KH Vatec and Samsung

April 17, 2012 Industry Report
Telecom equipment/Electronic components (Overweight)

Investing in uncertain times: Re-emerging opportunities
Earnings likely to be on the upswing
We expect that telecom equipment (mainly handsets) and electronic component makers earnings will begin to improve in 1Q. We estimate that the sector-average 1Q operating profit will increase 26.7% YoY, though revenues are likely to decline 3.1% YoY. This operating profit growth should be meaningful, since it would suggest that these companies have finished revamping their fundamentals. In 2Q, the companies earnings are likely to improve full swing. Indeed, we forecast the sectors revenues and operating profit to jump 28.0% YoY and 140.5% YoY, respectively.
Daewoo Securities Co., Ltd.
Wonjae Park +822-768-3372 william.park@dwsec.com Young Ryu +822-768-4138 young.ryu@dwsec.com
Investment strategy: Opportunities re-emerging

We maintain our Overweight rating on the telecom equipment/electronic components sector. As noted in our 2012 outlook report, we expect the sector to be strong in 1H before weakening in 2H. Our optimism for 1H is premised on: 1) our belief that domestic IT companies, which struggled during 2010~2011, are ready to improve their profitability on revamped fundamentals, and 2) our view that a low base effect (from stagnation in 2011) should have a more significant impact in 1H than in 2H. We think that the recent pullback of telecom equipment/electronic component shares is only a technical correction. As such, we expect these shares to rebound once companies release their improved 1Q results. Thus, now seems to be the time to accumulate shares. We recommend as our top picks the following companies: 1) LG Electronics (066570 KS), whose P/B has plummeted to the 1x level despite the companys rapid earnings improvement (especially at the TV unit); 2) Samsung ElectroMechanics (009150 KS) in light of its robust multilayer ceramic capacitor (MLCC) earnings and positive effects from Samsung Electronics strong earnings; and 3) Partron (091700 KQ), which is likely to post historic-high earnings in 1Q. We are also interested in LS (006260 KS), which is seeing earnings improvement at LS Cable & System (one of its key subsidiaries), and Samsung Techwin (012450 KS), which is steadily picking up. We also advise investors to pay more attention to LED makers due to the anticipated growth of the LED lighting market.
Strong in 1H, but weak in 2H
(Wbn) 50,000 Telecom equipment sector index (L) US$/W (R) JPY100/W (R) 2,500 - Expect strong smartphone line-up by SEC and LGE - Smartphone market growth leading to earnings improvement at component companies S t ong 1H12 30,000 Weak 2H12 20,000 1,000 1,500
40,000
2,000
10,000 06 07 08 09 10 11F 12F 13F
500
Source: KDB Daewoo Securities Research
Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including the U.S.
I. 1Q Preview and mid- to long-term outlook ...............................................................................3 Earnings to improve in 1Q.............................................................................................................3 Earnings improvement to gain speed in 2Q..................................................................................7 Mid- to long-term outlook of Korean IT industry............................................................................9 Issue analysis: Chinese makers present serious threat .............................................................11 II. Investment strategy & valuation..............................................................................................12 Look before its too late ...............................................................................................................12 LG Electronics (066570 KS) ........................................................................................................ 14 Samsung Electro-Mechanics (009150 KS) ..................................................................................... 18 Samsung Techwin (012450 KS) .................................................................................................. 21 LS (006260 KS).............................................................................................................................. 24 LG Innotek (011070 KS) ............................................................................................................... 27 Partron (091700 KQ)..................................................................................................................... 30 Intops (049070 KQ)....................................................................................................................... 34 Seoul Semiconductor (046890 KQ) ............................................................................................ 37 KH Vatec (060720 KQ).................................................................................................................. 40 Amotech (052710 KQ) .................................................................................................................. 43 Telechips (054450 KQ) ................................................................................................................. 46 P&Tel (054340 KQ) ....................................................................................................................... 49
April 17, 2012
Telecom equipment/Electronic components
I. 1Q Preview and mid- to long-term outlook

Earnings to improve in 1Q
Operating profit picks up full swing: Up 26.7% YoY and up 143.8% QoQ We expect the 1Q operating results of telecom equipment (mainly handsets) and electronic component makers to signal a major upswing going forward. We estimate that the sectoraverage 1Q operating profit will increase 26.7% YoY, though revenues are likely to decline 3.1% YoY. This operating profit growth should be meaningful, since it would suggest that these companies have strengthened their fundamentals. This positive outlook seems particularly noteworthy, given that the first quarter is typically a slow season for the IT industry. On a QoQ basis, we expect the sector-average profit to soar 143.8%, though revenues are estimated to have contracted 8.2%. The surge in operating profit should be attributable to: 1) efforts to strengthen fundamentals in the face of an economic slowdown and Apples market dominance in 2010 and 2011, 2) major destocking in 4Q11 in preparation for a full-swing industry pickup in 2012, and 3) the rapid expansion of Samsung Electronics (SEC) smartphone business.
Figure 1. 1Q12 Revenue growth (YoY)
LGE SEMCO LG Innotek Samsung Techwin LS KH Vatech SSC Partron Intops P&Tel Telechips Amotech Average -100 -50 -3. 1% 0 50 100
Figure 2. 1Q12 Operating profit growth (YoY)

LGE SEMCO LG Innotek Samsung Techwin LS KH Vatech SSC Partron Intops P&Tel Telechips Amotech Average -200 -100 0 26. 7% 100 200 TTB
Source: Company data, KDB Daewoo Securities Research
Figure 3. 1Q12 Revenue growth (QoQ)

LGE SEMCO LG Innotek Samsung Techwin LS KH Vatech SSC Partron Intops P&Tel Telechips Amotech Average -50 -25 -8. 2% 0 25 50
Figure 4. 1Q12 Operating profit growth (QoQ)

LGE SEMCO LG Innotek Samsung Techwin LS KH Vatech SSC Partron Intops P&Tel Telechips Amotech Average -200 -100 0 100 143.8% 200 TTB TTB TTB
KDB Daewoo Securities Research
April 17, 2012
Sharp growth of SECs smartphone sales to be positive for domestic IT companies
In 1Q, SEC is estimated to have sold 43mn smartphones, driven by robust sales of the Galaxy S2 and the Galaxy Note (over 5mn units). Thus, we believe that the company has reclaimed its position as the worlds no. 1 smartphone seller (in terms of quarterly sales volume), beating Apple. Moreover, SEC is anticipated to unseat Nokia, ending the companys 14-year dominance of the mobile handset market. On the back of robust smartphone sales, SEC reported a record quarterly operating profit of W5.8tr in 1Q, which is typically a slow season. The companys smartphone unit is leading the growth of its semiconductor (non-memory sales including APs) and display (AMOLED, etc.) businesses, and the broader domestic IT industry.
Figure 5. Global handset market share trend
(%) 50 Nokia Apple LG Electronics Samsung ZTE
40
SEC became the leader of the global handset market in 1Q12
30
20
10
0 1Q08 1Q09 1Q10 1Q11 1Q12F
Source: Gartner, KDB Daewoo Securities Research
Figure 6. SECs smartphone sales volume

(mn units) 60 Galaxy S3
Figure 7. SECs operating profit trend

(Wbn) 8000 OP margin
Galaxy Note
6000
40 Galaxy S2
4000
20
Galaxy S
2000
0 1Q08 1Q09 1Q10 1Q11 1Q12F
0 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12F
April 17, 2012
Figure 8. Quarterly global smartphone market share trend

(%) 50 Apple Nokia HTC Samsung Research In Motion LG Electronics
40
SEC became the leader of the global smartphome market in 3Q11
30
20
10
0 1Q08 1Q09 1Q10 1Q11 1Q12F
Figure 9. Apples earnings trend

(US$bn) 50 Desktops (L) iPhone (L) 40 OP margin (R) 30 Portables (L) iPads (L) iPods (L) Others (L) (%) 40
30 20 20 10
10
0 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11
Figure 10. Market cap trends of Apple and SEC

(-3Y=100) 500 SEC Apple 400
300
200
100
0 4/09 10/09 4/10 10/10 4/11 10/11 4/12
Source: Thomson Reuters, KDB Daewoo Securities Research
April 17, 2012
Table 1. 1Q12 Earnings estimates for telecom equipment/electronic component companies

1Q12F Revenues OP YoY Revenues -5.0 23.9 -1.7 -2.4 17.2 -10.0 152.1 30.2 9.7 -38.1 35.2 28.1 OP 229.0 31.0 1.7 -13.8 TTB -77.4 101.5 -96.2 5.0 -31.0 -29.0 738.1 QoQ Revenues -9.5 -5.9 -22.8 1.8 6.2 6.9 10.3 -14.6 -0.5 2.8 -11.3 -11.4
(Wbn, %) OP 1,765.7 4.2 TTB -15.0 TTB TTB 9.2 -57.9 528.8 -60.5 -70.9 -56.5
LG Electronics 12,500.20 430.43 SEMCO 1,565.07 95.40 Samsung Techwin 632.17 30.77 LS 3,008.02 135.63 LG Innotek 1,288.72 22.35 Seoul Semiconductor 168.75 3.19 Partron 133.91 11.16 KH Vatec 71.12 0.55 Intops 109.81 5.57 P&Tel 10.84 -2.00 Telechips 17.73 -0.79 Amotech 24.71 0.96 Note: TTB refers to turning into black; Source: KDB Daewoo Securities Research
Recent pullback is only a technical correction
We think that the recent pullback of telecom equipment/electronic component shares is only a technical correction, especially considering the upward revisions to 1Q earnings estimates. As such, we expect the shares to rebound once companies release their improved 1Q results.
Figure 11. Share performances of IT product/component makers
150
Handset/components KOSDAQ KOSPI
130 118.1p 110 113.5p 111.1p
90 9/11 12/11 3/12
Figure 12. Share price performances of LED companies

150 LED companies KOSPI KOSDAQ 135.8
120
113.5 111.1
90 9/11 11/11 1/12 3/12
April 17, 2012
Earnings improvement to gain speed in 2Q

Earnings to pick up faster in 2Q In 2Q, earnings are likely to improve full swing. Indeed, we forecast the sectors revenues and operating profit to jump 28.0% YoY and 140.5% YoY, respectively. On a QoQ basis, revenues and operating profit should each rise 11.2% and 42.4%. SECs smartphone business should continue to grow, driven by the expected release of the Galaxy S3. LG Electronics (LGE) is also anticipated to enjoy operating profit expansion thanks to greater TV and air conditioner sales.
Figure 13. 2Q12 Revenue growth (YoY)
LGE SEMCO LG Innotek Samsung Techwin LS KH Vatech SSC Partron Intops P&Tel Telechips Amotech Average -100 -50 0 28. 0% 50 100
Figure 14. 2Q12 Operating profit growth (YoY)

LGE SEMCO LG Innotek Samsung Techwin LS KH Vatech SSC Partron Intops P&Tel Telechips Amotech Average -50 0 42. 4% 50 100 150 TTB
Figure 15. 2Q12 Revenue growth (QoQ)

LGE SEMCO LG Innotek Samsung Techwin LS KH Vatech SSC Partron Intops P&Tel Telechips Amotech Average -50 -25 0 11. 2% 25 50
Figure 16. 2Q12 Operating profit growth (QoQ)

LGE SEMCO LG Innotek Samsung Techwin LS KH Vatech SSC Partron Intops P&Tel Telechips Amotech Average -200 -100 0 100 TTB TTB 140.5% 200 TTB
The recovery of the TV market is one of the most important variables affecting the IT industry. Indeed, tepid TV demand led to a sluggish IT market in 2011, weighing on the earnings of the worlds largest (SEC) and second largest (LG Electronics) TV makers , as well as those of electronic components makers including LED makers (the TV market makes up the largest portion of LED sales). TV demand recovery to accelerate, driven by: 1) 2012 London Olympics 2) Projected recovery of US economy We expect the recovery of the TV market (which started in 1Q) to accelerate heading towards the 2012 London Olympics. Although some market watchers remain skeptical about the ability of sporting events such as the Olympic Games and the FIFA World Cup to directly boost TV sales, we believe that such events will surely stimulate demand amid the worst downturn ever. Expectations of a US economic recovery are also positive for TV demand. 7
April 17, 2012
Figure 17. 2012 London Olympics logo
Source: Official London Olympic website
Figure 18. Revenue trend by TV panel type

(mn units) 300 250 12 200 150 100 4 50 0 04 05 06 07 08 09 10 11 12F 13F 0 8 (%) 16
Total (L) PDP (L)
CRT (L) Others (L)
LCD (L) YoY growth (R)
Source: Displaybank, KDB Daewoo Securities Research
Figure 19. US trade balance (monthly trend)

(US$bn) -40 Trade balance YoY growth (US$bn) 2 0
Figure 20. NAHB/Wells Fargo Housing Market Index

100 NAHB index
80
-45 -2 -4 -6 -50 -8
60
40
20
-10 -55 1/11 4/11 7/11 10/11 1/12 -12
0 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12
Source: Census Bureau, US Department of Commerce
Source: NAHB (National Association of Home Builders)
April 17, 2012
Mid- to long-term outlook of Korean IT industry

SEC is estimated to have emerged as the worlds no. 1 handset maker on the back of its strong supply chain SECs emergence as the worlds top handset maker - especially in the smartphones category (which has become the largest source of revenues for global handset markers) marks a significant step for the companys future growth. The sharp growth of SECs smartphone sales should trickle down to other domestic IT companies. Downstream industries, such as the smartphone industry, significantly affect their supply chains. Indeed, the development of SECs smartphone business has prompted: 1) rapid growth of the companys non-memory businesses (including APs) and 2) improvements to the camera module, substrate, and MLCC businesses of Samsung Electro-Mechanics (SEMCO). The Korean IT industry, which experienced the worst-ever demand contraction in 2010 and 2011, is making a sharp recovery thanks to its strong supply chains. The penetration rate of an IT product tends to increase slowly at the initial stage of market development, and then pick up speed (exhibiting an S-shaped curve), while profitability tends to remain very high at the initial stage and then starts to fall. Indeed, Apple secured an OP margin of a whopping 40% when the company opened up the smartphone market with its iPhone.
Figure 21. Life cycle of IT products: Relationship between penetration and profitability
(%) 99 Penetration rate OP margin (%) 45
66
Feature phone Tablet PC Smartphone TV PC
30
33
15
0 Early stage Middle Last stage
Commoditization of the smartphone market to present a growth opportunity for LGE
Profitability cannot remain high forever, as healthy profits attract rivals. As the number of market participants grows, penetration increases and profitability decreases. It appears that the smartphone market has entered this growth stage. At this stage of a business cycle, product differentiation is the key to maintaining/gaining competitiveness. However, if the products are similar, then, the company that can ensure faster and stable supply should outperform its competitors - in which case a stable supply chain is important. SEC and LGE both possess strong supply chains. SEC manufactures products such as smartphones and TVs using components and electronic materials made by Samsung Group affiliates including SEMCO, Samsung Display, and Cheil Industries. LGE also uses components supplied by its group affiliates including LG Innotek and LG Display, and electronic materials made by LG Chem. Such strong supply chains can greatly empower IT product makers that need to nimbly respond to rapidly changing market trends.
April 17, 2012
Unlike Korean counterparts, Apples competitiveness lies in its creativity and quality control. The company has invented groundbreaking products and services such as the iPhone, the iPad and iTunes. However, the company relies on Foxconn to assemble its products, and on Korean, Japanese and Taiwanese makers to source components. In turn, this enables Apple to focus instead on quality control. This type of business structure is highly effective if the company offers unique, original products. However, companies with this type of business structure may suffer when product commoditization occurs with increased penetration. Sony is a case in point. The companys revolutionary products, including the Walkman and the PlayStation, pushed the company to the top of the IT industry. But the company has lost its market share to SEC and LGE as the products became increasingly commoditized. Sony has a business structure similar to Apples, outsourcing components and electronic materials (while assembling products inhouse).
Figure 22. Supply chain of global IT industry
Product
SEC LGE Apple Foxxcon Sony
Components
SEMCO
SMD
LGI
LGD
SEC, LGD, SEMCO, LGI, Murata, Ibidedn, Nichia, Others
SMD, Murata, Ibiden, TDK, Others
Materials
Cheil Industries
Others
LG Chemical
Others
Shin-Etsu Chemical, SUMCO, Hitachi Chemical, JSR, Sumitomo Chemical, Furukawa, Nitto Denko, Sumitomo Bakelit
Commoditization to present opportunities to Korean smartphone makers with strong supply chains
Thus, the ongoing commoditization in the smartphone market should present a golden opportunity for Korean smartphone makers. Just as SEC and LGE respectively secured first and second place in the global TV market on the back of their competitive supply chains, we expect the companies strong supply chains to help them acquire the upper hand in the global smartphone market. SEC is already performing well, but LGE should also benefit from the commoditization trend. LGEs strongest advantage is the close relationship with its electronic materials supplier, LG Chem. Indeed, high-quality products require high-quality components, which again require high-quality materials. Surely, a lack of first-mover advantage (i.e., high profitability) and innovative products should be disappointing for Korean IT makers. However, it should be noted that SEC managed to be successful during the initial development stage of the LED BLU TV market. Moreover, we believe that OLED TVs can set a milestone for Korean IT companies in occupying the earlystage market, allowing domestic companies to narrow the gap with Japanese electronic materials rivals.
10
April 17, 2012
Issue analysis: Chinese makers present serious threat

The rapid growth of Chinese firms poses a serious threat Korean firms may have made significant advances in home appliances, televisions and more recently, smartphones, but Chinese suppliers have also grown fast enough to emerge as a serious threat. In 4Q11, the Chinese firm ZTE overtook LG Electronics as the worlds fourth largest handset supplier, while Huawei Technology now ranks sixth globally. These Chinese firms have been delivering rapid growth on the back of a robust consumer market, with the number of mobile phone subscribers hitting the 1bn mark in March. Although Apple and SEC remain well ahead in the high-end market (i.e. smartphones), Chinese vendors like ZTE, Huawei, Xiaomi and CoolPAD have been gaining share in the midto low-end market. What is worrying is that these Chinese makers will likely expand their presence into high-end and overseas markets. At the 2012 CES, Huawei unveiled the worlds slimmest smartphone, the Ascend P1 S (6.68mm thick), which demonstrates that the technological strength of Chinese firms cannot be underestimated. In order to stay ahead of Chinese makers, we believe it is essential for domestic firms to 1) take the lead in technology with continued R&D and patent licensing efforts; 2) make early entry into new markets like India and Africa; and 3) secure stable sources of core technologies like electronic materials.
Figure 23. ZTE ranked fourth among global handset makers in 4Q11
(%) 50 Nokia Apple LG Electronics Samsung ZTE Huawei Technologies
40
ZTE was ranked the fourth largest global handset maker in 4Q11
30
20
10
0 1Q08 1Q09 1Q10 1Q11 1Q12F
Figure 24. Huaweis Ascend P1 S
Size: 127.4 x 64.8 x 6.7 mm Weight: 110 g Display: 540 x 960 pixels (Super AMOLED capacitive touchscreen) Camera: 8 MP, LED flash OS: Android OS, v 4.0 CPU: Dual-core 1.5 GHz Release: Expect 2Q12
Source: GSMarena
11
April 17, 2012
II. Investment strategy & valuation

