRAL with a new target price of W40,000. (1) To reflect the potential 'ordinary wage' provision, which could be reflected in 1Q17E (vs. 4Q16E previously), (2) the entrance into unfavorable product cycle, and (3) rising uncertainty on Mexico plant operation post the US presidential election, we downgrade Kia Motors (Kia) to NEUTRAL from Outperform. We adjust 2016E/2017E EPS by +19%/-21%, respectively, and reduce our target price to W40,000 from W50,000. ■ 'Ordinary wage' risks with weakening sales mix lower 2017E EPS. (1) Reflecting W645 bn of potential one-off provision in 1Q17E. 'Ordinary wage' disputes are complicated long-lasting legal issues (we discussed this on page 32 of our Korea Auto Sector Initiation report published in Apr-15) and the first court ruling verdict has been delayed to 1Q17E from 4Q16E for Kia. As Kia's 'ordinary wage' case is similar to Hyundai Wia's, which already lost the case and booked one-off provision, we reflect potential 'ordinary wage' provision of W645 bn under 1Q17E non-operating expense item (vs. 4Q16E previously). (2) Peaking SUV sales mix in 2H16, entering a small sedan cycle in 2017. Kia's SUV sales mix is likely to peak in 2H16 with aging effects. For 2017, Kia will refresh the volume seller 'Morning' ('Picanto', entry sedan, 1Q17E) and 'K2' ('Pride', sub-compact sedan, 2H17E), which accounted for 18% of sales in Jan- Oct 2016. Unfortunately, these segments have been shrinking in key markets. (3) Rising uncertainty on Mexico plant operation. Kia plans to export 60% of Mexico plant production volume to US and a potential 35% tariff (as reported by CNN on 18-Nov) on Mexico-made cars by the US raises another uncertainty on Kia's Mexico plant operation. ■ Valuation. Our revised TP of W40,000 is based on 6.9x 2017E EPS. Despite the YoY OP turnaround, 'ordinary wage' uncertainty has depressed Kia's share price performance in 2016. As the uncertainty remains unchanged in 1H17E while its new product cycle is not favourable, we see rising earnings downside risks for Kia in 2017. Share price performance The price relative chart measures performance against the KOREA SE KOSPI IDX which closed at 1,987.95 on 23/11/16. On 23/11/16 the spot exchange rate was W1,174.55/US$1 Performance 1M 3M 12M Absolute (%) -11.1 -14.3 -33.7 Relative (%) -8.2 -11.6 -32.3 Financial and valuation metrics Year 12/15A 12/16E 12/17E 12/18E Revenue (W bn) 49,521.4 53,155.6 53,474.4 55,016.0 EBITDA (W bn) 3,776.8 3,995.3 3,960.4 4,112.4 EBIT (W bn) 2,354.3 2,522.0 2,434.9 2,414.9 Net profit (W bn) 2,630.6 3,043.7 2,352.4 2,902.3 EPS (CS adj.) (W) 6,489 7,508 5,803 7,160 Change from previous EPS (%) n.a. 18.6 (20.9) (4.1) Consensus EPS (W) n.a. 7,416 7,560 8,060 EPS growth (%) (12.1) 15.7 (22.7) 23.4 P/E (x) 5.7 4.9 6.3 5.1 Dividend yield (%) 3.0 3.5 4.1 4.6 EV/EBITDA (x) 3.7 3.2 3.1 2.7 P/B (x) 0.62 0.56 0.52 0.49 ROE (%) 11.3 12.0 8.6 9.8 Net debt/equity (%) Net Cash Net Cash Net Cash Net Cash Source: Company data, Thomson Reuters, Credit Suisse estimates
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DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
24 November 2016 Asia Pacific/South Korea
Equity Research Automobile Manufacturers
Kia Motors (000270.KS / 000270 KS) Rating (from OUTPERFORM) NEUTRAL Price (23 Nov 16, W) 36,750 Target price (W) (from 50,000) 40,000 Upside/downside (%) 8.8 Mkt cap (W/US$ bn) 14,897 / 12.68 Enterprise value (W bn) 13,086 Number of shares (mn) 405.36 Free float (%) 64.1 52-wk price range (W) 55,900-36,650 ADTO-6M (US$ mn) 34.2 *Stock ratings are relative to the relevant country benchmark.