Look before its too late
Maintain Overweight; Our top picks are LGE, Samsung ElectroMechanics and Partron We maintain our Overweight rating on the telecom equipment/electronic components sector. As noted in our 2012 outlook report, we expect the sector to be strong in 1H before weakening in 2H. Our optimism for 1H is premised on: 1) our belief that domestic IT companies, which struggled during 2010~2011, are ready to improve their profitability on revamped fundamentals, and 2) our view that a low base effect (from stagnation in 2011) should have a more significant impact in 1H than in 2H. In 4Q11, the widespread view that SEC is essentially the only serious rival to Apple helped drive the companys stock price from a low of W672,000 (August 19th) to W1,351,000 (although the stock has recently pulled back). We have also been seeing a positive change in the perception of other domestic firms in the IT sector. Not only has the number of Korean vendors supplying core parts to Apple and SEC been increasing, many of them have gained a more positive response than their Japanese or Taiwanese counterparts. Thus, we believe it is only natural for Korean firms to record stronger margins and trade at higher multiples, which partly explains their stock price appreciation in 1Q. We think that the recent pullback of telecom equipment/electronic component shares is only a technical correction. As such, we expect these shares to rebound once companies release their improved 1Q results. Thus, now seems to be the time to accumulate shares. We recommend as our top picks: 1) LG Electronics (066570 KS), whose P/B has plummeted to the 1x level despite the companys rapid earnings improvement (especially at the TV unit); 2) Samsung Electro-Mechanics (009150 KS) in light of its robust multilayer ceramic capacitor (MLCC) earnings and positive effects from Samsung Electronics strong earnings; and 3) Partron (091700 KQ), which is likely to post historic-high earnings in 1Q. Still, there appears to be a possibility of additional corrections in 2H, given weaker expectations for a low base effect and a lack of confidence in growth. In light of the possible corrections, the following companies appear undervalued in 2H: LS (006260 KS), which is seeing earnings improvement at LS Cable & System (one of its key subsidiaries), and Samsung Techwin (012450 KS), which is steadily picking up. We also advise investors to pay more attention to LED makers due to the anticipated growth of the LED lighting market.
Figure 25. Strong in 1H, but weak in 2H
(Wbn) 50,000 Telecom equipment sector index (L) US$/W (R) JPY100/W (R) 2,500 - Expect strong smartphone line-up by SEC and LGE - Smartphone market growth leading to earnings improvement at component companies S t ong 1H12 30,000 Weak 2H12 20,000 1,000 1,500
LS, Samsung Techwin and LG Innotek also deserve attention
40,000
2,000
10,000 06 07 08 09 10 11F 12F 13F
500
12
April 17, 2012
Figure 26. Investment strategy
1H12
Smartphone market growth leading to earnings improvement
Waiting for turnaround

- LGE (066570 KS): Earnings improvement in 1H12
- SEMCO (009150 KS): Strong competitiveness - Partron (091700 KQ): Undervalued
Earnings improvement
2H12
2H12
Undervalued in 1H12
Possibility of corrections of IT shares
- LS (006260 KS): Earnings improvement at

LS Cable & System
- Samsung Techwin (012450 KS): Earnings

Undervalued in 1H12
improvement and new business
Table 2. Ratings and target prices for telecom equipment/electronic component makers in Daewoo Universe
Ratings Ticker LG Electronics SEMCO Samsung Techwin LS LG Innotek SSC Partron Intops KH Vatec Telechips P&Tel Amotech 066570 KS 009150 KS 012450 KS 006260 KS 011070 KS 046890 KQ 091700 KQ 049070 KQ 060720 KQ 054450 KQ 054340 KQ 052710 KQ Previous Buy Buy Buy Buy Buy Trading Buy Buy Buy Trading Buy Hold Hold Hold Revised Previous (Wbn) 123,000 125,000 91,000 110,000 130,000 31,000 17,900 26,800 12,300 Target Price Revised (Wbn) 26,000 22,900 8,300 5,600 Share price % Change (as of April 13th) -16.1 -14.6 -32.5 77,700 100,500 64,600 75,400 92,600 23,000 12,300 17,100 7,510 5,790 2,490 5,010 Expected return (%) 58.3 24.4 40.9 45.9 40.4 13.0 45.5 33.9 10.5 11.8
Trading Buy
Figure 27. P/B band for handset component segment

(Wtr) 1.5 2.5x 2.0x 1.5x
Figure 28. P/E multiples by sector (Daewoo Universe)

(x) 24 17.7 15.6 11.3 8.8 8.1 7.4 Daewoo Universe average P/E of 10.4x 7.3 6.6
18
1.0
1.0x
12
5.2
0.5
0.5x
0
Sh ip b uil d in g et/ co mp on en ts Ha nd s r ms tru ct i on nd uc to Di sp Fin Int ch in e ry Ma er ne t Au to lay an c e
Se mi co
0.0 02 03 04 05 06 07 08 09 10 11 12 12F
Co
13
April 17, 2012
LG Electronics (066570 KS)

Buy (Maintain)
Target Price (12M, W) 123,000 Share Price (04/13/12, W) 77,700 Expected Return (%) 58.3 EPS Growth (12F, %) TTB Market EPS Growth (12F, %) 19.2 P/E (12F, x) 12.3 Market P/E (12F, x) 9.8 KOSPI 2,008.91 Market Cap (Wbn) 12,715 Shares Outstanding (mn) 181 Avg Trading Volume (60D, '000) 1,646 Avg Trading Value (60D, Wbn) 140 Dividend Yield (12F, %) 0.6 Free Float (%) 65.9 52-Week Low (W) 53,600 52-Week High (W) 119,000 Beta (12M, Daily Rate of Return) 1.1 Price Return Volatility (12M Daily, %, SD) 2.9 Foreign Ownership (%) 21.2 Major Shareholder(s) LG et al. (33.67%) NPS (7.35%) Trident Securities Limited et al. (6.15%) Price Performance (%) 1M 6M 12M Absolute -14.7 8.9 -22.4 Relative -13.9 -1.3 -17.1
Focus on TVs in 2012 and smartphones in 2013

Maintain Buy with a target price of W123,000 1Q12 Preview: Raising operating profit forecast to W430.4bn Earnings are improving across all divisions
We maintain our Buy call on LG Electronics (LGE) with a 12-month target price of W123,000. Our target price was derived by applying a P/B of 1.75x to our 2012F BPS of W70,100 (under consolidated K-IFRS). In 2011, the companys mobile communications (MC) division suffered losses due to its weak smartphone competitiveness. Concerns over the division further deepened with the deterioration of the handset market (e.g., Nokia stagnated, while Motorola was sold to Google). Furthermore, the margin recovery outlook for the home entertainment (HE) division was uncertain amid a weak economy, and the home appliance (including air conditioners) business was expected to deteriorate due to rising raw material prices. However, we believe that LGE has already hit bottom (in terms of earnings). Losses at the MC division (handsets and smartphones) are declining on the back of growing smartphone sales and higher cost efficiency. And the HE division has obtained competitive edges in the 3D and OLED TV segments. The companys home appliance business is also regaining stability. As such, the companys valuation should return to its normal level. We recommend that investors steadily accumulate LGE shares. We project LGEs 1Q revenues and operating profit at W12.5tr and W430.4bn (up 93.6% from our previous estimate of W222.3bn), under consolidated K-IFRS. The MC division is forecast to exceed the break-even point despite weak seasonality. Although smartphone sales volume will likely fall below expectation, Optimus LTE sales are stable while LGEs smartphone lineup is likely to improve with roll-outs of new models (e.g., the Optimus Vu). The companys stronger smartphone lineup will boost profitability full swing from 2013. The HE division is expected to drive profitability improvement. The division is projected to generate an OP margin of 3.9% on the back of the higher sales contribution of high-end products, including 3D TVs. The division is forecast to post revenues of W23.7tr in 2012, providing a catalyst to LGEs earnings improvement. Investors should take note that LGEs earnings are likely to improve further. After swinging to positive in 4Q, the company should continue to see growth in 1H, aided by solid smartphone and TV sales and the arrival of a strong season for the air conditioner business.
Share price 120 110 100 90 80 70 60 50 40 4/11 8/11 12/11 4/12 KOSPI
Earnings & Valuation Metrics

FY 12/10 12/11 12/12F 12/13F 12/14F Revenues (Wbn) 55,754 54,257 54,930 58,962 66,637 OP (Wbn) 177 280 1,465 2,130 2,710 OP (%) 0.3 0.5 2.7 3.6 4.1 EPS EBITDA FCF ROE P/E NP (Wbn) (Won) (Wbn) (Wbn) (%) (x) 1,227 7,345 1,378 -2,578 10.8 15.7 -470 -2,809 1,546 366 -3.7 1,141 6,310 2,524 197 8.2 12.3 1,699 9,394 3,358 805 10.9 8.3 2,135 11,808 4,103 948 12.3 6.6 P/B (x) 1.6 1.1 1.1 1.0 0.9 EV/EBITDA (x) 17.1 11.8 7.1 5.2 4.2
Note: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Source: Company data, KDB Daewoo Securities Research estimates
Daewoo Securities Research
14
April 17, 2012
Figure 29. Share performance
Figure 30. Quarterly earnings trend

(Wbn) 20,000 Revenues (L) OP margin (R) E arnings recovery 15,000 6 (%) 9
Figure 31. Quarterly earnings trend of HE business

(Wbn) 10,000 Home entertainment (L) OP margin (R) (%) TV business: E xpect O P margin of 4% 6
8,000
6,000 10,000 3 4,000 5,000 0 2,000 0 2
0 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12F 1Q13F
-3
0 1Q08 1Q09 1Q10 1Q11 1Q12F 1Q13F
-2
Figure 32. P/B band

(W) 200,000 3.0x 2.5x 2.0x 150,000 1.5x 100,000 1.0x
Figure 33. LGEs smartphone line-up

Name
Optimus 4X HD
Optimus Vu
Optimus 3D Max
50,000
Specification
Size:-x - x 8.9 mm Weight: - g Display:720 x 1280 pixels (HD-IPS TFT capacitive touchscreen) Camera:8 MP, LED flash OS: Android OS, v4.0 CPU: Quad-core 1.5 GHz
Size: 139.6 x 90.4 x 8.5 mm Weight: 168 g Display: 768 x 1024 pixels (HD-IPS TFT capacitive touchscreen) Camera: 8 MP, LED flash OS: Android OS, v2.3 CPU: Dual-core 1.5 GHz
Size: 126.8 x 67.4 x 9.6 mm Weight: 148g Display: 480 x 800 pixels pixels (3D LCD capacitive touchscreen) Camera: 5 MP, LED flash OS: Android OS, v2.3 CPU: Dual-core 1.2 GHz
0 07 08 09 10 11 12F 13F 14F

Release Date 2Q12 Mar-12 2Q12
Source: Company data, GSMarena
15
April 17, 2012
Table 3. Quarterly earnings trend

1Q Mobile Revenues communications Operating profit OP margin (%) Handsets Revenues Operating profit OP margin (%) Revenues Home entertainment Operating profit OP margin (%) Home appliances Revenues Operating profit OP margin (%) Air conditioning & Revenues energy solutions Operating profit OP margin (%) Internal & other Revenues Operating profit OP margin (%) Revenues Operating profit OP margin (%) Pretax profit Pretax margin (%) Net profit Net margin (%) Handset sales volume TV sales volume LCD TV sales volume 2Q 2011 3Q 4Q Annual 1QF 2012F 2QF 3QF 4QF Annual 12,315.2 148.6 1.2 12,059.0 141.5 1.2 23,689.1 769.5 3.2 11,272.4 501.0 4.4 4,658.1 130.9 2.8 2,995.3 -85.3 -2.8 54,930.1 1,464.7 2.7 1,324.7 2.4 1,141.0 2.1 70,008 38,533 28,173 YoY -18.8 -124.5 4.5 -19.2 -122.8 4.5 -2.9 90.5 1.9 1.9 53.5 2.0 0.3 62.0 1.7 0.0 19.2 -0.5 -5.0 229.1 2.4 774.0 2.4 TTB 2.5 -42.0 -1.6 12.6
(Wbn, %p, 000)

1Q12F QoQ Est. -14.9 2,360.8 104.8 1.5 3.4 0.1 -14.5 2,303.4 132.7 0.0 3.5 0.0 -16.2 5,083.8 76.3 114.6 2.1 2.3 -10.8 2,639.9 121.3 105.8 3.1 4.0 80.1 1,221.3 -244.2 43.6 3.2 3.6 -7.5 1,124.2 -85.1 -43.3 4.3 -3.9 -9.5 12,429.9 1,763.3 222.3 2.9 1.8 TTB 167.3 3.4 1.3 TTB 124.9 3.2 1.0 -19.8 14,175 -13.5 8,841 -13.9 6,147 Diff. 0.0 1,495.0 1.0 0.0 1.0 9.3 87.9 1.6 0.6 48.1 1.9 1.2 26.5 0.9 -38.4 -50.4 0.8 0.6 93.6 1.7 100.9 1.3 131.8 1.3 0.0 4.1 5.9
2,909.1 3,245.9 2,762.4 2,775.1 -100.5 -53.9 -138.8 12.0 -3.5 -1.7 -5.0 0.4 2,851.7 3,200.1 2,689.2 2,695.3 -101.1 -54.7 -139.9 9.9 -3.5 -1.7 -5.2 0.4 5,718.5 5,818.5 5,740.0 6,625.5 113.1 97.8 88.6 122.2 2.0 1.7 1.5 1.8 2,607.1 2,801.1 2,694.8 2,978.4 102.1 58.7 74.3 70.8 3.9 2.1 2.8 2.4 1,232.8 1,659.6 1,005.9 686.6 34.1 59.5 1.7 -38.3 2.8 3.6 0.2 -5.6 692.4 860.1 694.1 748.7 -18.0 -3.8 -57.7 -143.6 -2.6 -0.4 -8.3 -19.2 13,159.9 14,385.2 12,897.2 13,814.3 130.8 158.3 -31.9 23.1 1.0 1.1 -0.2 0.2 38.5 149.7 -530.9 -56.6 0.3 1.0 -4.1 -0.4 -30.1 97.8 -424.2 -113.2 -0.2 0.7 -3.3 -0.8 24,451 24,786 21,098 17,685 9,359 9,113 9,194 10,642 5,783 5,701 5,679 7,562
11,692.5 2,360.8 3,125.9 3,577.2 3,251.4 -281.2 24.6 25.9 54.6 43.5 -2.4 1.0 0.8 1.5 1.3 11,436.3 2,303.4 3,080.1 3,504.0 3,171.6 -285.8 23.0 24.6 52.6 41.2 -2.5 1.0 0.8 1.5 1.3 23,902.5 5,554.8 5,458.3 5,752.4 6,923.5 421.7 215.4 228.2 163.6 162.3 1.8 3.9 4.2 2.8 2.3 11,081.4 2,655.7 2,850.7 2,740.1 3,026.0 305.9 156.7 145.3 103.0 96.1 2.8 5.9 5.1 3.8 3.2 4,584.9 1,236.6 1,664.4 1,038.8 718.3 57.0 55.2 91.3 10.1 -25.7 1.2 4.5 5.5 1.0 -3.6 2,995.3 692.4 860.1 694.1 748.7 -223.1 -21.5 -21.0 -11.5 -31.3 -7.4 -3.1 -2.4 -1.7 -4.2 54,256.6 12,500.2 13,959.4 13,802.6 14,667.9 280.3 430.4 469.7 319.7 245.0 0.5 3.4 3.4 2.3 1.7 -399.3 336.2 432.1 304.6 251.9 -0.7 2.7 3.1 2.2 1.7 -469.6 289.6 372.1 262.3 216.9 -0.9 2.3 2.7 1.9 1.5 88,020 14,175 17,711 19,833 18,290 38,308 9,205 8,862 9,193 11,273 24,725 6,512 6,255 6,549 8,857
Note: Based on IFRS Source: Company data, KDB Daewoo Securities Research estimates
Table 4. Earnings forecast revisions

2011 Revenues Operating profit Pretax profit Net profit OP margin (%) Pretax margin (%) Net margin (%) Final exchange rate (US$/W) Avg. exchange rate (US$/W) Handset sales volume TV sales volume LCD TV sales volume 54,257 280 -399 -470 0.5 -0.7 -0.9 1,110.0 1,107.3 88.0 38.3 24.7 12F 54,631 1,083 875 653 2.0 1.6 1.2 1,050.0 1,085.0 70.0 37.6 27.2 Previous 13F 57,581 1,765 1,591 1,187 3.1 2.8 2.1 1,050.0 1,085.0 75.0 38.9 30.6 14F 63,360 2,237 2,062 1,539 3.5 3.3 2.4 1,050.0 1,085.0 83.6 39.5 31.6 12F 54,930 1,465 1,325 1,141 2.7 2.4 2.1 1,050.0 1,085.0 70.0 38.5 28.2 Revised 13F 58,962 2,130 2,088 1,699 3.6 3.5 2.9 1,050.0 1,085.0 75.0 41.1 32.9 14F 66,637 2,710 2,688 2,135 4.1 4.0 3.2 1,050.0 1,085.0 83.6 42.2 34.4
(Wbn, W, %, %p)
% Change 12F 13F 0.5 35.3 51.3 74.6 0.7 0.8 0.9 0.0 0.0 0.0 2.6 3.5 2.4 20.7 31.3 43.1 0.5 0.8 0.8 0.0 0.0 0.0 5.9 7.5 14F 5.2 21.1 30.4 38.7 0.5 0.8 0.8 0.0 0.0 0.0 7.0 8.8
Note: Based on IFRS Source: Company data, KDB Daewoo Securities Research estimates
16
April 17, 2012
LG Electronics (066570 KS/Buy/TP: W123,000)

Comprehensive Income Statement (Summarized)
(Wbn) Revenues Cost of Revenues Gross Profit SG&A Expenses Operating Profit (Adj) Operating Profit Non-Operating Profit Net Financial Income Net Gain from Inv in Associates Pretax Profit Income Tax Profit from Continuing Operations Profit from Discontinued Operations Net Profit Controlling Interests Non-Controlling Interests Total Comprehensive Profit Controlling Interests Non-Controlling Interests EBITDA FCF (Free Cash Flow) EBITDA Margin (%) Operating Profit Margin (%) Net Profit Margin (%) 12/11 54,257 42,058 12,199 11,856 343 280 -680 228 -331 -399 34 -433 0 -433 -470 37 -642 -692 50 1,546 366 2.9 0.5 -0.9 12/12F 54,930 41,468 13,462 11,997 1,465 1,465 -140 250 66 1,325 133 1,192 0 1,192 1,141 51 1,088 1,024 65 2,524 197 4.6 2.7 2.1 12/13F 58,962 43,964 14,997 12,867 2,130 2,130 -42 243 157 2,088 313 1,775 0 1,775 1,699 76 1,671 1,581 90 3,358 805 5.7 3.6 2.9 12/14F 66,637 49,395 17,243 14,533 2,710 2,710 -22 237 170 2,688 457 2,231 0 2,231 2,135 96 2,127 2,018 109 4,103 948 6.2 4.1 3.2
Statement of Financial Condition (Summarized)

(Wbn) Current Assets Cash and Cash Equivalents AR & Other Receivables Inventories Other Current Assets Non-Current Assets Investments in Associates Property, Plant and Equipment Intangible Assets Total Assets Current Liabilities AP & Other Payables Short-Term Financial Liabilities Other Current Liabilities Non-Current Liabilities Long-Term Financial Liabilities Other Non-Current Liabilities Total Liabilities Controlling Interests Capital Stock Capital Surplus Retained Earnings Non-Controlling Interests Stockholders' Equity 12/11 15,783 2,346 7,065 4,947 1,250 16,875 5,603 7,290 1,036 32,659 14,215 7,360 3,192 3,663 5,296 4,258 615 19,510 12,894 904 2,862 9,500 254 13,148 12/12F 17,494 3,395 7,502 5,095 1,327 18,117 5,669 8,387 1,038 35,612 14,896 7,815 3,192 3,889 5,499 4,258 713 20,395 14,898 999 3,747 10,641 319 15,217 12/13F 19,067 3,980 7,942 5,495 1,475 19,670 5,825 9,631 1,040 38,737 16,204 8,688 3,192 4,324 5,736 4,258 845 21,940 16,389 999 3,747 12,248 408 16,797 12/14F 21,797 4,622 9,040 6,249 1,711 21,251 5,996 10,802 1,041 43,048 18,292 10,082 3,192 5,017 6,015 4,258 1,018 24,306 18,225 999 3,747 14,202 518 18,742
Cash Flows (Summarized)

(Wbn) Cash Flows from Op Activities Net Profit Non-Cash Income and Expense Depreciation Amortization Others Chg in Working Capital Chg in AR & Other Receivables Chg in Inventories Chg in AP & Other Payables Income Tax Paid Cash Flows from Inv Activities Chg in PP&E Chg in Intangible Assets Chg in Financial Assets Others Cash Flows from Fin Activities Chg in Financial Liabilities Chg in Equity Dividends Paid Others Increase (Decrease) in Cash Beginning Balance Ending Balance 12/11 1,881 -433 3,733 896 306 -1,843 -1,060 230 769 -345 -359 -2,293 -1,752 -304 -131 -106 850 228 976 -43 -311 401 1,944 2,346 12/12F 2,475 1,192 1,332 758 301 45 84 -437 -148 455 -133 -2,050 -1,854 -304 0 108 625 0 980 0 -355 1,050 2,346 3,395 12/13F 3,391 1,775 1,583 926 302 45 346 -440 -400 874 -313 -2,360 -2,171 -304 0 114 -446 0 0 -91 -355 585 3,395 3,980 12/14F 3,623 2,231 1,872 1,091 303 45 -23 -1,098 -754 1,394 -457 -2,444 -2,262 -304 0 121 -537 0 0 -182 -355 642 3,980 4,622
Forecasts/Valuations (Summarized)
P/E (x) P/CF (x) P/B (x) EV/EBITDA (x) EPS (W) CFPS (W) BPS (W) DPS (W) Payout ratio (%) Dividend Yield (%) Revenue Growth (%) EBITDA Growth (%) Operating Profit Growth (%) EPS Growth (%) Accounts Receivable Turnover (x) Inventory Turnover (x) Accounts Payable Turnover (x) ROA (%) ROE (%) ROIC (%) Liability to Equity Ratio (%) Current Ratio (%) Net Debt to Equity Ratio (%) Interest Coverage Ratio (x) 12/11 17.0 1.1 11.8 -2,809 4,383 66,396 200 0.0 0.3 -2.7 12.2 58.8 TTR 7.9 10.0 9.6 -1.3 -3.7 3.1 148.4 111.0 37.5 0.9 12/12F 12.3 6.4 1.1 7.1 6,310 12,167 70,100 500 8.0 0.6 1.2 63.3 422.6 TTB 7.9 10.9 9.7 3.5 8.2 11.2 134.0 117.5 25.5 4.1 12/13F 8.3 4.8 1.0 5.2 9,394 16,185 77,550 1,000 10.7 1.3 7.3 33.1 45.4 48.9 8.0 11.1 9.6 4.8 10.9 14.1 130.6 117.7 19.6 6.0 12/14F 6.6 4.0 0.9 4.2 11,808 19,514 86,733 1,500 12.7 1.9 13.0 22.2 27.2 25.7 8.2 11.4 9.5 5.5 12.3 16.0 129.7 119.2 14.2 7.6
Source: Company data, KDB Daewoo Securities Research estimates
17
April 17, 2012
Samsung Electro-Mechanics (009150 KS)

Buy (Maintain)
Target Price (12M, W) 125,000 Share Price (04/13/12, W) 100,500 Expected Return (%) 24.4 EPS Growth (12F, %) 37.2 Market EPS Growth (12F, %) 19.2 P/E (12F, x) 16.3 Market P/E (12F, x) 9.8 KOSPI 2,008.91 Market Cap (Wbn) 7,507 Shares Outstanding (mn) 78 Avg Trading Volume (60D, '000) 635 Avg Trading Value (60D, Wbn) 61 Dividend Yield (12F, %) 0.8 Free Float (%) 76.2 52-Week Low (W) 59,200 52-Week High (W) 121,000 Beta (12M, Daily Rate of Return) 1.1 Price Return Volatility (12M Daily, %, SD) 2.8 Foreign Ownership (%) 18.3 Major Shareholder(s) SEC et al. (23.69%) Capital Research and Management Company (CRMC) et al. (11.46%) Korea Investment Management (5.8%) Price Performance (%) 1M 6M 12M Absolute 2.1 21.8 -14.5 Relative 2.9 11.6 -9.1
Stable earnings are attractive

Maintain Buy and a target price of W125,000 1Q12 Preview: Solid earnings despite slow season; OP estimated at W95.4bn Historic-high operating profit (excluding the LED business) expected in 2013
We maintain our Buy call on Samsung Electro-Mechanics (SEMCO) and our target price of W125,000. Our target price is equivalent to a 2012F P/B of 2.6x (a 20% premium to the companys 5-year average P/B of 2.2x), based on a BPS of W47,596 under consolidated K-IFRS. A P/B of 2.6x does not seem undemanding. SEMCOs P/B reached 4.0x in 2010, driven by expectations for its LED business, but the unit merged into Samsung Electronics (SEC) as of April 1st. Thus, we believe it is time for investors to start focusing on the companys future without an LED business. 1) SEMCO has been delivering healthy earnings, aided by SECs robust smartphone sales. We expect a record operating profit (excluding the LED business) in 2013. 2) FC-CSP and FC-BGA will likely become the companys new growth drivers. 3) The appreciation of SECs share price (269,897 shares received in return for the sale of the LED unit; valued at W57.2bn) should boost SEMCOs shares. We estimate SEMCOs 1Q operating profit at W95.4bn, which seems healthy given that the first quarter is typically a slow season. SEMCOs substrate business (ACI division) is showing the quickest recovery among the companys business units. SECs robust smartphone sales are positively affecting the HDI substrate unit. And the FC-CSP unit is displaying topline growth alongside smartphone market growth. SEMCO became the global FC-CSP market share leader in 2010 and has steadily improved its position since then. The FC-BGA unit is also picking up, finding opportunities in the converging PC and handset markets (e.g. smartphones, tablet PCs). While SEMCO occupies only 8% of the W5tr FC-BGA market, we think the unit will become a new growth driver, following MLCC. The camera module unit (OMS division) should post solid results, also aided by SECs robust smartphone sales. The multi-layer ceramic chip capacitor (MLCC) unit (a part of the LCR division) is also projected to improve on the back of smartphone market expansion and the TV market recovery. Growing downward pricing pressure and potential yen depreciation may have negative impacts. However, given that only Murata (Japan) and SEMCO have achieved economies of scale, the MLCC business should be able to gradually pick up.
Share price 110 100 90 80 70 60 50 40 4/11 8/11 12/11 4/12 KOSPI

FY 12/10 12/11 12/12F 12/13F 12/14F Revenues OP OP Margin NP EPS EBITDA FCF ROE P/E (Wbn) (Wbn) (%) (Wbn) (Won) (Wbn) (Wbn) (%) (x) 5,651 498 8.8 555 7,148 985 -436 18.3 17.4 6,032 321 5.3 350 4,504 942 -504 10.0 17.3 6,743 476 7.1 480 6,180 981 -211 13.2 16.3 7,277 576 7.9 495 6,384 1,143 -72 12.9 15.7 7,818 625 8.0 523 6,735 1,328 -367 12.9 14.9 P/B EV/EBITDA (x) (x) 2.8 10.8 1.8 7.8 2.1 9.5 2.0 8.3 1.9 7.5
18
April 17, 2012

(Wbn) 2,500 (%) 20
2,000
OMS (L) CDS (L) ACI (L) LCR (L) OP margin (R)
15
1,500
10
1,000
500
0 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12F
-5

2011 1Q 2Q 3Q 4Q Annual 1QF Revenues ACI 351.2 376.6 414.8 459.4 1,602.0 428.7 LCR 429.6 433.1 427.5 399.0 1,689.2 392.4 CDS 440.0 381.6 391.7 426.4 1,639.7 397.2 OMS 177.3 209.0 337.1 378.8 1,102.2 346.7 Total 1,398.1 1,400.3 1,571.1 1,663.6 6,033.1 1,565.1 Operating profit ACI 16.5 18.5 21.6 44.6 101.1 37.5 LCR 64.0 58.5 41.5 23.5 187.5 34.8 CDS 4.7 3.8 9.3 11.2 29.0 8.5 OMS -12.4 -12.2 8.2 19.7 3.3 14.6 Total 72.8 68.5 80.6 99.0 320.9 95.4 OP margin ACI 4.7 4.9 5.2 9.7 6.3 8.8 LCR 14.9 13.5 9.7 5.9 11.1 8.9 CDS 1.1 1.0 2.4 2.6 1.8 2.1 OMS -7.0 -5.8 2.4 5.2 0.3 4.2 Total 5.2 4.9 5.1 6.0 5.3 6.1 Pre-tax profit 90.1 73.5 51.4 149.0 364.0 103.1 Net profit 85.6 54.1 64.9 144.9 349.5 77.1 Pre-tax margin 6.4 5.2 3.3 9.0 6.0 6.6 Net margin 6.1 3.9 4.1 8.7 5.8 4.9 Note: Based on IFRS / Source: Samsung Electro-Mechanics, KDB Daewoo Securities Research 2QF 455.1 408.3 404.3 378.0 1,645.6 40.3 45.1 9.3 14.7 109.4 8.9 11.0 2.3 3.9 6.6 148.2 110.9 9.0 6.7 2012F 3QF 483.1 442.0 417.9 412.4 1,755.5 49.3 57.8 15.0 20.6 142.7 10.2 13.1 3.6 5.0 8.1 181.6 135.9 10.3 7.7 4QF 487.2 425.6 432.2 431.5 1,776.6 40.3 53.1 17.0 18.0 128.4 8.3 12.5 3.9 4.2 7.2 108.2 155.7 6.1 8.8 Annual 1,854.1 1,668.4 1,651.7 1,568.6 6,742.8 167.4 190.9 49.7 67.9 475.9 9.0 11.4 3.0 4.3 7.1 541.2 479.6 8.0 7.1
(Wbn, W, %p)
1Q12F 1Q 22.1 -8.6 -9.7 95.5 11.9 127.3 -45.6 80.6 TTB 31.0 4.1 -6.0 1.1 11.2 0.9 14.4 -9.8 0.1 -1.2 2Q -6.7 -1.6 -6.8 -8.5 -5.9 -15.8 48.0 -24.3 -26.1 -3.6 -1.0 3.0 -0.5 -1.0 0.1 -30.8 -46.7 -2.4 -3.8
19
April 17, 2012
Samsung Electro-Mechanics (009150 KS/Buy/TP: W125,000)

(Wbn) Revenues Cost of Revenues Gross Profit SG&A Expenses Operating Profit (Adj) Operating Profit Non-Operating Profit Net Financial Income Net Gain from Inv in Associates Pretax Profit Income Tax Profit from Continuing Operations Profit from Discontinued Operations Net Profit Controlling Interests Non-Controlling Interests Total Comprehensive Profit Controlling Interests Non-Controlling Interests EBITDA FCF (Free Cash Flow) EBITDA Margin (%) Operating Profit Margin (%) Net Profit Margin (%) 12/11 6,032 5,050 981 704 278 321 43 35 -1 364 56 309 84 392 350 43 155 108 47 942 -504 15.6 5.3 5.8 12/12F 6,743 5,348 1,395 919 476 476 65 24 1 541 87 455 84 539 480 59 301 238 63 981 -211 14.6 7.1 7.1 12/13F 7,277 5,709 1,568 992 576 576 -7 26 1 569 97 472 84 556 495 61 319 254 65 1,143 -72 15.7 7.9 6.8 12/14F 7,818 6,128 1,691 1,066 625 625 -12 31 1 613 110 503 84 587 523 64 350 281 68 1,328 -367 17.0 8.0 6.7

(Wbn) Current Assets Cash and Cash Equivalents AR & Other Receivables Inventories Other Current Assets Non-Current Assets Investments in Associates Property, Plant and Equipment Intangible Assets Total Assets Current Liabilities AP & Other Payables Short-Term Financial Liabilities Other Current Liabilities Non-Current Liabilities Long-Term Financial Liabilities Other Non-Current Liabilities Total Liabilities Controlling Interests Capital Stock Capital Surplus Retained Earnings Non-Controlling Interests Stockholders' Equity 12/11 3,697 526 882 761 1,502 3,632 41 2,278 56 7,329 2,711 605 1,096 1,011 742 495 171 3,453 3,507 388 1,046 1,529 368 3,876 12/12F 5,240 888 1,591 1,146 1,588 3,844 42 2,437 52 9,084 3,403 1,021 1,096 1,287 1,504 975 406 4,907 3,746 388 1,046 2,009 431 4,177 12/13F 5,533 972 1,707 1,229 1,598 4,295 43 2,884 49 9,828 3,510 1,095 1,096 1,320 1,884 1,091 623 5,394 3,938 388 1,046 2,442 496 4,434 12/14F 5,852 1,057 1,836 1,322 1,610 5,063 43 3,647 46 10,915 3,630 1,178 1,096 1,357 2,579 1,522 840 6,210 4,141 388 1,046 2,887 564 4,705

(Wbn) Cash Flows from Op Activities Net Profit Non-Cash Income and Expense Depreciation Amortization Others Chg in Working Capital Chg in AR & Other Receivables Chg in Inventories Chg in AP & Other Payables Income Tax Paid Cash Flows from Inv Activities Chg in PP&E Chg in Intangible Assets Chg in Financial Assets Others Cash Flows from Fin Activities Chg in Financial Liabilities Chg in Equity Dividends Paid Others Increase (Decrease) in Cash Beginning Balance Ending Balance 12/11 459 392 842 648 15 -102 -691 -272 -263 72 -84 -959 -1,070 -6 142 -25 315 471 4 -88 -72 -170 695 526 12/12F 500 539 527 496 10 75 -479 -710 -385 416 -87 -579 -585 -6 0 12 441 0 0 0 -39 362 526 888 12/13F 1,071 556 670 558 9 5 -59 -115 -83 74 -97 -991 -1,005 -6 0 20 4 0 0 -62 -50 84 888 972 12/14F 1,230 587 826 695 8 5 -72 -130 -93 83 -110 -1,446 -1,458 -6 0 18 301 0 0 -78 -53 85 972 1,057
P/E (x) P/CF (x) P/B (x) EV/EBITDA (x) EPS (W) CFPS (W) BPS (W) DPS (W) Payout ratio (%) Dividend Yield (%) Revenue Growth (%) EBITDA Growth (%) Operating Profit Growth (%) EPS Growth (%) Accounts Receivable Turnover (x) Inventory Turnover (x) Accounts Payable Turnover (x) ROA (%) ROE (%) ROIC (%) Liability to Equity Ratio (%) Current Ratio (%) Net Debt to Equity Ratio (%) Interest Coverage Ratio (x) 12/11 17.3 6.0 1.8 7.8 4,504 13,055 44,474 750 0.0 1.0 6.7 -4.4 -35.6 -37.0 7.7 8.0 15.6 5.5 10.0 7.1 89.1 136.4 26.8 7.0 12/12F 16.3 7.9 2.1 9.5 6,180 12,695 47,596 800 13.0 0.8 11.8 4.2 48.3 37.2 5.9 7.1 15.1 6.6 13.2 11.1 117.5 154.0 27.7 13.4 12/13F 15.7 7.3 2.0 8.3 6,384 13,692 50,112 1,000 15.7 1.0 7.9 16.4 21.0 3.3 4.8 6.1 14.1 5.9 12.9 11.3 121.7 157.6 26.8 12.5 12/14F 14.9 6.4 1.9 7.5 6,735 15,802 52,771 1,300 19.3 1.3 7.4 16.2 8.5 5.5 4.8 6.1 14.1 5.7 12.9 10.4 132.0 161.2 32.6 12.8
20
April 17, 2012
Samsung Techwin (012450 KS)

Buy (Maintain)
Target Price (12M, W) 91,000 Share Price (04/13/12, W) 64,600 Expected Return (%) 40.9 EPS Growth (12F, %) -21.4 Market EPS Growth (12F, %) 19.2 P/E (12F, x) 19.0 Market P/E (12F, x) 9.8 KOSPI 2,008.91 Market Cap (Wbn) 3,432 Shares Outstanding (mn) 53 Avg Trading Volume (60D, '000) 627 Avg Trading Value (60D, Wbn) 39 Dividend Yield (12F, %) 0.9 Free Float (%) 67.2 52-Week Low (W) 48,900 52-Week High (W) 95,900 Beta (12M, Daily Rate of Return) 1.2 Price Return Volatility (12M Daily, %, SD) 2.7 Foreign Ownership (%) 14.3 Major Shareholder(s) SEC et al. (32.76%) Korea Investment Management et al. (9.29%) Price Performance (%) Absolute Relative
Margins normalizing; Expectations for new businesses growing

Maintain Buy and a target price of W91,000 1Q12 Preview: Operating profit estimated at W30.8bn New compressor and graphene businesses
We maintain our Buy call on Samsung Techwin and our 12-month target price of W91,000. We arrived at our target price by applying a P/B of 2.8x (20% discount to the companys five-year average P/B of 3.5x; unchanged) to our 2012F BPS of W32,772 (under consolidated K-IFRS). The target price offers an upside of 40.9% from the current price. We project the companys 1Q12 revenues to come in at W632.2bn (down 22.8% QoQ and down 1.7% YoY). We estimate the companys 1Q12 operating profit at W30.8bn (swing to positive QoQ and up 1.7% YoY). We attribute the stronger-than-expected 1Q results to: 1) the companys 4Q inventory drawdowns and 2) margin improvements at the semiconductor component and semiconductor equipment divisions. Both of these divisions are likely to reach break-even points after incurring double-digit losses in 4Q11. It should be noted that Samsung Techwins margins appear to have normalized in 1Q. Margins at the security camera, defense, and power systems units are on the road to recovery. The companys 2011 earnings were sluggish due to massive upheaval (e.g., the arrival of a new CEO). However, with restructuring nearing completion, we believe that Samsung Techwin is turning around. Our optimism for Samsung Techwin shares is premised on our growing expectations for the companys new businesses (as well as near-term earnings improvements). The company recently took orders for 17 large compressors (for use in oil and gas production) from Saudi Aramco, the worlds largest oil producer. Given that the worlds compressor market is worth a whopping W23tr, this development appears meaningful. The outlook for Samsung Techwins graphene business is rosy. The Ministry of Knowledge Economy projects that the global market for graphene, which can be used to make flexible displays, semiconductor parts, and auto/aircraft parts, will surge to US$30bn in 2015 and US$600bn in 2030. However, it should take an extended period of time for the business to be actually launched. In addition, it is not certain which company in the Samsung Group will take charge of the business. However, in its peer group, Samsung Techwin is making the quickest progress in the segment (e.g., construction of a test production pilot line). Earnings & Valuation Metrics
FY 12/10 12/11 12/12F 12/13F 12/14F Revenues OP OP Margin NP EPS EBITDA FCF ROE P/E (Wbn) (Wbn) (%) (Wbn) (Won) (Wbn) (Wbn) (%) (x) 2,924 228 7.8 233 4,394 310 -11 19.9 23.6 2,948 251 8.5 230 4,319 188 41 15.9 12.3 3,060 161 5.3 180 3,395 241 70 10.2 19.0 3,525 208 5.9 225 4,239 291 92 10.8 15.2 4,009 260 6.5 279 5,256 347 102 11.5 12.3 P/B EV/EBITDA (x) (x) 5.3 20.4 2.0 19.0 2.0 17.3 1.7 14.2 1.4 11.8
1M -6.0 -5.2
6M 10.2 0.1
12M -21.6 -16.3
Share price 140 120 100 80 60 40 4/11 8/11 12/11 4/12 KOSPI
21
April 17, 2012