■ Downgrade to NEUTRAL with a new target price of W40,000. (1) To reflect the potential 'ordinary wage' provision, which could be reflected in 1Q17E (vs. 4Q16E previously), (2) the entrance into unfavorable product cycle, and (3) rising uncertainty on Mexico plant operation post the US presidential election, we downgrade Kia Motors (Kia) to NEUTRAL from Outperform. We adjust 2016E/2017E EPS by +19%/-21%, respectively, and reduce our target price to W40,000 from W50,000.
(1) Reflecting W645 bn of potential one-off provision in 1Q17E. 'Ordinary wage' disputes are complicated long-lasting legal issues (we discussed this on page 32 of our Korea Auto Sector Initiation report published in Apr-15) and the first court ruling verdict has been delayed to 1Q17E from 4Q16E for Kia. As Kia's 'ordinary wage' case is similar to Hyundai Wia's, which already lost the case and booked one-off provision, we reflect potential 'ordinary wage' provision of
W645 bn under 1Q17E non-operating expense item (vs. 4Q16E previously).
(2) Peaking SUV sales mix in 2H16, entering a small sedan cycle in 2017. Kia's SUV sales mix is likely to peak in 2H16 with aging effects. For 2017, Kia will refresh the volume seller 'Morning' ('Picanto', entry sedan, 1Q17E) and 'K2' ('Pride', sub-compact sedan, 2H17E), which accounted for 18% of sales in Jan-Oct 2016. Unfortunately, these segments have been shrinking in key markets.
(3) Rising uncertainty on Mexico plant operation. Kia plans to export 60% of Mexico plant production volume to US and a potential 35% tariff (as reported by CNN on 18-Nov) on Mexico-made cars by the US raises another uncertainty on Kia's Mexico plant operation.
■ Valuation. Our revised TP of W40,000 is based on 6.9x 2017E EPS. Despite
the YoY OP turnaround, 'ordinary wage' uncertainty has depressed Kia's share price performance in 2016. As the uncertainty remains unchanged in 1H17E while its new product cycle is not favourable, we see rising earnings downside risks for Kia in 2017.
Share price performance
The price relative chart measures performance against the
Net debt/equity (%) (3.0) (7.3) (9.6) (12.4) Net debt/EBITDA (x) (0.20) (0.48) (0.69) (0.93)
Company Background
Kia Motors Corporation is a Korea-based automobile manufacturer of passenger vehicles, recreational vehicles, trucks and buses, taxies as well as special top vehicles under various brand names.
Blue/Grey Sky Scenario
Our Blue Sky Scenario (W) (from 66,000) 52,000
Our blue sky scenario target price is based on 9.0x FY17E P/E.
Our Grey Sky Scenario (W) (from 37,000) 29,000
Our blue sky scenario target price is based on 5.0x FY17E P/E.
Share price performance
The price relative chart measures performance against the KOREA SE KOSPI
IDX which closed at 1,987.95 on 23-Nov-2016
On 23-Nov-2016 the spot exchange rate was W1,174.55/US$1
Source: Company data, Thomson Reuters, Credit Suisse estimates
24 November 2016
Kia Motors (000270.KS / 000270 KS) 4
Rising uncertainty with weakening sales mix 'Ordinary wage' disputes have been complicated issues for Korean autos for years.
Old K5 (Optima) - US incentive since launch (Nov-10)
New K5 (Optima) - US incentive since launch (Oct-15)
(USD)
3,133
1,500
2,000
2,500
3,000
3,500
Jan-13 Jan-14 Jan-15 Jan-16
Kia average US incentive spending
(USD)
24 November 2016
Kia Motors (000270.KS / 000270 KS) 8
Rising uncertainty on Mexico plant operation. Kia's share price has corrected 11% post
the US election as market concerns about a potential 35% tariff on Mexico-made vehicles
by the US which raises another uncertainty on Kia's newly built Mexico plant operation.