1Q SIS Digital solutions IMS Power systems Defense program Total SIS Digital solutions IMS Power systems Defense program Total SIS Digital solutions IMS Power systems Defense program Total 163.7 83.9 69.2 173.2 153.4 643.4 15.2 -11.7 4.7 11.5 10.4 30.2 9.3 -13.9 6.8 6.7 6.8 4.7 45.3 43.2 7.0 6.7 2Q 171.1 98.4 89.0 216.2 216.7 791.5 15.6 -8.8 9.0 -7.6 24.3 188.4 9.1 -8.9 10.1 -3.5 11.2 23.8 166.0 130.6 21.0 16.5 2011 3Q 170.1 83.0 49.2 174.9 216.3 693.5 15.5 -8.0 -0.8 7.9 20.1 34.8 9.1 -9.6 -1.6 4.5 9.3 5.0 39.0 41.0 5.6 5.9 4Q 176.4 71.9 42.0 241.5 287.4 819.2 5.5 -32.4 -10.1 11.8 22.4 -2.7 3.1 -45.0 -24.0 4.9 7.8 -0.3 -2.6 14.3 -0.3 1.8 FY 681.3 337.2 249.4 805.8 873.8 2,947.6 51.7 -60.7 2.8 23.7 77.2 250.7 7.6 -18.0 1.1 2.9 8.8 8.5 247.7 229.1 8.4 7.8 1QF 167.6 74.3 50.4 164.5 175.3 632.2 13.2 -1.5 -1.0 8.6 11.4 30.8 7.9 -2.0 -2.0 5.2 6.5 4.9 41.0 37.8 6.5 6.0 2QF 184.3 75.5 60.5 227.0 184.1 731.4 13.8 -0.8 -0.6 11.4 12.9 36.7 7.5 -1.0 -1.0 5.0 7.0 5.0 46.2 42.5 6.3 5.8 2012F 3QF 212.0 78.4 75.6 244.9 198.5 809.3 21.2 0.0 0.8 12.1 15.9 50.0 10.0 0.0 1.0 5.0 8.0 6.2 62.0 57.2 7.7 7.1 4QF 250.1 81.6 90.7 265.7 198.5 886.6 17.5 0.8 1.8 13.7 10.1 44.0 7.0 1.0 2.0 5.2 5.1 5.0 46.5 42.9 5.2 4.8 FY 814.1 309.8 277.2 902.1 756.3 3,059.5 65.8 -1.4 1.0 45.9 50.3 161.4 8.1 -0.5 0.3 5.1 6.6 5.3 195.7 180.4 6.4 5.9
(Wbn, %)
1Q12F YoY QoQ 2.4 -11.4 -27.2 -5.0 14.3 -1.7 -13.0 RR TTR -25.3 9.2 1.7 -1.4 11.9 -8.8 -1.4 -0.3 0.2 -9.5 -12.5 -0.6 -0.7 -5.0 3.4 20.0 -31.9 -39.0 -22.8 142.1 RR RR -27.0 -49.2 TTB 4.8 43.0 22.0 0.4 -1.3 5.2 TTB 163.4 6.8 4.2
Revenues
Operating profit
OP margin (%, %p)
Pretax profit Net profit Pretax profit margin Net profit margin
Note 1: SIS = Security & Image Solution, DIS = Digital & IT Solution, IMS = Intelligent Machinery & Solution * IT Solution discontinued its camera module business on June 30th Note 2: 2Q Operating profit included W156bn related to the companys Korea Aerospace Industries (KAI) shares (W64.7bn on the sale of some shares; a valuation gain of W91.3bn on the remaining stake). Source: Company data, KDB Daewoo Securities Research estimates
22
April 17, 2012
Samsung Techwin (012450 KS/Buy/TP: W91,000)

(Wbn) Revenues Cost of Revenues Gross Profit SG&A Expenses Operating Profit (Adj) Operating Profit Non-Operating Profit Net Financial Income Net Gain from Inv in Associates Pretax Profit Income Tax Profit from Continuing Operations Profit from Discontinued Operations Net Profit Controlling Interests Non-Controlling Interests Total Comprehensive Profit Controlling Interests Non-Controlling Interests EBITDA FCF (Free Cash Flow) EBITDA Margin (%) Operating Profit Margin (%) Net Profit Margin (%) 12/11 2,948 2,403 545 456 88 251 -3 34 32 248 17 231 -1 230 230 1 399 398 1 188 41 6.4 8.5 7.8 12/12F 3,060 2,467 593 431 161 161 34 32 47 196 15 181 0 181 180 0 309 308 1 241 70 7.9 5.3 5.9 12/13F 3,525 2,829 696 488 208 208 39 34 53 246 21 226 0 226 225 1 354 353 1 291 92 8.3 5.9 6.4 12/14F 4,009 3,194 815 555 260 260 49 37 66 308 29 280 0 280 279 1 408 407 1 347 102 8.7 6.5 7.0

(Wbn) Current Assets Cash and Cash Equivalents AR & Other Receivables Inventories Other Current Assets Non-Current Assets Investments in Associates Property, Plant and Equipment Intangible Assets Total Assets Current Liabilities AP & Other Payables Short-Term Financial Liabilities Other Current Liabilities Non-Current Liabilities Long-Term Financial Liabilities Other Non-Current Liabilities Total Liabilities Controlling Interests Capital Stock Capital Surplus Retained Earnings Non-Controlling Interests Stockholders' Equity 12/11 1,244 188 547 407 102 1,949 547 683 259 3,194 963 223 330 410 605 457 25 1,568 1,621 266 189 986 4 1,625 12/12F 1,411 268 592 441 111 2,188 594 740 245 3,599 1,015 242 330 444 650 490 22 1,665 1,930 266 189 1,167 4 1,934 12/13F 1,668 406 654 486 122 2,439 646 801 233 4,107 1,086 267 330 490 765 593 20 1,851 2,251 266 189 1,360 5 2,256 12/14F 1,992 540 752 559 140 2,710 712 867 221 4,701 1,200 307 330 563 875 691 18 2,075 2,621 266 189 1,602 6 2,627

(Wbn) Cash Flows from Op Activities Net Profit Non-Cash Income and Expense Depreciation Amortization Others Chg in Working Capital Chg in AR & Other Receivables Chg in Inventories Chg in AP & Other Payables Income Tax Paid Cash Flows from Inv Activities Chg in PP&E Chg in Intangible Assets Chg in Financial Assets Others Cash Flows from Fin Activities Chg in Financial Liabilities Chg in Equity Dividends Paid Others Increase (Decrease) in Cash Beginning Balance Ending Balance 12/11 96 230 11 82 18 106 -109 -103 57 -71 -35 60 -48 -3 -15 126 -81 -5 0 -43 -33 76 112 188 12/12F 203 181 60 62 17 16 -23 -45 -34 18 -15 -119 -119 -3 0 3 -5 0 0 0 -37 80 188 268 12/13F 234 226 65 67 16 16 -36 -61 -46 25 -21 -128 -128 -3 0 4 32 0 0 -32 -39 139 268 406 12/14F 253 280 68 73 15 16 -66 -98 -73 40 -29 -137 -139 -3 0 5 18 0 0 -37 -44 134 406 540
P/E (x) P/CF (x) P/B (x) EV/EBITDA (x) EPS (W) CFPS (W) BPS (W) DPS (W) Payout ratio (%) Dividend Yield (%) Revenue Growth (%) EBITDA Growth (%) Operating Profit Growth (%) EPS Growth (%) Accounts Receivable Turnover (x) Inventory Turnover (x) Accounts Payable Turnover (x) ROA (%) ROE (%) ROIC (%) Liability to Equity Ratio (%) Current Ratio (%) Net Debt to Equity Ratio (%) Interest Coverage Ratio (x) 12/11 12.3 8.6 2.0 19.0 4,319 6,200 26,708 500 0.0 0.9 0.8 -39.3 10.0 -1.7 6.1 6.9 14.0 7.6 15.9 6.0 96.5 129.2 36.9 6.9 12/12F 19.0 13.2 2.0 17.3 3,395 4,884 32,772 600 17.7 0.9 3.8 27.8 -35.6 -21.4 5.6 7.2 15.6 5.3 10.2 10.5 86.1 139.0 28.5 4.6 12/13F 15.2 11.1 1.7 14.2 4,239 5,802 39,058 700 16.5 1.1 15.2 20.9 28.7 24.8 5.9 7.6 16.5 5.9 10.8 12.6 82.1 153.6 22.9 5.6 12/14F 12.3 9.4 1.4 11.8 5,256 6,904 46,240 800 15.2 1.2 13.7 19.4 25.0 24.0 6.0 7.7 16.6 6.4 11.5 14.5 79.0 166.0 18.3 6.2
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April 17, 2012
LS (006260 KS)
Buy (Maintain)
Target Price (12M, W) 110,000 Share Price (04/13/12, W) 75,400 Expected Return (%) 45.9 EPS Growth (12F, %) 138.5 Market EPS Growth (12F, %) 19.2 P/E (12F, x) 8.7 Market P/E (12F, x) 9.8 KOSPI 2,008.91 Market Cap (Wbn) 2,428 Shares Outstanding (mn) 32 Avg Trading Volume (60D, '000) 133 Avg Trading Value (60D, Wbn) 11 Dividend Yield (12F, %) 1.8 Free Float (%) 52.8 52-Week Low (W) 66,100 52-Week High (W) 128,500 Beta (12M, Daily Rate of Return) 1.0 Price Return Volatility (12M Daily, %, SD) 2.4 Foreign Ownership (%) 14.9 Major Shareholder(s) Zayul Koo et al. (33.43%) LS Treasury Stock et al. (13.77%) NPS (9.28%) Price Performance (%) 1M 6M 12M Absolute -11.6 0.4 -32.4 Relative -10.8 -9.8 -27.1
LS Cable & Systems long-awaited recovery begins

Maintain Buy with a target price of W110,000 1Q12 Preview: Revising up operating profit estimate by 3.2% to W135.6bn Recovery of LS Cable & System provides a major tailwind
We maintain our Buy call on LS with a target price of W110,000, which was derived by applying a P/E of 12.9x (the average of the companys pre-holding 2009 P/E and post-holding 2010 P/E) to our consolidated K-IFRS 2012F EPS of W8,535. Of note, the average 2012F P/E of global cable companies is 12.4x. Our target price implies an upside of 45.9%. We forecast 1Q consolidated IFRS revenues of W3.0bn (down 3.5% YoY; up 1.8% QoQ). We revised up our 1Q operating profit estimate by 3.2% to W135.6bn (down 13.8% YoY; down 14.9% QoQ) from W131.4bn. Going forward, we expect quarterly operating profit to remain stable at around W150bn. The key strength of LS lies in its healthy subsidiaries, which tend to pick up the slack for one another. In particular, LS-Nikko Copper is expected to show strong earnings growth in 2012 thanks to rising by-product prices (e.g., sulfuric acid, gold, silver, and rare metals). In particular, sulfuric acid prices soared 136.4% in 2011. Also, LS Mtrons machine sales (e.g., tractors and auto-use injection molding machines) remain robust, and connector and copper foil sales are likely to recover. Most importantly, the companys earnings seem dependent on the recovery of LS Cable & System (a key subsidiary). In 2011, the subsidiary was hurt by declines in high-margin orders (in the wake of the political turmoil in the Middle East) and oneoff expenses (penalties and losses from a submarine cable accident). The cable accident alone added W70.7bn to expenses as of 4Q11. However, in 2012, LS Cable & Systems earnings are likely to recover on normalizing Middle Eastern orders (orders from Kuwait, Saudi Arabia and Qatar have been gaining momentum) and the projected earnings pickup at its subsidiaries (US-based SPSX has been displaying stronger growth at its communications cable unit). Still, it appears as though a 1Q earnings recovery will be needed to dispel the concerns surrounding the company. We advise investors to keep tabs on the companys 1Q performance.
Share price 120 110 100 90 80 70 60 50 40 4/11 8/11 12/11 4/12 KOSPI

FY 12/10 12/11 12/12F 12/13F 12/14F Revenues OP OP Margin NP EPS EBITDA FCF ROE P/E (Wbn) (Wbn) (%) (Wbn) (Won) (Wbn) (Wbn) (%) (x) 16,980 600 3.5 251 7,808 988 -874 14.5 13.6 12,352 338 2.7 118 3,653 538 1,120 5.7 20.8 12,867 572 4.4 281 8,715 812 451 11.7 8.7 14,104 639 4.5 328 10,173 882 246 12.1 7.4 15,813 731 4.6 391 12,128 978 226 12.9 6.2 P/B EV/EBITDA (x) (x) 2.7 9.5 1.5 13.6 1.3 8.6 1.1 7.9 0.9 7.2
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April 17, 2012

1Q Revenues Operating profit Pretax profit Net profit EPS OP margin Pretax margin Net margin 3,116.5 157.3 94.2 63.7 1,980 5.0 3.0 2.0 2011 2Q 3,279.7 89.7 29.1 75.8 2,353 2.7 0.9 2.3 3Q 3,033.9 -68.4 -122.7 -95.2 -2,956 -2.3 -4.0 -3.1 4Q 2,955.2 159.5 106.8 73.3 2,275 5.4 3.6 2.5 1QF 3,008.0 135.6 85.2 64.4 2,001 4.5 2.8 2.1 2012F 2QF 3,202.7 145.3 93.1 70.4 2,186 4.5 2.9 2.2 3QF 4QF 3,336.1 160.0 109.1 82.5 2,562 4.8 3.3 2.5 YoY -3.5 -13.8 -9.6 1.1 1.1 -0.5 -0.2 0.1
(Wbn, %)
1Q12F QoQ Previous Change 1.8 -14.9 -20.2 -12.1 -12.1 -0.9 -0.8 -0.3 3,008.0 131.4 77.9 58.9 1,829 4.4 2.6 2.0 0.0 3.2 9.4 9.4 9.4 0.1 0.2 0.2
3,319.9 130.5 83.7 63.3 1,966 3.9 2.5 1.9

2011 2012F Previous 2013F 2014F 16,297 661 462 333 10,339 4.1 2.8 2.0 2012F 12,867 571 371 281 8,535 4.4 2.9 2.2 Revised 2013F 14,104 639 434 328 10,030 4.5 3.1 2.3 2014F 15,813 731 517 391 11,974 4.6 3.3 2.5 2012F -3.7 10.0 10.6 9.2 6.9 0.6 0.4 0.3
(Wbn, W, %, %p)
% Diff. 2013F -3.6 9.8 11.0 12.2 10.7 0.6 0.4 0.3 2014F -3.0 10.5 12.1 17.3 15.8 0.6 0.4 0.4
Revenues 12,385 13,359 14,636 Operating profit 337 520 582 Pretax profit 99 335 390 Net profit 116 257 292 EPS 3,606 7,983 9,063 OP margin 2.7 3.9 4.0 Pretax margin 0.8 2.5 2.7 Net margin 0.9 1.9 2.0 Source: Company data, KDB Daewoo Securities Research
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April 17, 2012
LS (006260 KS/Buy/TP: W110,000)

(Wbn) Revenues Cost of Revenues Gross Profit SG&A Expenses Operating Profit (Adj) Operating Profit Non-Operating Profit Net Financial Income Net Gain from Inv in Associates Pretax Profit Income Tax Profit from Continuing Operations Profit from Discontinued Operations Net Profit Controlling Interests Non-Controlling Interests Total Comprehensive Profit Controlling Interests Non-Controlling Interests EBITDA FCF (Free Cash Flow) EBITDA Margin (%) Operating Profit Margin (%) Net Profit Margin (%) 12/11 12,352 11,138 1,214 959 255 338 -231 209 0 107 48 59 62 121 118 4 138 135 3 538 1,120 4.4 2.7 1.0 12/12F 12,867 11,328 1,538 967 572 572 -201 214 0 371 82 289 0 289 281 9 307 298 9 812 451 6.3 4.4 2.2 12/13F 14,104 12,405 1,699 1,060 639 639 -206 218 0 434 95 338 0 338 328 11 355 345 10 882 246 6.3 4.5 2.3 12/14F 15,813 13,893 1,920 1,188 731 731 -214 225 0 517 114 404 0 404 391 13 421 408 13 978 226 6.2 4.6 2.5

(Wbn) Current Assets Cash and Cash Equivalents AR & Other Receivables Inventories Other Current Assets Non-Current Assets Investments in Associates Property, Plant and Equipment Intangible Assets Total Assets Current Liabilities AP & Other Payables Short-Term Financial Liabilities Other Current Liabilities Non-Current Liabilities Long-Term Financial Liabilities Other Non-Current Liabilities Total Liabilities Controlling Interests Capital Stock Capital Surplus Retained Earnings Non-Controlling Interests Stockholders' Equity 12/11 4,861 326 2,509 1,457 148 5,097 841 2,850 825 9,958 3,809 1,578 1,965 267 3,363 2,967 269 7,172 2,246 161 225 1,940 540 2,786 12/12F 5,266 603 2,730 1,351 160 5,153 841 2,864 835 10,419 3,972 1,717 1,965 290 3,354 2,967 265 7,327 2,544 161 225 2,220 549 3,093 12/13F 5,915 805 2,993 1,481 175 5,257 841 2,885 844 11,172 4,165 1,883 1,965 318 3,596 3,217 262 7,761 2,852 161 225 2,511 559 3,410 12/14F 6,629 916 3,356 1,660 194 5,373 841 2,915 852 12,002 4,432 2,111 1,965 357 3,779 3,407 260 8,211 3,219 161 225 2,861 572 3,791

(Wbn) Cash Flows from Op Activities Net Profit Non-Cash Income and Expense Depreciation Amortization Others Chg in Working Capital Chg in AR & Other Receivables Chg in Inventories Chg in AP & Other Payables Income Tax Paid Cash Flows from Inv Activities Chg in PP&E Chg in Intangible Assets Chg in Financial Assets Others Cash Flows from Fin Activities Chg in Financial Liabilities Chg in Equity Dividends Paid Others Increase (Decrease) in Cash Beginning Balance Ending Balance 12/11 40 59 547 231 52 -125 -508 -145 -113 -64 -58 -518 -438 -64 -160 144 541 828 0 -48 -240 62 264 326 12/12F 754 289 523 187 54 26 23 -222 106 140 -82 -240 -200 -64 0 24 -237 0 0 0 -237 277 326 603 12/13F 560 338 544 188 55 26 -227 -263 -130 165 -95 -328 -210 -64 -80 26 -30 0 0 -38 -242 202 603 805 12/14F 553 404 574 191 56 26 -311 -363 -179 228 -114 -339 -221 -64 -84 30 -103 0 0 -40 -253 111 805 916
P/E (x) P/CF (x) P/B (x) EV/EBITDA (x) EPS (W) CFPS (W) BPS (W) DPS (W) Payout ratio (%) Dividend Yield (%) Revenue Growth (%) EBITDA Growth (%) Operating Profit Growth (%) EPS Growth (%) Accounts Receivable Turnover (x) Inventory Turnover (x) Accounts Payable Turnover (x) ROA (%) ROE (%) ROIC (%) Liability to Equity Ratio (%) Current Ratio (%) Net Debt to Equity Ratio (%) Interest Coverage Ratio (x) 12/11 20.8 6.1 1.5 13.6 3,653 12,434 51,307 1,250 0.0 1.6 -27.3 -45.6 -43.7 -53.2 4.9 5.5 7.8 1.1 5.7 2.0 257.4 127.6 150.2 1.5 12/12F 8.7 4.7 1.3 8.6 8,715 16,192 60,253 1,350 13.4 1.8 4.2 51.0 69.1 138.5 4.9 9.2 7.8 2.8 11.7 7.4 236.9 132.6 126.4 2.5 12/13F 7.4 4.3 1.1 7.9 10,173 17,732 69,521 1,450 12.3 1.9 9.6 8.6 11.8 16.7 4.9 10.0 7.8 3.1 12.1 8.1 227.6 142.0 114.8 2.7 12/14F 6.2 3.8 0.9 7.2 12,128 19,792 80,684 1,550 11.0 2.1 12.1 10.8 14.4 19.2 5.0 10.1 7.9 3.5 12.9 8.9 216.6 149.6 104.3 2.9
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April 17, 2012
LG Innotek (011070 KS)

Buy (Maintain)
Target Price (12M, W) 130,000 Share Price (04/13/12, W) 92,600 Expected Return (%) 40.4 EPS Growth (12F, %) TTB Market EPS Growth (12F, %) 19.2 P/E (12F, x) 23.7 Market P/E (12F, x) 9.8 KOSPI 2,008.91 Market Cap (Wbn) 1,868 Shares Outstanding (mn) 20 Avg Trading Volume (60D, '000) 217 Avg Trading Value (60D, Wbn) 20 Dividend Yield (12F, %) 0.0 Free Float (%) 52.1 52-Week Low (W) 56,200 52-Week High (W) 120,500 Beta (12M, Daily Rate of Return) 1.4 Price Return Volatility (12M Daily, %, SD) 3.2 Foreign Ownership (%) 16.5 Major Shareholder(s) LGE et al. (47.87%) Norges Bank (5.07%) Price Performance (%) 1M Absolute -12.2 Relative -11.4
Faster-than-expected earnings improvement

Maintain Buy with a target price of W130,000 Likely to post record revenues and revert to operating profit (W22.4bn) in 1Q Earnings to be driven by camera modules in 1H and LEDs in 2H
We maintain our Buy call on LG Innotek with a target price of W130,000, which is based on a 2012F P/B of 2.1x (consolidated K-IFRS). Our target price also corresponds to a 2012F P/E of 33.3x (EPS of W3,900) and a 2013F P/E of 17.1x (EPS of W7,591). Although our valuation may not appear conservative, we believe that momentum from LG Innoteks earnings turnaround should be taken into account. Indeed, after bottoming in 4Q11, the companys earnings should improve through 3Q12 and the pace of the turnaround seems to be faster than expected. We believe LG Innoteks earnings have been improving at a rapid pace. For 1Q, we expect record-high revenues of W1.29tr (up 6.2% QoQ; up 17.2% YoY), aided by strong sales of camera modules (up 40.0% YoY), automotive parts (up 68.0% YoY), and touch windows (up 159.7% YoY). In particular, camera module sales are forecast to stay robust going forward, as the companys top customer rolled out a new tablet PC model and is expected to release a new smartphone model in June. Another positive is the expected improvement in margins. After posting an operating loss of W60bn in 4Q11, we expect LG Innotek to swing to an operating profit of W22.4bn in 1Q. Margin improvement should be attributable to: 1) the camera module units higher OP margin (up 3.1%p YoY) and 2) smaller losses at the LED unit. While LG Innoteks earnings are likely to be driven by the strength of its camera module business in 1H, the LED business is forecast to become an earnings driver in 2H. The LED units cost structure is anticipated to improve. In early 2011, LG Innotek signed a contract under which it agreed to purchase 6-inch sapphire substrates at over US$400/unit. The 6-inch sapphire substrate price subsequently dropped by more than 40% last year. However, this contract expired at end-4Q. The end of inventory drawdowns in late 2011 should also have a positive impact. We expect the companys LED business to turn to profit in 3Q, but an earlier recovery is also possible.
6M 30.6 20.4
12M -19.8 -14.5
Share price 110 100 90 80 70 60 50 40 4/11 8/11 12/11 4/12 KOSPI

FY 12/10 12/11 12/12F 12/13F 12/14F Revenues OP OP Margin NP EPS EBITDA FCF ROE P/E (Wbn) (Wbn) (%) (Wbn) (Won) (Wbn) (Wbn) (%) (x) 4,104 157 3.8 196 10,241 437 -1,055 16.6 13.1 4,553 -67 -1.5 -145 -7,211 376 -591 -10.4 5,584 170 3.0 79 3,900 562 -69 5.7 23.7 6,020 269 4.5 153 7,591 690 -36 10.2 12.2 6,483 334 5.2 205 10,158 785 94 12.2 9.1 P/B EV/EBITDA (x) (x) 2.0 9.3 1.2 8.5 1.5 6.9 1.3 5.8 1.2 5.1
27
April 17, 2012

1Q Tuner PM CM LED Wireless telecom Motor EMA Reve Photomask nues Lead frame Tape substrate PCB Package Touch window Internal & other Total OP OP margin (%) Pretax profit Net profit Pretax margin (%) Net margin (%) 2Q 2011 3Q 4Q Annual 1QF 2012F 2QF 3QF 1Q12F 4QF Annual YoY -6.9 0.3 40.0 -5.0 5.6 8.2 68.0 0.2 5.0 -0.2 0.0 22.3 159.7 RR 17.2 TTB 2.4 TTB TTB 2.5 0.9 QoQ
(Wbn, %, W)
Est. Diff.
63.5 55.1 53.5 56.2 228.3 59.1 57.0 55.4 57.9 229.4 106.7 109.0 111.4 116.1 443.2 107.0 120.8 123.3 130.4 481.5 316.4 289.4 227.8 382.4 1,216.0 443.0 445.7 542.2 412.2 1,843.0 203.3 272.8 248.9 180.9 905.9 193.0 236.7 279.9 248.8 958.5 87.2 89.8 85.3 90.2 352.5 92.1 94.9 89.4 97.9 374.2 40.2 43.4 38.7 34.6 156.9 43.5 47.0 41.9 37.5 170.0 30.2 34.2 41.0 50.0 155.4 50.7 53.9 60.3 63.0 227.9 39.1 46.1 32.0 36.4 153.6 39.2 46.2 32.1 36.5 154.0 20.8 23.6 22.6 18.1 85.1 21.8 24.8 23.7 19.0 89.3 50.9 47.2 42.6 43.1 183.8 50.8 51.6 56.7 45.0 204.0 100.0 101.6 95.7 96.2 393.5 100.0 123.4 134.7 116.2 474.4 25.1 27.3 28.4 33.0 113.8 30.7 20.8 34.7 36.4 122.6 23.9 46.3 40.9 69.2 180.3 62.1 81.8 55.0 65.1 264.0 -8.0 -14.6 -1.7 7.2 -17.1 -4.3 -3.3 -0.5 -0.2 -8.4 1,099.3 1,171.2 1,067.1 1,213.6 4,551.2 1,288.7 1,401.2 1,528.7 1,365.7 5,584.3 -7.4 5.9 -5.4 -60.0 -66.9 22.4 39.4 59.4 48.9 170.0 -0.7 0.5 -0.5 -4.9 -1.5 1.7 2.8 3.9 3.6 3.0 -26.7 -15.2 -43.3 -89.3 -174.5 1.1 15.7 38.7 23.2 78.6 -9.5 -7.0 -35.6 -93.3 -145.3 1.1 15.7 38.7 23.2 78.6 -2.4 -1.3 -4.1 -7.4 -3.8 0.1 1.1 2.5 1.7 1.4 -0.9 -0.6 -3.3 -7.7 -3.2 0.1 1.1 2.5 1.7 1.4
5.1 63.5 55.1 -7.8 106.7 109.0 15.8 316.4 289.4 6.7 203.3 272.8 2.1 87.2 89.8 25.7 40.2 43.4 1.5 30.2 34.2 7.7 39.1 46.1 20.7 20.8 23.6 17.8 50.9 47.2 4.0 100.0 101.6 -7.0 25.1 27.3 -10.3 23.9 46.3 RR -8.0 -14.6 6.2 1,099.3 1,171.2 TTB -7.4 5.9 6.7 -0.7 0.5 TTB -26.7 -15.2 TTB -9.5 -7.0 7.4 -2.4 -1.3 7.8 -0.9 -0.6
Note: Based on IFRS Source: KDB Daewoo Securities Research
28
April 17, 2012
LG Innotek (011070 KS /Buy/TP: W130,000)

(Wbn) Revenues Cost of Revenues Gross Profit SG&A Expenses Operating Profit (Adj) Operating Profit Non-Operating Profit Net Financial Income Net Gain from Inv in Associates Pretax Profit Income Tax Profit from Continuing Operations Profit from Discontinued Operations Net Profit Controlling Interests Non-Controlling Interests Total Comprehensive Profit Controlling Interests Non-Controlling Interests EBITDA FCF (Free Cash Flow) EBITDA Margin (%) Operating Profit Margin (%) Net Profit Margin (%) 12/11 4,553 4,164 389 432 -43 -67 -108 90 0 -175 -29 -145 0 -145 -145 0 -141 -141 0 376 -591 8.3 -1.5 -3.2 12/12F 5,584 4,883 701 531 170 170 -91 97 0 79 0 79 0 79 79 0 88 88 0 562 -69 10.1 3.0 1.4 12/13F 6,020 5,179 841 572 269 269 -99 100 0 170 17 153 0 153 153 0 162 162 0 690 -36 11.5 4.5 2.5 12/14F 6,483 5,533 950 616 334 334 -101 103 0 233 28 205 0 205 205 0 214 214 0 785 94 12.1 5.2 3.2

(Wbn) Current Assets Cash and Cash Equivalents AR & Other Receivables Inventories Other Current Assets Non-Current Assets Investments in Associates Property, Plant and Equipment Intangible Assets Total Assets Current Liabilities AP & Other Payables Short-Term Financial Liabilities Other Current Liabilities Non-Current Liabilities Long-Term Financial Liabilities Other Non-Current Liabilities Total Liabilities Controlling Interests Capital Stock Capital Surplus Retained Earnings Non-Controlling Interests Stockholders' Equity 12/11 1,736 436 868 376 25 2,674 0 2,306 132 4,410 1,474 671 694 109 1,611 1,551 0 3,085 1,325 101 848 372 0 1,325 12/12F 1,972 421 1,069 423 28 2,776 0 2,357 160 4,748 1,572 756 694 122 1,764 1,663 1 3,335 1,413 101 848 451 0 1,413 12/13F 1,980 289 1,168 462 30 3,007 0 2,545 183 4,987 1,633 826 674 134 1,778 1,636 1 3,412 1,575 101 848 604 0 1,575 12/14F 2,175 353 1,261 499 31 3,162 0 2,663 203 5,337 1,689 891 654 144 1,860 1,677 2 3,549 1,788 101 848 808 0 1,788

(Wbn) Cash Flows from Op Activities Net Profit Non-Cash Income and Expense Depreciation Amortization Others Chg in Working Capital Chg in AR & Other Receivables Chg in Inventories Chg in AP & Other Payables Income Tax Paid Cash Flows from Inv Activities Chg in PP&E Chg in Intangible Assets Chg in Financial Assets Others Cash Flows from Fin Activities Chg in Financial Liabilities Chg in Equity Dividends Paid Others Increase (Decrease) in Cash Beginning Balance Ending Balance 12/11 367 -175 602 398 21 -92 -45 -31 -9 62 -16 -668 -632 -50 7 8 491 586 0 -7 -87 188 248 436 12/12F 442 79 483 370 22 6 -120 -201 -47 84 0 -459 -421 -50 0 12 3 0 0 0 -109 -15 436 421 12/13F 648 153 537 395 27 2 -25 -99 -39 70 -17 -621 -584 -50 0 13 -159 -50 0 0 -113 -132 421 289 12/14F 736 205 580 421 30 2 -21 -93 -37 65 -28 -580 -539 -50 0 9 -92 -50 0 -1 -111 64 289 353
P/E (x) P/CF (x) P/B (x) EV/EBITDA (x) EPS (W) CFPS (W) BPS (W) DPS (W) Payout ratio (%) Dividend Yield (%) Revenue Growth (%) EBITDA Growth (%) Operating Profit Growth (%) EPS Growth (%) Accounts Receivable Turnover (x) Inventory Turnover (x) Accounts Payable Turnover (x) ROA (%) ROE (%) ROIC (%) Liability to Equity Ratio (%) Current Ratio (%) Net Debt to Equity Ratio (%) Interest Coverage Ratio (x) 12/11 5.0 1.2 8.5 -7,211 13,564 59,180 0 0.0 0.0 11.0 -13.9 TTR TTR 5.7 12.3 9.9 -3.4 -10.4 -1.5 232.9 117.8 134.2 -0.7 12/12F 23.7 4.0 1.5 6.9 3,900 23,337 62,166 0 0.0 0.0 22.7 49.5 TTB TTB 6.1 14.0 10.6 1.7 5.7 5.5 236.1 125.5 134.8 1.6 12/13F 12.2 3.3 1.3 5.8 7,591 28,500 69,045 50 0.7 0.1 7.8 22.9 58.1 94.6 5.7 13.6 10.3 3.1 10.2 7.2 216.6 121.3 126.3 2.4 12/14F 9.1 2.9 1.2 5.1 10,158 32,527 78,614 100 1.0 0.1 7.7 13.7 24.3 33.8 5.6 13.5 10.3 4.0 12.2 8.2 198.5 128.8 108.9 3.0
29
April 17, 2012
Partron (091700 KQ)

Buy (Maintain)
Target Price (12M, W) Share Price (04/13/12, W) Expected Return (%) EPS Growth (12F, %) Market EPS Growth (12F, %) P/E (12F, x) Market P/E (12F, x) KOSDAQ Market Cap (Wbn) Shares Outstanding (mn) Avg Trading Volume (60D, '000) Avg Trading Value (60D, Wbn) Dividend Yield (12F, %) Free Float (%) 52-Week Low (W) 52-Week High (W) Beta (12M, Daily Rate of Return) Price Return Volatility (12M Daily, %, SD) Foreign Ownership (%) Major Shareholder(s) Jong Gu Kim et al. (25.36%) NPS (5.19%) Price Performance (%) 1M Absolute -13.4 Relative -12.6 17,900 12,300 45.5 39.0 19.2 8.2 9.8 499.46 367 30 591 8 2.0 73.8 8,410 21,700 1.3 3.7 9.9
Record revenues expected in 1Q, followed by record OP in 2Q

Maintain Buy with a target price of W17,900 Operating profit forecast to reach W11.2bn in 1Q and an all-time high of W14.4bn in 2Q12 We believe that Patron should focus on top-line growth over margins for now
We reiterate our Buy call on Patron with a target price of W17,900, which was derived by applying a P/E of 11.9x to our 2012F EPS of W1,503 (up from W1,492). We believe the stock merits a premium, given that 1) Patron is expected to display strong 2012F EPS growth (39.0%) relative to its peers and 2) the company has continued to post record-breaking earnings. Our target price implies an upside potential of 45.5% from the current share price. We expect 1Q revenues to reach an all-time high of W133.9bn (up 152.1% YoY), breaking the previous record made in 4Q11. After posting roughly W50bn in 1Q10, the company has been setting record quarterly revenues (over W70bn in 2Q11 and W100bn in 3Q11). Such remarkable top-line growth has been driven by robust sales of the Galaxy S2 and the Galaxy Note (for which Partron supplies camera modules, DMB antennae, and GPS antennae). We revised up our original 1Q revenue estimates (W125.9bn) by 6.4%.
6M -1.2 -11.4
12M -6.9 -1.6
We forecast 1Q operating profit of W11.2bn (up 101.5% YoY) and an OP margin of 8.3% (down 2.1%p YoY). We attribute such margin contraction to growing downward pricing pressures and an increase in the sales contribution of lowmargin camera modules. We expect 2Q operating profits to set a record high of W14.4bn on a combination of continued top-line growth and an OP margin improvement. It should be noted that OP margin has already fallen to the level of the firms camera module business. Partron has displayed the most rapid growth among its peer group and is likely to continue growth going forward, fueled by 1) its top customers growing smartphone sales and 2) a potential boost from tablet PC sales (Partron is supplying or is likely to supply parts for Galaxy Tab models). Although Partrons deteriorating margins remain worrisome, it is difficult for the company to achieve both top-line and bottom-line growth at this point. Given that achieving economies of scale is an important competitive advantage for parts makers, we believe that Patron should focus on top-line growth over margins for now.
Share price 140 120 100 80 60 40 4/11 8/11 12/11 4/12 KOSDAQ

FY 12/10 12/11 12/12F 12/13F 12/14F Revenues OP OP Margin NP EPS EBITDA FCF ROE P/E (Wbn) (Wbn) (%) (Wbn) (Won) (Wbn) (Wbn) (%) (x) 233 36 15.6 24 792 39 3 22.9 18.5 360 38 10.4 32 1,081 41 -14 24.0 13.4 569 54 9.5 45 1,503 58 31 25.5 8.2 613 61 9.9 51 1,718 66 32 23.1 7.2 683 69 10.1 58 1,942 75 33 21.5 6.3 P/B EV/EBITDA (x) (x) 3.8 11.1 2.9 11.3 1.9 6.8 1.5 6.1 1.3 5.4
Note: All figures are based on non-consolidated K-IFRS; NP refers to net profit attributable to controlling interests Source: Company data, KDB Daewoo Securities Research estimates
30
April 17, 2012

1Q Revenues Operating profit Pretax profit Net profit EPS OP margin Pretax margin Net margin 53.1 5.5 5.6 4.7 156 10.4 10.5 8.8 2011 2Q 77.9 9.0 9.1 8.1 273 11.6 11.7 10.5 3Q 107.5 12.8 12.6 11.0 368 11.9 11.7 10.2 4Q 121.4 10.2 10.1 8.5 284 8.4 8.3 7.0 1QF 133.9 11.2 10.5 8.9 299 8.3 7.8 6.7 2012F 2QF 145.9 14.4 14.4 12.2 409 9.9 9.9 8.4 3QF 152.0 16.8 16.4 13.9 467 11.1 10.8 9.2 4QF 136.8 11.7 11.5 9.8 328 8.6 8.4 7.1 YoY 152.1 101.5 87.9 91.2 91.2 -2.1 -2.7 -2.1
(Wbn, %)
1Q12F QoQ Previous Change 10.3 9.2 3.8 5.2 5.2 -0.1 -0.5 -0.3 125.9 10.7 10.7 9.1 305 8.5 8.5 7.2 6.4 4.0 -2.1 -2.1 -2.1 -0.2 -0.7 -0.6

2011 2012F Previous 2013F 606.0 60.4 61.0 51.9 1,737 10.0 10.1 8.6 2014F 670.5 68.0 68.8 58.5 1,959 10.1 10.3 8.7 2012F 568.6 54.1 52.8 44.9 1,503 9.5 9.3 7.9 Revised 2013F 613.2 60.9 60.4 51.3 1,718 9.9 9.8 8.4 2014F 682.7 69.0 68.2 58.0 1,942 10.1 10.0 8.5 2012F 4.2 3.8 0.7 0.7 0.7 0.0 -0.3 -0.3
(Wbn, W, %, %p)
% Diff. 2013F 1.2 0.9 -1.1 -1.1 -1.1 0.0 -0.2 -0.2 2014F 1.8 1.5 -0.9 -0.9 -0.9 0.0 -0.3 -0.2
Revenues 359.9 545.6 Operating profit 37.5 52.1 Pretax profit 37.4 52.4 Net profit 32.3 44.6 EPS 1,081 1,492 OP margin 10.4 9.5 Pretax margin 10.4 9.6 Net margin 9.0 8.2 Source: KDB Daewoo Securities Research
31
April 17, 2012
Table 11. Quarterly earnings forecasts by business division