Kia plans to increase Mexico plant sales to 250k units (vs. our estimate of 230k units) in
2017E and about 60% of produced volume will be exported to the US. If the US raises
tariff for Mexico-made cars, Kia has to (1) reduce its production volume from Mexico and
increase exports to the US from Korea, or (2) re-allocate Mexico export volume to other
countries other than the US. In addition, a weakening Mexican Peso could cause Mexico
auto demand slowdown and also could increase uncertainty on forex translation loss when
recognising Mexico plant earnings under consolidated IFRS accounting.
Figure 18: 60% of Mexico plant sales is planned to
be exported to US…
Figure 19: ...and Mexico plant sales portion will
likely reach 10% by 2018E
Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates
Figure 20: ...and a weakening Mexican Peso could cause forex translation loss
for Kia
Source: the BLOOMBERG PROFESSIONAL™ service, Credit Suisse
62
138
168
192210
0
50
100
150
200
250
2016E 2017E 2018E 2019E 2020E
Mexico plant export sales volume to US
('000 units) Kia plans to export 60% of its Mexico plant sales volume to the US
3.4
7.4
8.59.2 9.5
0
3
6
9
12
2016E 2017E 2018E 2019E 2020E
Kia's Mexico plant sales portion out of global sales volume
(%)
0.04
0.05
0.06
0.07
0.08
0.09
Jan-11 Jan-13 Jan-15
US Dollar / Mexican Peso
(USD/MXN)
50
60
70
80
90
100
Jan-11 Jan-13 Jan-15
Korean Won / Mexican Peso
(KRW/MXN)
24 November 2016
Kia Motors (000270.KS / 000270 KS) 9
Valuation Downgrade to NEUTRAL from Outperform. To reflect potential 'ordinary wage' provision
of W645 bn in 1Q17E, entering an unfavourable product cycle, and rising uncertainty on
Mexico plant operation, we downgrade our rating for Kia Motors to NEUTRAL from
Outperform. We adjust our 2016E/2017E EPS by +19%, -21%, respectively, and reduce
our target price for Kia to W40,000 from W50,000.
Since our initiation in April 2015, our target price has been based on a P/E methodology
by applying a certain valuation discount rate, driven by the opportunity costs of ROE
(Decoupling of product cycle and earnings), to reflect Hyundai Motor Group (HMG) trio's
US$10 bn investment for acquiring the KEPCO site to build the new GBC (global business
centre). From 2016, we removed 50% of the previously applied discount rate of 21%
because (1) the land acquisition costs were fully paid in 2015, (2) the additional
contribution allowance of W1.75 tn was finalised in February 2016 and the official
development blueprints were released, and (3) the event occurred in 3Q14, implying the
issues with the investment are now fully priced in. In addition, the company has already
announced the gradual increase in its dividend payment going forward.
Figure 21: Measuring the opportunity cost of the KEPCO acquisition and GBC construction A. Calculating normalised ROE if the cash for GBC were used to build new plants Kia
Investment cost to build a 300k capacity plant for Kia (W tn) (A) 1.2
2014 net profit of Kia's Slovakia plant (W tn) (B) 0.40
2014-2016E cash outflow for investing in GBC (W tn) (C) 2.8
# of plants that could be built if the cash for GBC were used for capacity expansion (D) = (A)/(C) 2.3
Opportunity costs (return) if the cash for GBC were used to build plants (W tn) (E) = (B) x (D) 0.9
2017E net profit (W tn) (F) 2.4
Average 2016-2017E owner's equity excluding minority interests equity (W tn) (G) 27.5
ROE if the cash for KEPCO site were used to build new plants (H) = ((E)+(F))/(G) 11.9%
B. Calculating normalised ROE if the cash for GBC were used to increase dividend
ROE if the cash for KEPCO were used for dividend increase (I) = (F)/((G)-(c)) 9.5%
Average ROE if the cash for GBC were used for capacity expansion or dividend increase (J) = ((H)+(I))/2 10.7%
2017E ROE after investing in GBC (K) = our current forecasts 8.6%
Opportunity ROE loss from investing in GBC (L) = (J) - (K) -2.2%
Opportunity costs if invested in capacity expansion or dividend increase (W tn) (M) 0.6
* GBC: Global Business Center. Source: Company data, Credit Suisse estimates
Figure 22: Ordinary wage impact calculation—Kia to see the biggest impact
P/B = ROE - g