1Q Revenues Antenna Chip Antenna GPS Subtotal 6.9 11.6 1.3 19.8 5.2 1.5 1.4 26.1 2.7 56.6 12.2 20.5 2.3 34.9 9.2 2.6 2.5 46.1 4.7 100.0 11.5 60.5 81.0 40.1 30.5 18.3 -61.5 101.1 57.4 9.4 16.6 8.7 15.5 7.4 13.1 6.3 12.1 0.9 19.4 5.4 2.9 1.9 20.8 2.7 53.1 11.9 22.8 1.8 36.5 10.2 5.4 3.6 39.2 5.0 100.0 -19.8 17.6 -29.5 -0.7 4.3 76.3 -14.2 6.6 196.4 8.3 8.3 15.7 7.6 14.3 5.8 11.0 7.7 11.2 1.4 20.3 4.6 1.5 2.9 25.5 2.9 57.7 13.3 19.4 2.5 35.2 8.0 2.5 5.0 44.2 5.1 100.0 -9.8 0.7 -7.2 -4.1 -15.7 -49.7 37.8 -2.5 304.7 -1.4 9.4 16.2 6.8 11.8 6.4 11.0 7.9 9.6 1.5 19.0 5.2 1.1 2.6 33.9 3.5 65.2 12.1 14.8 2.2 29.1 7.9 1.6 4.0 52.0 5.3 100.0 22.2 -7.0 24.8 5.6 -7.6 -31.5 -4.0 75.3 140.1 34.1 9.2 14.1 6.7 10.3 4.0 6.2 7.8 9.2 1.4 18.4 5.8 1.2 2.0 22.6 3.2 53.1 14.6 17.4 2.6 34.6 10.9 2.2 3.8 42.5 6.0 100.0 12.8 -20.2 6.3 -7.0 11.4 -19.1 45.5 -13.5 20.2 -6.1 5.5 10.4 5.6 10.5 4.7 8.8 7.2 13.2 1.0 21.5 5.3 1.4 2.7 43.2 3.8 77.9 9.3 17.0 1.3 27.6 6.8 1.8 3.5 55.5 4.9 100.0 14.3 8.9 9.3 10.7 -2.4 -51.9 41.5 107.3 42.2 46.6 9.1 11.7 9.2 11.8 7.3 9.3 9.0 11.7 1.1 21.8 6.5 1.3 1.6 71.9 4.3 107.5 8.4 10.8 1.0 20.3 6.1 1.2 1.5 66.9 4.0 100.0 17.7 4.1 -23.1 7.3 40.9 -9.0 -43.3 181.6 46.8 86.1 13.4 12.4 13.4 12.5 10.6 9.9 9.1 12.4 0.8 22.3 6.5 1.6 1.5 84.2 5.2 121.4 7.5 10.2 0.7 18.4 5.4 1.3 1.2 69.4 4.3 100.0 15.8 28.2 -42.3 17.6 26.5 51.3 -41.7 148.3 51.0 86.3 12.0 9.9 12.0 9.9 9.5 7.8 8.1 11.7 1.1 20.9 6.8 0.5 2.0 96.3 7.3 133.9 6.1 8.7 0.8 15.6 5.1 0.4 1.5 71.9 5.5 100.0 4.6 26.7 -20.5 13.9 18.6 -54.4 -1.4 326.6 129.8 152.1 9.0 6.7 9.4 7.0 7.4 5.5 2010 2Q 3Q 4Q 1Q 2011 2Q 3Q 4Q 1QF
(Wbn, W, %, %p)
2012F 2QF 3QF 8.6 13.3 0.8 22.7 6.9 1.0 3.8 104.2 7.4 145.9 5.9 9.1 0.5 15.5 4.7 0.7 2.6 71.4 5.1 100.0 19.0 0.5 -25.7 5.5 29.8 -24.0 37.0 141.2 94.9 87.4 11.5 7.9 11.6 7.9 9.2 6.3 10.7 14.6 0.9 26.2 9.3 0.6 2.0 104.9 9.0 152.0 7.0 9.6 0.6 17.2 6.1 0.4 1.3 69.0 5.9 100.0 17.8 25.3 -17.5 20.1 43.4 -54.7 20.9 46.0 107.5 41.4 16.9 11.1 17.0 11.2 13.5 8.9 4QF 9.2 12.1 0.7 22.0 8.2 1.6 1.6 92.7 10.7 136.8 6.7 8.8 0.5 16.1 6.0 1.2 1.2 67.7 7.9 100.0 1.5 -2.4 -20.2 -1.5 25.4 0.0 9.0 10.0 105.1 12.7 13.3 9.8 13.7 10.0 10.8 7.9
Crystal oscillator Dielectric filter Isolator Camera module RF module/optical mouse Total Revenues contribution (%, %p) Chip Antenna Antenna GPS Subtotal Crystal oscillator Dielectric filter Isolator Camera module RF module/optical mouse Total YoY Chip Antenna Antenna GPS Subtotal Crystal oscillator Dielectric filter Isolator Camera module RF module/optical mouse Total Operating profit OP margin Pretax profit Pretax margin Net profit Net margin
32
April 17, 2012
Partron (091700 KQ/Buy/TP: W17,900)

(Wbn) Revenues Cost of Revenues Gross Profit SG&A Expenses Operating Profit (Adj) Operating Profit Non-Operating Profit Net Financial Income Net Gain from Inv in Associates Pretax Profit Income Tax Profit from Continuing Operations Profit from Discontinued Operations Net Profit Controlling Interests Non-Controlling Interests Total Comprehensive Profit Controlling Interests Non-Controlling Interests EBITDA FCF (Free Cash Flow) EBITDA Margin (%) Operating Profit Margin (%) Net Profit Margin (%) 12/11 360 291 69 32 37 38 0 0 0 37 5 32 0 32 32 0 34 34 0 41 -14 11.4 10.4 9.0 12/12F 569 466 103 49 54 54 -1 1 0 53 8 45 0 45 45 0 46 46 0 58 31 10.2 9.5 7.9 12/13F 613 500 114 53 61 61 -1 1 0 60 9 51 0 51 51 0 53 53 0 66 32 10.8 9.9 8.4 12/14F 683 555 128 59 69 69 -1 1 0 68 10 58 0 58 58 0 60 60 0 75 33 11.0 10.1 8.5

(Wbn) Current Assets Cash and Cash Equivalents AR & Other Receivables Inventories Other Current Assets Non-Current Assets Investments in Associates Property, Plant and Equipment Intangible Assets Total Assets Current Liabilities AP & Other Payables Short-Term Financial Liabilities Other Current Liabilities Non-Current Liabilities Long-Term Financial Liabilities Other Non-Current Liabilities Total Liabilities Controlling Interests Capital Stock Capital Surplus Retained Earnings Non-Controlling Interests Stockholders' Equity 12/11 116 4 71 33 3 148 2 33 2 264 103 66 34 2 8 3 4 111 153 15 22 116 0 153 12/12F 132 7 80 37 3 189 2 44 2 321 111 74 34 3 11 5 4 122 199 15 22 161 0 199 12/13F 145 4 90 41 3 234 2 58 1 379 121 84 34 3 13 7 4 134 245 15 22 205 0 245 12/14F 161 6 100 46 4 285 2 79 1 446 131 93 34 3 20 14 4 151 295 15 22 254 0 295

(Wbn) Cash Flows from Op Activities Net Profit Non-Cash Income and Expense Depreciation Amortization Others Chg in Working Capital Chg in AR & Other Receivables Chg in Inventories Chg in AP & Other Payables Income Tax Paid Cash Flows from Inv Activities Chg in PP&E Chg in Intangible Assets Chg in Financial Assets Others Cash Flows from Fin Activities Chg in Financial Liabilities Chg in Equity Dividends Paid Others Increase (Decrease) in Cash Beginning Balance Ending Balance 12/11 26 32 10 3 0 0 -9 -32 -11 35 -7 -53 -37 0 2 -18 19 25 0 -5 -1 -8 12 4 12/12F 46 45 13 4 1 0 -4 -9 -4 8 -8 -43 -15 0 0 -28 1 0 0 0 -1 4 4 7 12/13F 52 51 15 5 0 0 -5 -10 -5 9 -9 -48 -20 0 0 -28 -7 0 0 -7 -1 -3 7 4 12/14F 60 58 17 6 0 0 -5 -10 -5 10 -10 -55 -26 0 0 -28 -4 0 0 -9 -2 1 4 6
P/E (x) P/CF (x) P/B (x) EV/EBITDA (x) EPS (W) CFPS (W) BPS (W) DPS (W) Payout ratio (%) Dividend Yield (%) Revenue Growth (%) EBITDA Growth (%) Operating Profit Growth (%) EPS Growth (%) Accounts Receivable Turnover (x) Inventory Turnover (x) Accounts Payable Turnover (x) ROA (%) ROE (%) ROIC (%) Liability to Equity Ratio (%) Current Ratio (%) Net Debt to Equity Ratio (%) Interest Coverage Ratio (x) 12/11 13.4 12.0 2.9 11.3 1,081 1,202 5,063 200 0.0 1.4 54.7 5.0 3.5 36.5 7.6 13.4 9.5 15.1 24.0 52.7 72.5 112.8 17.8 57.5 12/12F 8.2 7.5 1.9 6.8 1,503 1,638 6,625 250 16.5 2.0 58.0 42.2 44.1 39.0 8.6 16.4 10.0 15.3 25.5 57.8 61.2 119.2 13.0 40.7 12/13F 7.2 6.5 1.5 6.1 1,718 1,887 8,152 300 17.3 2.4 7.8 13.6 12.7 14.3 8.2 15.7 9.5 14.7 23.1 53.3 54.8 119.7 12.5 43.5 12/14F 6.3 5.7 1.3 5.4 1,942 2,156 9,852 350 17.9 2.9 11.3 14.2 13.2 13.0 8.2 15.6 9.5 14.1 21.5 48.9 51.1 123.4 12.1 43.9
33
April 17, 2012
Intops (049070 KQ)

Buy (Maintain)
Target Price (12M, W) 22,900 Share Price (04/13/12, W) 17,100 Expected Return (%) 33.9 EPS Growth (12F, %) 22.9 Market EPS Growth (12F, %) 19.2 P/E (12F, x) 6.7 Market P/E (12F, x) 9.8 KOSDAQ 499.46 Market Cap (Wbn) 147 Shares Outstanding (mn) 9 Avg Trading Volume (60D, '000) 55 Avg Trading Value (60D, Wbn) 1 Dividend Yield (12F, %) 2.5 Free Float (%) 68.6 52-Week Low (W) 14,200 52-Week High (W) 21,350 Beta (12M, Daily Rate of Return) 1.1 Price Return Volatility (12M Daily, %, SD) 2.6 Foreign Ownership (%) 24.1 Major Shareholder(s) Jae Kyoung Kim et al. (31.39%) Korea Investment Management (11.03%) FID Low Priced Stock Fund (9.3%) Price Performance (%) 1M 6M 12M Absolute -7.3 -0.9 -11.4 Relative -6.5 -11.1 -6.1
Earnings are not quite satisfactory

Trim 12-month target price by 16.1% to W22,900; Maintain Buy rating 1Q12 Preview: Operating profit of W5.6bn Earnings to continue to improve
We maintain our Buy call on Intops, but lower our 12-month target price from W26,800 to W22,900. We derived the target price by applying a P/E of 9.0x (raised from 7x in reflection of market share gains) to our 2012F EPS of W2,545 (lowered from W3,840 in light of profitability deterioration and a reduction in equity-method gains). Our target price represents an upside potential of 33.9% from the current price. The stock, currently trading at a 2012F P/E of 6.4x, seems deeply undervalued in light of the following: 1) Earnings are improving sharply in line with robust smartphone sales by its largest customer; 2) Intops will be able to maintain its market share (within its largest customer) for a prolonged period of time on enhanced competitiveness; and 3) the companys 2012F EPS growth is strong (22.6%). We expect Intops to deliver 1Q revenues of W109.8bn (up 23.3% YoY; down 0.5% QoQ), exceeding the W100bn mark for the fourth straight quarter. Operating profit is forecast at W5.6bn, up 5.0% YoY. Intops continues to strengthen its position as a major supplier to its largest customer. Since 2H10, the release of smartphones by its largest customer has driven the ongoing rapid improvement in Intops earnings and profitability, with revenues doubling from W50bn to W100bn (OP margin of roughly 6%). Handset case earnings tend to fluctuate widely depending on sales volume (because of the large share of fixed costs in total production costs). Intops largest customer claimed the top spot in the global smartphone market in 3Q11, and now appears to have overtaken Nokia as the worlds top handset maker, ending Nokias 14-year dominance. As Intops is very likely to remain the core supplier for the new models to be released by its largest customer, the companys earnings should continue to grow for the time being. However, Intops is increasingly facing obstacles related to transactions with its largest customer, such as downward pricing pressure and limits on market share, which should weigh on the companys stock price.
Share price 120 110 100 90 80 70 60 50 40 4/11 8/11 12/11 4/12 KOSDAQ

FY 12/10 12/11 12/12F 12/13F 12/14F Revenues OP OP Margin NP EPS EBITDA FCF ROE P/E (Wbn) (Wbn) (%) (Wbn) (Won) (Wbn) (Wbn) (%) (x) 317 16 4.9 20 2,283 20 41 7.9 10.8 410 20 4.8 18 2,070 26 -11 6.7 9.3 425 23 5.4 22 2,545 27 16 7.7 6.7 432 24 5.6 24 2,779 28 17 8.0 6.2 454 25 5.6 26 3,050 29 18 8.3 5.6 P/B EV/EBITDA (x) (x) 0.8 6.7 0.6 4.0 0.5 2.3 0.5 1.5 0.5 0.6
34
April 17, 2012

1Q Revenues Operating profit Pretax profit Net profit EPS OP margin Pretax margin Net margin 89.1 5.3 5.6 4.2 492 6.0 6.3 4.7 2011 2Q 100.1 6.5 8.3 7.8 907 6.5 8.3 7.8 3Q 110.0 7.1 12.4 7.9 923 6.5 11.3 7.2 4Q 110.3 0.9 -2.8 -2.2 -252 0.8 -2.6 -2.0 1QF 109.8 5.6 6.3 4.8 553 5.1 5.8 4.3 2012F 2QF 109.9 6.5 8.8 6.6 764 5.9 8.0 6.0 3QF 113.7 7.5 9.5 7.1 825 6.6 8.3 6.2 4QF 91.8 3.5 4.6 3.5 403 3.8 5.0 3.8 YoY 23.3 5.0 12.5 12.4 12.4 -0.9 -0.6 -0.4
(Wbn, %)
1Q12F QoQ Previous Change -0.5 528.8 -323.9 -319.6 -319.6 4.3 8.3 6.3 92.4 4.7 6.1 4.4 516 6.4 8.1 6.1 18.8 18.8 4.4 7.2 7.2 -1.3 -2.3 -1.7

2011 2012F Previous 2013F 423.7 25.2 47.6 33.0 3,840 5.9 11.2 7.8 2014F 454.3 27.0 51.5 33.0 3,840 5.9 11.3 7.3 2012F 425.2 23.1 29.2 21.9 2,545 5.4 6.9 5.1 Revised 2013F 432.2 24.0 31.9 23.9 2,779 5.6 7.4 5.5 2014F 453.9 25.2 35.0 26.2 3,050 5.6 7.7 5.8 2012F 2.4 -6.7 -35.5 -33.7 -33.7 -0.5 -4.0 -2.8
(Wbn, W, %, %p)
% Diff. 2013F 2.0 -4.7 -33.0 -27.6 -27.6 -0.4 -3.9 -2.3 2014F -0.1 -6.6 -32.0 -20.6 -20.6 -0.4 -3.6 -1.5
Revenues 409.5 415.1 Operating profit 19.8 24.7 Pretax profit 23.5 45.2 Net profit 17.8 33.0 EPS 2,070 3,840 OP margin 4.8 6.0 Pretax margin 5.7 10.9 Net margin 4.3 8.0 Source: KDB Daewoo Securities Research
35
April 17, 2012
Intops (049070 KQ/Buy/TP: W22,900)

(Wbn) Revenues Cost of Revenues Gross Profit SG&A Expenses Operating Profit (Adj) Operating Profit Non-Operating Profit Net Financial Income Net Gain from Inv in Associates Pretax Profit Income Tax Profit from Continuing Operations Profit from Discontinued Operations Net Profit Controlling Interests Non-Controlling Interests Total Comprehensive Profit Controlling Interests Non-Controlling Interests EBITDA FCF (Free Cash Flow) EBITDA Margin (%) Operating Profit Margin (%) Net Profit Margin (%) 12/11 410 365 44 23 21 20 4 -5 -3 24 6 18 0 18 18 0 16 16 0 26 -11 6.3 4.8 4.4 12/12F 425 377 49 25 23 23 6 -8 1 29 7 22 0 22 22 0 20 20 0 27 16 6.2 5.4 5.2 12/13F 432 382 50 26 24 24 8 -9 1 32 8 24 0 24 24 0 22 22 0 28 17 6.4 5.6 5.5 12/14F 454 402 52 27 25 25 10 -11 1 35 9 26 0 26 26 0 24 24 0 29 18 6.3 5.6 5.8


(Wbn) Cash Flows from Op Activities Net Profit Non-Cash Income and Expense Depreciation Amortization Others Chg in Working Capital Chg in AR & Other Receivables Chg in Inventories Chg in AP & Other Payables Income Tax Paid Cash Flows from Inv Activities Chg in PP&E Chg in Intangible Assets Chg in Financial Assets Others Cash Flows from Fin Activities Chg in Financial Liabilities Chg in Equity Dividends Paid Others Increase (Decrease) in Cash Beginning Balance Ending Balance 12/11 1 18 14 4 0 -6 -23 -2 3 -23 -7 -50 -5 0 -53 8 5 11 0 -5 -1 -44 56 12 12/12F 21 22 5 4 0 -2 1 -2 0 2 -7 7 -4 0 0 11 -3 0 0 -1 -1 25 12 37 12/13F 21 24 4 4 0 -2 1 -3 -1 4 -8 9 -4 0 0 13 -6 0 0 -5 -1 23 37 60 12/14F 22 26 2 4 0 -2 2 -2 0 2 -9 10 -4 0 0 14 -7 0 0 -5 -1 25 60 85
P/E (x) P/CF (x) P/B (x) EV/EBITDA (x) EPS (W) CFPS (W) BPS (W) DPS (W) Payout ratio (%) Dividend Yield (%) Revenue Growth (%) EBITDA Growth (%) Operating Profit Growth (%) EPS Growth (%) Accounts Receivable Turnover (x) Inventory Turnover (x) Accounts Payable Turnover (x) ROA (%) ROE (%) ROIC (%) Liability to Equity Ratio (%) Current Ratio (%) Net Debt to Equity Ratio (%) Interest Coverage Ratio (x) 12/11 9.3 7.5 0.6 4.0 2,070 2,573 31,651 580 0.0 3.0 29.3 25.9 26.3 -9.3 15.3 62.6 9.9 4.9 6.7 23.3 35.4 194.4 -23.3 17.9 12/12F 6.7 5.8 0.5 2.3 2,545 2,949 33,781 430 16.9 2.5 3.8 3.5 16.7 22.9 15.1 78.4 14.3 5.7 7.7 27.6 35.1 224.9 -30.4 18.8 12/13F 6.2 5.4 0.5 1.5 2,779 3,183 35,715 480 17.3 2.8 1.6 3.5 4.0 9.2 14.0 68.5 13.3 5.8 8.0 28.2 37.6 246.6 -36.2 19.6 12/14F 5.6 5.0 0.5 0.6 3,050 3,453 37,869 530 17.4 3.1 5.0 4.4 5.0 9.7 13.6 63.5 12.9 6.0 8.3 29.1 38.3 272.5 -41.9 20.6
36
April 17, 2012
Seoul Semiconductor (046890 KQ)

Trading Buy (Maintain)
Target Price (12M, W) Share Price (04/13/12, W) Expected Return (%) EPS Growth (12F, %) Market EPS Growth (12F, %) P/E (12F, x) Market P/E (12F, x) KOSDAQ Market Cap (Wbn) Shares Outstanding (mn) Avg Trading Volume (60D, '000) Avg Trading Value (60D, Wbn) Dividend Yield (12F, %) Free Float (%) 52-Week Low (W) 52-Week High (W) Beta (12M, Daily Rate of Return) Price Return Volatility (12M Daily, %, SD) Foreign Ownership (%) Major Shareholder(s) Jung Hoon Lee et al. (48.06%) Norges Bank (5.05%) Price Performance (%) 1M Absolute -10.0 Relative -9.2 26,000 23,000 13.0 56.8 19.2 24.7 9.8 499.46 1,341 58 1,151 29 0.9 51.9 18,550 42,300 1.3 4.0 19.3
Weak earnings, but bright market outlook

Lower 12-month target price to W26,000; Maintain Trading Buy rating 1Q12 Preview: Operating profit appears sluggish Short-term earnings are negative, but bright LED lighting market outlook and patent assets should boost competitiveness
We maintain our Trading Buy rating on Seoul Semiconductor (SSC), but cut our 12month target price from W31,000 to W26,000. In calculating our target price, we applied a P/B multiple of 2.4x (2012F BPS of W10,874), which is roughly a 10% discount to the five-year average low P/B of 2.7x. SSCs shares have been underperforming the market due to disappointing earnings. We estimate that 1Q revenues have reached a disappointing W168.8bn (under K-IFRS). The sluggish performance (down 18.6% YoY) should be attributable to flagging TV BLU revenues and weak seasonal demand. Operating profit is estimated to have hit W3.2bn, swinging to a positive territory QoQ, but falling 77.4% YoY. The contraction should be mainly due to higher fixed costs caused by revenue declines. Fortunately, the worst seems to be over for SSC. We advise investors to start taking an interest in the stock in light of the following:
6M 3.8 -6.4
12M -45.0 -39.7
1) Earnings are turning around: Capacity utilization is increasing at both SSC and its subsidiary Seoul Optodevice. In the LED industry, higher capacity utilization directly leads to profitability improvement. 2) The LED market outlook is brightening: SSC is the developer of Acrich, the worlds first semiconductor light source that operates directly from AC power without a converter. Despite the ongoing economic downturn around the globe, demand for energy-efficient LED lighting should only grow. 3) The company has strong patent assets: SSCs patents should help keep the competition in check when the lighting market expands sharply. Thus, we may revisit our rating on the company after 1Q earnings are released, in consideration of how well the lighting industry is faring.
Share price 110 100 90 80 70 60 50 40 4/11 8/11 12/11 4/12 KOSDAQ

FY 12/10 12/11 12/12F 12/13F 12/14F Revenues OP OP Margin NP EPS EBITDA FCF ROE P/E (Wbn) (Wbn) (%) (Wbn) (Won) (Wbn) (Wbn) (%) (x) 839 110 13.1 94 1,614 142 -68 18.2 25.2 740 31 4.1 35 593 55 -119 5.9 35.4 804 53 6.6 54 931 88 -10 8.5 24.7 949 77 8.1 79 1,359 112 -7 11.4 16.9 1,103 98 8.9 99 1,703 133 21 12.8 13.5 P/B EV/EBITDA (x) (x) 4.2 16.0 2.1 23.6 2.1 16.1 1.9 12.7 1.7 10.6
37
April 17, 2012

(Wbn) 300 Revenues (L) OP margin (R) (%) 20
200
10
100
0 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12F
-10

1Q Revenues Operating profit Pretax profit Net profit EPS OP margin Pretax margin Net margin 207.4 14.1 15.9 11.8 203 6.8 7.7 5.7 2Q 208.1 18.0 20.9 14.6 251 8.7 10.1 7.0 2011 3Q 166.1 6.2 15.0 18.4 315 3.7 9.0 11.1 4Q 157.9 -10.0 -11.2 -10.9 -188 -6.3 -7.1 -6.9 FY 739.5 28.3 40.6 33.9 581 3.8 5.5 4.6 1QF 168.8 3.2 4.9 4.0 69 1.9 2.9 2.4 2QF 187.3 11.8 16.6 13.7 234 6.3 8.9 7.3 2012F 3QF 238.0 26.1 29.0 23.7 407 10.9 12.2 10.0 4QF 210.3 12.0 15.6 12.8 220 5.7 7.4 6.1 FY 804.4 53.1 66.2 54.3 931 6.6 8.2 6.7
(Wbn, %,%p)
YoY 1Q12F QoQ 6.9 TTB TTB TTB TTB 6.9 9.6 8.9
-18.6 -77.4 -69.0 -65.8 -65.8 -4.9 -4.8 -3.3
38
April 17, 2012
Seoul Semiconductor (046890 KQ/Trading Buy/TP: W26,000)

(Wbn) Revenues Cost of Revenues Gross Profit SG&A Expenses Operating Profit (Adj) Operating Profit Non-Operating Profit Net Financial Income Net Gain from Inv in Associates Pretax Profit Income Tax Profit from Continuing Operations Profit from Discontinued Operations Net Profit Controlling Interests Non-Controlling Interests Total Comprehensive Profit Controlling Interests Non-Controlling Interests EBITDA FCF (Free Cash Flow) EBITDA Margin (%) Operating Profit Margin (%) Net Profit Margin (%) 12/11 740 631 109 84 25 31 11 -4 4 41 7 35 0 35 35 0 35 35 0 55 -119 7.4 4.1 4.7 12/12F 804 667 138 85 53 53 13 -3 1 66 12 54 0 54 54 0 54 54 0 88 -10 10.9 6.6 6.7 12/13F 949 772 177 100 77 77 21 -5 7 98 19 79 0 79 79 0 79 79 0 112 -7 11.8 8.1 8.4 12/14F 1,103 888 215 116 98 98 26 -6 12 124 25 99 0 99 99 0 100 100 0 133 21 12.1 8.9 9.0

(Wbn) Current Assets Cash and Cash Equivalents AR & Other Receivables Inventories Other Current Assets Non-Current Assets Investments in Associates Property, Plant and Equipment Intangible Assets Total Assets Current Liabilities AP & Other Payables Short-Term Financial Liabilities Other Current Liabilities Non-Current Liabilities Long-Term Financial Liabilities Other Non-Current Liabilities Total Liabilities Controlling Interests Capital Stock Capital Surplus Retained Earnings Non-Controlling Interests Stockholders' Equity 12/11 454 10 176 74 72 425 31 181 27 879 177 54 108 15 93 88 3 270 609 29 360 220 0 609 12/12F 586 66 213 89 96 430 33 175 29 1,017 185 71 93 21 169 164 4 354 663 29 360 274 0 663 12/13F 661 55 259 108 117 444 40 174 30 1,105 188 87 76 25 187 182 4 374 731 29 360 342 0 731 12/14F 777 95 300 125 135 458 52 169 31 1,235 187 101 58 29 232 227 4 419 816 29 360 427 0 816

(Wbn) Cash Flows from Op Activities Net Profit Non-Cash Income and Expense Depreciation Amortization Others Chg in Working Capital Chg in AR & Other Receivables Chg in Inventories Chg in AP & Other Payables Income Tax Paid Cash Flows from Inv Activities Chg in PP&E Chg in Intangible Assets Chg in Financial Assets Others Cash Flows from Fin Activities Chg in Financial Liabilities Chg in Equity Dividends Paid Others Increase (Decrease) in Cash Beginning Balance Ending Balance 12/11 -15 35 32 26 5 0 -65 -1 29 -20 -17 -84 -80 -13 10 -1 60 83 0 -18 -4 -40 50 10 12/12F 18 54 34 23 11 11 -58 -38 -15 18 -12 -15 -18 -13 0 16 53 -15 0 0 -8 56 10 66 12/13F 24 79 33 23 12 11 -70 -46 -19 15 -19 -15 -22 -13 0 20 -20 -17 0 -12 -9 -11 66 55 12/14F 46 99 34 22 12 11 -62 -41 -17 14 -25 -10 -18 -13 0 21 4 -18 0 -15 -9 40 55 95
P/E (x) P/CF (x) P/B (x) EV/EBITDA (x) EPS (W) CFPS (W) BPS (W) DPS (W) Payout ratio (%) Dividend Yield (%) Revenue Growth (%) EBITDA Growth (%) Operating Profit Growth (%) EPS Growth (%) Accounts Receivable Turnover (x) Inventory Turnover (x) Accounts Payable Turnover (x) ROA (%) ROE (%) ROIC (%) Liability to Equity Ratio (%) Current Ratio (%) Net Debt to Equity Ratio (%) Interest Coverage Ratio (x) 12/11 35.4 18.9 2.1 23.6 593 1,112 9,974 119 0.0 0.6 -11.9 -61.3 -72.3 -63.2 4.6 8.4 17.6 4.2 5.9 5.0 44.3 257.2 10.5 5.7 12/12F 24.7 15.1 2.1 16.1 931 1,524 10,874 200 21.5 0.9 8.8 60.3 74.4 56.8 4.7 9.9 19.0 5.7 8.5 8.7 53.3 317.9 10.3 7.1 12/13F 16.9 11.8 1.9 12.7 1,359 1,957 12,016 250 18.4 1.1 17.9 27.6 44.9 46.0 4.6 9.6 17.7 7.5 11.4 11.1 51.2 352.1 11.1 8.6 12/14F 13.5 10.0 1.7 10.6 1,703 2,301 13,459 300 17.6 1.3 16.3 19.1 27.8 25.4 4.5 9.5 17.4 8.5 12.8 12.6 51.4 415.2 8.4 10.6
39
April 17, 2012
KH Vatec (060720 KQ)

Trading Buy (Maintain)
Target Price (12M, W) 8,300 Share Price (04/13/12, W) 7,510 Expected Return (%) 10.5 EPS Growth (12F, %) 67.4 Market EPS Growth (12F, %) 19.2 P/E (12F, x) 7.2 Market P/E (12F, x) 9.8 KOSDAQ 499.46 Market Cap (Wbn) 120 Shares Outstanding (mn) 16 Avg Trading Volume (60D, '000) 127 Avg Trading Value (60D, Wbn) 1 Dividend Yield (12F, %) 0.7 Free Float (%) 64.9 52-Week Low (W) 6,120 52-Week High (W) 21,300 Beta (12M, Daily Rate of Return) 1.5 Price Return Volatility (12M Daily, %, SD) 4.3 Foreign Ownership (%) 9.6 Major Shareholder(s) Nam Kwang Hee et al. (32.1%)
Getting better, but not fast enough

Lower target price to W8,300; Maintain Trading Buy 1Q12 Preview: Operating profit to remain weak (W500mn) Earnings are likely to recover, but at a slow pace
We maintain our Trading Buy rating on KH Vatec, but lower our target price from W12,300 to W8,300. We arrived at our target price by applying a P/E of 8x (down from 9x to reflect sluggish earnings) to our 2012F consolidated K-IFRS-based EPS of W1,045 (down from W1,372). Our target price implies upside potential of 10.5% from the current share price. We revised down our initial projections for KH Vatecs 1Q revenues and operating profit by 2.8% (from W73.2bn) and 73.1% (from W2bn), respectively. We estimate that that the company will deliver 1Q consolidated K-IFRS-based revenues of W71.1bn (down 31.3% YoY; down 14.6% QoQ) and an operating profit of W500mn (down 96.2% YoY; down 57.9% QoQ). The sluggish result is largely attributable to flagging module sales to Nokia. Historically, module sales to Nokia have had a significant impact on KH Vatecs earnings. When KH Vatec generated strong earnings, module sales to Nokia accounted for over 50% of revenues. However, the proportion has plummeted to less than 10% in 4Q (vs. 53% in 2010). To offset its weak sales to Nokia, the company has focused on diversifying its customer base since late-2010. However, it has not yet seen any tangible results, as the number of products adopting modules is decreasing due to tepid IT demand and the proliferation of smartphones. We expect that KH Vatecs earnings will improve gradually starting in 3Q, as: 1) magnesium product sales to Samsung Electronics are growing steadily, and 2) the company is likely to supply tablet PC-use parts to a US e-book store starting in the quarter. Nevertheless, profitability improvement may be slower than anticipated, as the companys proportion of module sales is unlikely to increase. We believe that KH Vatecs share price, currently trading at a 2012F P/B of 0.6x (based on a BPS of W12,914), is unlikely to decline sharply.
Price Performance (%) 1M Absolute -12.6 Relative -11.8
6M -7.3 -17.5
12M -63.0 -57.7

FY 12/10 12/11 12/12F 12/13F 12/14F Revenues OP OP Margin NP (Wbn) (Wbn) (%) (Wbn 351 24 6.7 13 316 16 4.9 10 345 17 4.9 17 382 21 5.6 20 424 27 6.5 26 EPS EBITDA FCF ROE P/E (Won) (Wbn) (Wbn) (%) (x) 811 34 42 7.7 27.0 624 21 -65 5.4 13.9 1,045 26 1 8.2 7.2 1,277 31 4 9.0 5.9 1,602 38 8 10.2 4.7 P/B EV/EBITDA (x) (x) 2.0 9.2 0.7 7.6 0.6 5.4 0.5 4.5 0.5 3.6
40
April 17, 2012

1Q Revenues Operating profit Pretax profit Net profit EPS OP margin Pretax margin Net margin 103.5 14.3 15.6 11.4 713 13.8 15.1 11.0 2011 2Q 62.8 -0.7 -0.7 -1.2 -77 -1.2 -1.1 -2.0 3Q 66.4 0.7 0.7 0.2 11 1.1 1.0 0.3 4Q 83.3 1.3 0.2 -0.4 -23 1.6 0.2 -0.4 1QF 71.1 0.5 0.1 0.1 7 0.8 0.2 0.1 2012F 2QF 81.7 3.0 3.5 3.3 209 3.7 4.3 4.1 3QF 101.3 6.9 7.3 6.9 432 6.8 7.2 6.8 4QF 90.8 6.5 6.7 6.4 398 7.2 7.4 7.0 YoY -31.3 -96.2 -99.3 -99.1 -99.1 -13.0 -14.9 -10.9
(Wbn, %)
1Q12F QoQ Previous Change -14.6 -57.9 -35.6 TTB TTB -0.8 -0.1 0.6 73.2 2.0 1.5 1.2 72 2.8 2.1 1.6 -2.8 -73.1 -92.8 -90.9 -90.9 -2.0 -1.9 -1.4

2011 2012F Previous 2013F 415.4 26.8 35.1 26.4 1,647 6.4 8.5 6.3 2014F 464.4 33.9 42.2 31.6 1,976 7.3 9.1 6.8 2012F 344.9 17.0 17.6 16.7 1,045 4.9 5.1 4.8 Revised 2013F 382.3 21.3 22.0 20.4 1,277 5.6 5.7 5.3 2014F 424.3 27.4 28.2 25.6 1,602 6.5 6.6 6.0 2012F -7.1 -18.0 -39.9 -23.8 -23.8 -0.6 -2.8 -1.1
(Wbn, W, %, %p)
% Diff. 2013F -8.0 -20.4 -37.5 -22.5 -22.5 -0.9 -2.7 -1.0 2014F -8.6 -19.0 -33.2 -18.9 -18.9 -0.8 -2.4 -0.8
Revenues 351.1 371.5 Operating profit 23.6 20.7 Pretax profit 18.1 29.3 Net profit 13.1 22.0 EPS 811 1,372 OP margin 12.0 5.6 Pretax margin 10.2 7.9 Net margin 7.7 5.9 Source: KDB Daewoo Securities Research
41
April 17, 2012
KH Vatec (060720 KQ/Trading Buy/TP: W8,300)

(Wbn) Revenues Cost of Revenues Gross Profit SG&A Expenses Operating Profit (Adj) Operating Profit Non-Operating Profit Net Financial Income Net Gain from Inv in Associates Pretax Profit Income Tax Profit from Continuing Operations Profit from Discontinued Operations Net Profit Controlling Interests Non-Controlling Interests Total Comprehensive Profit Controlling Interests Non-Controlling Interests EBITDA FCF (Free Cash Flow) EBITDA Margin (%) Operating Profit Margin (%) Net Profit Margin (%) 12/11 316 279 37 27 10 16 0 0 0 16 6 10 0 10 10 0 13 13 0 21 -65 6.8 4.9 3.2 12/12F 345 303 42 25 17 17 1 0 0 18 1 17 0 17 17 0 19 19 0 26 1 7.6 4.9 4.9 12/13F 382 333 50 28 21 21 1 0 0 22 2 20 0 20 20 0 23 23 0 31 4 8.1 5.6 5.3 12/14F 424 366 59 31 27 27 1 0 0 28 3 26 0 26 26 0 28 28 0 38 8 8.9 6.5 6.0


(Wbn) Cash Flows from Op Activities Net Profit Non-Cash Income and Expense Depreciation Amortization Others Chg in Working Capital Chg in AR & Other Receivables Chg in Inventories Chg in AP & Other Payables Income Tax Paid Cash Flows from Inv Activities Chg in PP&E Chg in Intangible Assets Chg in Financial Assets Others Cash Flows from Fin Activities Chg in Financial Liabilities Chg in Equity Dividends Paid Others Increase (Decrease) in Cash Beginning Balance Ending Balance 12/11 44 10 19 11 1 -4 19 5 -7 24 -4 -58 -53 -4 17 -18 28 34 0 -4 -2 15 13 28 12/12F 21 17 9 8 1 1 -4 -7 -4 5 -1 -16 -16 -4 0 3 5 0 0 0 -3 10 28 38 12/13F 24 20 11 8 2 1 -5 -8 -5 6 -2 -17 -16 -4 0 3 1 0 0 -1 -3 8 38 46 12/14F 29 26 12 8 2 1 -6 -9 -6 7 -3 -17 -17 -4 0 3 -2 0 0 -2 -3 10 46 56
P/E (x) P/CF (x) P/B (x) EV/EBITDA (x) EPS (W) CFPS (W) BPS (W) DPS (W) Payout ratio (%) Dividend Yield (%) Revenue Growth (%) EBITDA Growth (%) Operating Profit Growth (%) EPS Growth (%) Accounts Receivable Turnover (x) Inventory Turnover (x) Accounts Payable Turnover (x) ROA (%) ROE (%) ROIC (%) Liability to Equity Ratio (%) Current Ratio (%) Net Debt to Equity Ratio (%) Interest Coverage Ratio (x) 12/11 13.9 6.5 0.7 7.6 624 1,330 11,838 0 0.0 0.0 -10.0 -37.0 -33.7 -23.0 6.4 8.5 7.2 3.1 5.4 3.9 87.2 143.4 11.3 6.6 12/12F 7.2 4.7 0.6 5.4 1,045 1,616 12,914 50 4.6 0.7 9.2 22.3 9.2 67.4 5.4 7.7 7.5 4.4 8.2 7.3 86.4 152.1 9.4 5.9 12/13F 5.9 4.0 0.5 4.5 1,277 1,884 14,197 100 7.6 1.3 10.8 18.7 25.4 22.1 5.4 7.8 7.6 4.9 9.0 8.4 83.7 159.2 6.9 6.9 12/14F 4.7 3.4 0.5 3.6 1,602 2,240 15,777 150 9.1 2.0 11.0 21.4 28.7 25.5 5.5 7.9 7.6 5.6 10.2 9.9 79.7 166.5 3.6 8.6
42
April 17, 2012
Amotech (052710 KQ)