Cost of Equity = Risk free rate + (Beta x risk premium) Cost of Equity – g
Applying risk free rate 2.0%, market risk premium 8.0%, g (long-term growth rate) 1.0% Kia
Beta 1.3
Cost of equity = risk free rate + (Beta x market risk premium) (N) 12.3%
Intrinsic P/B for 2017E ROE (O) = ((K)-g)/((N)-g) 0.67
Companies Mentioned (Price as of 23-Nov-2016) BMW (BMWG.DE, €83.3) Daimler (DAIGn.DE, €65.52) Dongfeng Motor Group Company Limited (0489.HK, HK$7.84) Fiat Chrysler Automobile (FCHA.MI, €7.09) Ford Motor Company (F.N, $11.89) General Motors Company. (GM.N, $33.81) Great Wall Motor (2333.HK, HK$7.02) Honda Motor (7267.T, ¥3,154) Hyundai Mobis (012330.KS, W248,000) Hyundai Motor Company (005380.KS, W134,000, OUTPERFORM, TP W168,000) Hyundai Wia (011210.KS, W70,800) Kia Motors (000270.KS, W36,750, NEUTRAL, TP W40,000) Nissan Motor (7201.T, ¥1,025) PSA Peugeot Citroen (PEUP.PA, €14.28) Renault (RENA.PA, €74.99) Tata Motors Ltd. (TAMO.BO, Rs471.4) Toyota Motor (7203.T, ¥6,287) Volkswagen (VOWG_p.DE, €120.6)
Disclosure Appendix
Analyst Certification Michael Sohn and Jung Il Lee each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.
3-Year Price and Rating History for Hyundai Motor Company (005380.KS)
005380.KS Closing Price Target Price
Date (W) (W) Rating
23-Jan-14 232,000 294,000 O
24-Jul-14 229,000 287,000
23-Oct-14 171,000 252,000
03-Mar-15 166,500 NR
21-Apr-15 171,000 170,000 N *
10-Jun-15 134,500 150,000
14-Jul-15 125,500 137,000
08-Sep-15 156,500 150,000
27-Jan-16 137,000 145,000
29-Feb-16 147,500 190,000 O
18-Jul-16 132,000 175,000
05-Oct-16 140,000 168,000
* Asterisk signifies initiation or assumption of coverage.
O U T PERFO RM
N O T RA T ED
N EU T RA L
3-Year Price and Rating History for Kia Motors (000270.KS)
000270.KS Closing Price Target Price
Date (W) (W) Rating
08-Jan-14 53,900 71,000 N
24-Jan-14 52,700 60,000
22-May-14 60,100 72,000 O
18-Sep-14 54,400 88,500
24-Oct-14 54,400 98,900
26-Jan-15 46,450 70,400
03-Mar-15 46,700 NR
21-Apr-15 47,900 42,000 U *
10-Jun-15 44,250 48,000 N
08-Sep-15 50,600 61,000 O
27-Jan-16 48,600 57,000
23-Mar-16 49,800 61,000
06-Jul-16 41,400 50,000
* Asterisk signifies initiation or assumption of coverage.
N EU T RA L
O U T PERFO RM
N O T RA T ED
U N D ERPERFO RM
The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities
24 November 2016
Kia Motors (000270.KS / 000270 KS) 14
As of December 10, 2012 Analysts’ stock rating are defined as follows: Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark* over the next 12 months. Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months. Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months. *Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ra tings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector , with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin American and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, the expected total return (ETR) calculation includes 12-month rolling dividend yield. An Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform where an ETR less than or equal to 5%. A Neutral may be assigned where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of associated risks. Prior to 18 May 2015, ETR ranges for Outperform and Underperform ratings did not overlap with Neutral thresholds between 15% and 7.5%, wh ich was in operation from 7 July 2011. Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances. Not Rated (NR) : Credit Suisse Equity Research does not have an investment rating or view on the stock or any other securities related to the company at this time. Not Covered (NC) : Credit Suisse Equity Research does not provide ongoing coverage of the company or offer an investment rating or investment view on the equity security of the company or related products.
Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.
Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation: Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months. Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months. Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months. *An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover m ultiple sectors.
Credit Suisse's distribution of stock ratings (and banking clients) is:
Global Ratings Distribution
Rating Versus universe (%) Of which banking clients (%) Outperform/Buy* 44% (63% banking clients) Neutral/Hold* 38% (60% banking clients) Underperform/Sell* 15% (55% banking clients) Restricted 3% *For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, an d other individual factors.
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Target Price and Rating Valuation Methodology and Risks: (12 months) for Hyundai Motor Company (005380.KS)
Method: Our W168,000 target price on Hyundai Motor is based on 7.4x FY17E EPS. Our OUTPERFORM rating is on the back of: (1) HMC's favourable change in strategy towards more SUVs in 2016E, (2) US inventory and incentive stabilisition with EM forex/demand recovery, and (3) YoY OP turnaround expected in 4Q16E and 2017E (after a modest +1% YoY turnaround in 2Q16) as the labour strike issue was cleared out in 3Q16.
Risk: Risks to Hyundai Motor achieving our W168,000 target price and OUTPERFORM rating include the following: (1) KRW appreciation, (2) labour strikes, (3) quality defects, (4) rising M/S of imported vehicles, and (5) rising customer incentives.
Target Price and Rating Valuation Methodology and Risks: (12 months) for Kia Motors (000270.KS)
Method: Our target price of W40,000 for Kia Motors was derived by applying target P/E (price-to-earnings) multiple of 6.9x to FY17E EPS (earnings per share), which was derived by applying a logical valuation discount to Kia's intrinsic P/E post purchasing KEPCO's HQ land. Our NEUTRAL rating is based on (1) Kia's peaking SUV sales mix with aging impact from 2H16 (and entrance into a small sedan cycle in 2017E while the sedan market has been shrinking globally) and (2) continued uncertainty regarding 'ordinary wage' disputes which could potentially decrease 2017E pre-tax profit by 18%.
Risk: Key risks to our W40,000 target price and NEUTRAL rating for Kia Motors include: (1) ordinary wage issues, (2) potential revision of Korea-US FTA and NAFTA post US election, (3) KRW appreciation, and (4) quality defects.
Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures for the definitions of abbreviations typically used in the target price method and risk sections.
See the Companies Mentioned section for full company names The subject company (000270.KS, 005380.KS) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse. Credit Suisse provided investment banking services to the subject company (000270.KS, 005380.KS) within the past 12 months. Credit Suisse has received investment banking related compensation from the subject company (000270.KS, 005380.KS) within the past 12 months Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (000270.KS, 005380.KS) within the next 3 months. Please visit https://credit-suisse.com/in/researchdisclosure for additional disclosures mandated vide Securities And Exchange Board of India (Research Analysts) Regulations, 2014 Credit Suisse may have interest in (TAMO.BO) Credit Suisse beneficially holds >0.5% long position of the total issued share capital of the subject company (000270.KS, 005380.KS).
For date and time of production, dissemination and history of recommendation for the subject company(ies) featured in this report, disseminated within the past 12 months, please refer to the link: https://rave.credit-suisse.com/disclosures/view/report?i=272255&v=-5ptg4pod05t0380a8yra1snm1 .
Important Regional Disclosures Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report. The analyst(s) involved in the preparation of this report may participate in events hosted by the subject company, including site visits. Credit Suisse does not accept or permit analysts to accept payment or reimbursement for travel expenses associated with these events. Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares. Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report. For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit https://www.credit-suisse.com/sites/disclaimers-ib/en/canada-research-policy.html. Credit Suisse has acted as lead manager or syndicate member in a public offering of securities for the subject company (005380.KS) within the past 3 years. Principal is not guaranteed in the case of equities because equity prices are variable. Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that. This research report is authored by: Credit Suisse Securities (Europe) Limited, Seoul Branch ............................................................................................Michael Sohn ; Jung Il Lee To the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important disclosures regarding any non-U.S. analyst contributors: The non-U.S. research analysts listed below (if any) are not registered/qualified as research analysts with FINRA. The non-U.S. research analysts listed below may not be associated persons of CSSU and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. Credit Suisse Securities (Europe) Limited, Seoul Branch ............................................................................................Michael Sohn ; Jung Il Lee
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