Trading Buy (Upgrade)
Target Price (12M, W) 5,600 Share Price (04/13/12, W) 5,010 Expected Return (%) 11.8 EPS Growth (12F, %) TTB Market EPS Growth (12F, %) 19.2 P/E (12F, x) 9.7 Market P/E (12F, x) 9.8 KOSDAQ 499.46 Market Cap (Wbn) 49 Shares Outstanding (mn) 10 Avg Trading Volume (60D, '000) 67 Avg Trading Value (60D, Wbn) 0 Dividend Yield (12F, %) 0.0 Free Float (%) 68.0 52-Week Low (W) 2,775 52-Week High (W) 6,810 Beta (12M, Daily Rate of Return) 1.2 Price Return Volatility (12M Daily, %, SD) 3.2 Foreign Ownership (%) 0.4 Major Shareholder(s) Byoug Kyu Kim et al. (26.27%) Treasury fund (5.71%) Price Performance (%) Absolute Relative
Beneficiary of smartphone proliferation

Upgrade from Hold to Trading Buy and present a 12-month target price of W5,600 Earnings are gradually improving on solid CMF sales The smart motor business needs to take off for additional growth
We upgrade our rating on Amotech from Hold to Trading Buy and present a 12month target price of W5,600. Our target price was derived by applying a P/E of 11x to our 2012F EPS of W518 (non-consolidated K-IFRS). The companys shares are trading at a 2012F P/E of 9.5x and a 2013F P/E of 6.2x. Notably, it is positive for the shares that the company is turning around after posting losses in 2011. In 1Q, revenues are expected to rise by 22.0% YoY to W24.7bn, while operating profit is projected to soar by 738.1% YoY to W1bn. Although OP margin is anticipated to rise by 3.3%p YoY to 3.9%, profitability has not fully recovered yet. We raised our previous revenues and operating profit forecasts by 5.7% and 31.2%, respectively. Our investment recommendation is premised on the following: 1) Amotech is expected to benefit from the proliferation of smartphones. The company produces CMF (common mode filter), which mutes the noise created from the use of high-speed data in smartphones. The application of such products is expanding on the increasing sophistication of smartphones. The companys laminated CMF product has the added advantages of being small in scale (enabling the miniaturization of devices) and competitive in price. In addition, sales of the companys NFC (near field communication) antennas are also increasing, as they have been adopted in Samsung Electronics (SEC) flagship smartphone model. The NFC antennas are highly likely to be used in SECs next generation model. 2) The growth of the smart motor business, the companys next-generation growth engine, is materializing. Sales of washing-machine-use brushless DC (BLDC) motors are expected to increase, as the company began to supply to Haier (China) from 2007, and a Korean company and Whirlpool (Germany) from 2010. Car motors are also highly anticipated, as they are essential for hybrid and electric vehicles. The car motor business will likely boost the companys earnings going forward. One risk facing the company is the annual interest expense of W1bn related to the debt arising from the establishment of a subsidiary.
1M 0.0 0.8
6M 52.7 42.6
12M -23.6 -18.3

FY 12/10 12/11 12/12F 12/13F 12/14F Revenues OP OP Margin NP EPS EBITDA FCF ROE P/E (Wbn) (Wbn) (%) (Wbn) (Won) (Wbn) (Wbn) (%) (x) 91 6 6.4 2 192 18 -3 2.2 37.1 93 2 2.5 -2 -198 16 -23 -1.9 118 8 6.5 5 518 21 -5 4.6 9.7 134 10 7.3 8 794 24 1 6.7 6.3 149 13 8.8 11 1,131 28 4 9.0 4.4 P/B EV/EBITDA (x) (x) 0.8 7.5 0.4 8.7 0.5 7.6 0.5 6.8 0.4 5.9
43
April 17, 2012

1Q Revenues Operating profit Pretax profit Net profit EPS OP margin Pretax margin Net margin -28.9 -41.9 -36.1 -28.9 -41.9 -36.1 -28.9 -41.9 2011 2Q -3.4 2.6 2.6 -3.4 2.6 2.6 -3.4 2.6 3Q 3.6 8.9 8.9 3.6 8.9 8.9 3.6 8.9 4Q 3.6 8.5 8.5 3.6 8.5 8.5 3.6 8.5 1QF -8.0 -2.7 -2.7 -8.0 -2.7 -2.7 -8.0 -2.7 2012F 2QF 2.3 7.5 7.5 2.3 7.5 7.5 2.3 7.5 3QF 3.7 8.8 8.8 3.7 8.8 8.8 3.7 8.8 4QF -4.6 -5.3 -5.3 -4.6 -5.3 -5.3 -4.6 -5.3 YoY -1.3 -1.4 -1.4 -1.3 -1.4 -1.4 -1.3 -1.4
(Wbn, %)
1Q12F QoQ Previous Change 0.1 0.4 0.4 0.1 0.4 0.4 0.1 0.4 -28.9 -41.9 -36.1 -28.9 -41.9 -36.1 -28.9 -41.9 -3.4 2.6 2.6 -3.4 2.6 2.6 -3.4 2.6

2011 2012F Previous 2013F 122.1 7.5 6.4 5.0 519 6.1 5.3 4.1 2014F 138.2 10.4 10.3 8.0 830 7.5 7.5 5.8 2012F 117.8 7.6 5.0 5.0 518 6.5 4.3 4.3 Revised 2013F 134.1 9.8 7.7 7.7 794 7.3 5.7 5.7 2014F 149.2 13.1 11.5 11.0 1,131 8.8 7.7 7.3 2012F 8.6 32.7 36.0 74.3 74.3 1.2 0.9 1.6
(Wbn, W, %, %p)
% Diff. 2013F 9.8 31.1 19.3 52.9 52.9 1.2 0.5 1.6 2014F 8.0 25.4 11.9 36.3 36.3 1.2 0.3 1.5
Revenues 93.3 108.4 Operating profit 2.3 5.7 Pretax profit -3.0 3.7 Net profit -1.9 2.9 EPS -198 297 OP margin 2.5 5.3 Pretax margin -3.2 3.4 Net margin -2.1 2.7 Source: KDB Daewoo Securities Research
44
April 17, 2012
Amotech (052710 KQ/Trading Buy/TP: W5,600)

(Wbn) Revenues Cost of Revenues Gross Profit SG&A Expenses Operating Profit (Adj) Operating Profit Non-Operating Profit Net Financial Income Net Gain from Inv in Associates Pretax Profit Income Tax Profit from Continuing Operations Profit from Discontinued Operations Net Profit Controlling Interests Non-Controlling Interests Total Comprehensive Profit Controlling Interests Non-Controlling Interests EBITDA FCF (Free Cash Flow) EBITDA Margin (%) Operating Profit Margin (%) Net Profit Margin (%) 12/11 93 70 24 21 2 2 -5 5 0 -3 -1 -2 0 -2 -2 0 -4 -4 0 16 -23 16.7 2.5 -2.1 12/12F 118 82 36 28 8 8 -3 5 0 5 0 5 0 5 5 0 3 3 0 21 -5 17.7 6.5 4.3 12/13F 134 92 42 32 10 10 -2 5 1 8 0 8 0 8 8 0 6 6 0 24 1 17.9 7.3 5.7 12/14F 149 101 49 35 13 13 -2 5 2 12 1 11 0 11 11 0 9 9 0 28 4 18.8 8.8 7.3


(Wbn) Cash Flows from Op Activities Net Profit Non-Cash Income and Expense Depreciation Amortization Others Chg in Working Capital Chg in AR & Other Receivables Chg in Inventories Chg in AP & Other Payables Income Tax Paid Cash Flows from Inv Activities Chg in PP&E Chg in Intangible Assets Chg in Financial Assets Others Cash Flows from Fin Activities Chg in Financial Liabilities Chg in Equity Dividends Paid Others Increase (Decrease) in Cash Beginning Balance Ending Balance 12/11 8 -2 20 10 4 -2 -10 -3 -7 2 0 -42 -26 -5 -8 -3 26 30 0 0 -4 -8 10 2 12/12F 14 5 16 9 4 2 -7 -5 -5 3 0 -18 -13 -5 0 0 4 0 0 0 -5 0 2 2 12/13F 20 8 16 10 4 2 -4 -3 -3 2 0 -19 -14 -5 0 0 4 0 0 0 -6 6 2 8 12/14F 24 11 17 11 5 2 -4 -3 -3 2 -1 -19 -15 -5 0 1 0 0 0 0 -6 5 8 12
P/E (x) P/CF (x) P/B (x) EV/EBITDA (x) EPS (W) CFPS (W) BPS (W) DPS (W) Payout ratio (%) Dividend Yield (%) Revenue Growth (%) EBITDA Growth (%) Operating Profit Growth (%) EPS Growth (%) Accounts Receivable Turnover (x) Inventory Turnover (x) Accounts Payable Turnover (x) ROA (%) ROE (%) ROIC (%) Liability to Equity Ratio (%) Current Ratio (%) Net Debt to Equity Ratio (%) Interest Coverage Ratio (x) 12/11 3.1 0.4 8.7 -198 1,162 9,884 0 0.0 0.0 2.7 -11.3 -59.7 TTR 4.6 4.4 15.1 -0.9 -1.9 1.8 119.4 67.5 90.0 0.5 12/12F 9.7 2.7 0.5 7.6 518 1,890 10,054 0 0.0 0.0 26.3 34.3 226.8 TTB 4.9 4.3 15.9 2.0 4.6 4.8 128.3 76.3 96.0 1.5 12/13F 6.3 2.2 0.5 6.8 794 2,256 10,533 0 0.0 0.0 13.9 14.9 29.5 53.3 4.8 4.3 15.7 2.9 6.7 5.8 133.1 87.4 95.2 1.7 12/14F 4.4 1.9 0.4 5.9 1,131 2,677 11,375 0 0.0 0.0 11.3 16.8 32.7 42.5 4.9 4.3 15.9 3.9 9.0 6.9 130.9 96.9 89.6 2.2
45
April 17, 2012
Telechips (054450 KQ)

Hold (Maintain)
Target Price (12M, W) Share Price (04/13/12, W) 5,790 Expected Return (%) 0.0 EPS Growth (12F, %) TTB Market EPS Growth (12F, %) 19.2 P/E (12F, x) 9.9 Market P/E (12F, x) 9.8 KOSDAQ 499.46 Market Cap (Wbn) 61 Shares Outstanding (mn) 11 Avg Trading Volume (60D, '000) 60 Avg Trading Value (60D, Wbn) 0 Dividend Yield (12F, %) 1.7 Free Float (%) 51.7 52-Week Low (W) 3,700 52-Week High (W) 8,770 Beta (12M, Daily Rate of Return) 1.0 Price Return Volatility (12M Daily, %, SD) 3.5 Foreign Ownership (%) 9.5 Major Shareholder(s) Seo Min Ho et al. (33.61%) Treasury fund (11.01%) FID Low Priced Stock Fund (9.68%) Price Performance (%) 1M 6M 12M Absolute -2.5 16.2 -25.0 Relative -1.7 6.0 -19.7
Nearing the bottom

Maintain Hold 1Q12 Preview: Operating loss likely for the sixth consecutive quarter Likely to swing to operating profit in 2Q; Earnings to recover full swing from 2H
We maintain our Hold rating for Telechips. The companys shares appear undervalued, considering: 1) they are trading at a 2012F P/B of only 0.7x (BPS of W7,962), and 2) the companys cash and cash equivalents stand at W45bn. However, it is negative that the company generated an operating loss for the fifth consecutive quarter in 4Q and is forecast to remain in the red in 1Q. In 1Q, revenues are forecast to decline 11.3% QoQ to W17.7bn due to unfavorable seasonality. Operating loss is projected to decline YoY and QoQ to W800mn, which is attributable to 1) a decrease in the top line and 2) a deteriorating cost structure. Despite increased R&D related to application processors (AP), sales have yet to show a meaningful improvement. Due to increased R&D costs, the companys COGS-to-revenues ratio rose QoQ, while SG&A expenses also surged QoQ. Moreover, Telechips is no longer eligible for tax credits as the company has failed to return to black. This negatively affected the companys net profit. However, earnings are expected to improve from 2Q, backed by an increase in set-top box (STB) and Dongle chip sales. Orders for chipsets appear to be expanding. Furthermore, car chips sales are steadily growing. Typically, it takes some time to enter the car chip market. However, once a company penetrates the market, it can post steady growth. Telechips reported car chip sales of W17.2bn in 2010 and W20.5bn in 2011. In 2012, car chip sales are forecast to expand by 35.1% YoY to W27.7bn. We maintain our Hold rating on Telechips, as the company is expected to record poor earnings. However, we will review our rating in light of the pace of earnings improvement in 2Q.
Share price 120 110 100 90 80 70 60 50 40 4/11 8/11 12/11 4/12 KOSDAQ

FY 12/10 12/11 12/12F 12/13F 12/14F Revenues OP OP Margin NP EPS EBITDA FCF ROE P/E (Wbn) (Wbn) (%) (Wbn) (Won) (Wbn) (Wbn) (%) (x) 74 0 0.5 4 388 10 -4 4.1 20.0 72 -5 -6.5 -3 -316 7 -1 -3.6 91 4 4.4 6 584 14 -2 6.8 9.9 107 7 6.5 9 847 17 0 9.2 6.8 119 9 7.2 10 959 19 4 9.6 6.0 P/B EV/EBITDA (x) (x) 1.0 4.0 0.7 2.1 0.7 1.8 0.7 1.4 0.6 1.0
46
April 17, 2012

1Q Revenues Operating profit Pretax profit Net profit EPS OP margin Pretax margin Net margin 17.5 -1.1 -0.9 -1.0 -91 -6.4 -5.4 -5.5 2011 2Q 17.1 -0.6 0.2 0.1 12 -3.3 1.0 0.8 3Q 17.4 -0.3 0.5 0.4 41 -1.6 2.8 2.5 4Q 20.0 -2.7 -2.9 -2.9 -278 -13.6 -14.4 -14.7 1QF 17.7 -0.8 -0.4 -0.4 -33 -4.5 -2.0 -2.0 2012F 2QF 23.1 1.1 1.7 1.7 157 4.5 7.2 7.2 3QF 25.8 2.0 2.5 2.5 239 7.6 9.8 9.8 4QF 24.7 1.8 2.3 2.3 221 7.2 9.5 9.5 YoY 1.3 -29.0 -62.6 -63.5 -63.5 1.9 3.4 3.5
(Wbn, %)
1Q12F QoQ Previous Change -11.3 -70.9 -87.8 -88.0 -88.0 9.1 12.5 12.7 17.7 -0.8 -0.3 -0.3 -26 -4.4 -1.6 -1.6 0.0 0.8 26.0 26.0 26.0 0.0 -0.4 -0.4

2011 2012F Previous 2013F 101.8 6.2 7.9 7.5 706 6.1 7.7 7.4 2014F 112.6 7.6 9.3 8.4 793 6.8 8.3 7.5 2012F 91.3 4.0 6.2 6.2 584 4.4 6.8 6.8 Revised 2013F 107.1 7.0 9.5 9.0 847 6.5 8.8 8.4 2014F 118.5 8.5 11.3 10.2 959 7.2 9.5 8.6 2012F 4.9 17.3 22.8 22.8 22.8 0.5 1.0 1.0
(Wbn, W, %, %p)
% Diff. 2013F 5.2 11.8 20.0 20.0 20.0 0.4 1.1 1.0 2014F 5.2 11.1 20.9 20.9 20.9 0.4 1.2 1.1
Revenues 72.0 87.1 Operating profit -4.7 3.4 Pretax profit -3.2 5.0 Net profit -3.3 5.0 EPS -310 476 OP margin -6.5 3.9 Pretax margin -4.4 5.8 Net margin -4.6 5.8 Source: KDB Daewoo Securities Research
47
April 17, 2012
Telechips (054450 KQ/Hold)

(Wbn) Revenues Cost of Revenues Gross Profit SG&A Expenses Operating Profit (Adj) Operating Profit Non-Operating Profit Net Financial Income Net Gain from Inv in Associates Pretax Profit Income Tax Profit from Continuing Operations Profit from Discontinued Operations Net Profit Controlling Interests Non-Controlling Interests Total Comprehensive Profit Controlling Interests Non-Controlling Interests EBITDA FCF (Free Cash Flow) EBITDA Margin (%) Operating Profit Margin (%) Net Profit Margin (%) 12/11 72 53 19 24 -5 -5 2 -2 1 -3 0 -3 0 -3 -3 0 -4 -4 0 7 -1 10.2 -6.5 -4.6 12/12F 91 62 29 25 4 4 2 -2 0 6 0 6 0 6 6 0 6 6 0 14 -2 15.1 4.4 6.8 12/13F 107 72 35 28 7 7 3 -2 0 10 1 9 0 9 9 0 8 8 0 17 0 15.9 6.5 8.4 12/14F 119 79 40 31 9 9 3 -3 0 11 1 10 0 10 10 0 9 9 0 19 4 15.9 7.2 8.6


(Wbn) Cash Flows from Op Activities Net Profit Non-Cash Income and Expense Depreciation Amortization Others Chg in Working Capital Chg in AR & Other Receivables Chg in Inventories Chg in AP & Other Payables Income Tax Paid Cash Flows from Inv Activities Chg in PP&E Chg in Intangible Assets Chg in Financial Assets Others Cash Flows from Fin Activities Chg in Financial Liabilities Chg in Equity Dividends Paid Others Increase (Decrease) in Cash Beginning Balance Ending Balance 12/11 6 -3 12 1 11 -3 -2 -1 0 -1 0 -1 -1 -9 6 2 -3 0 -5 -1 2 2 3 4 12/12F 11 6 8 1 9 0 -3 -3 -3 2 0 -9 -2 -9 0 2 4 0 0 0 1 6 4 10 12/13F 13 9 8 2 9 0 -4 -3 -3 2 -1 -9 -2 -9 0 2 0 0 0 -1 1 4 10 14 12/14F 17 10 9 2 9 0 -1 -2 -2 2 -1 -9 -3 -9 0 3 -1 0 0 -1 1 8 14 22
P/E (x) P/CF (x) P/B (x) EV/EBITDA (x) EPS (W) CFPS (W) BPS (W) DPS (W) Payout ratio (%) Dividend Yield (%) Revenue Growth (%) EBITDA Growth (%) Operating Profit Growth (%) EPS Growth (%) Accounts Receivable Turnover (x) Inventory Turnover (x) Accounts Payable Turnover (x) ROA (%) ROE (%) ROIC (%) Liability to Equity Ratio (%) Current Ratio (%) Net Debt to Equity Ratio (%) Interest Coverage Ratio (x) 12/11 5.9 0.7 2.1 -316 820 7,450 80 0.0 1.7 -2.4 -22.5 TTR TTR 11.2 6.7 10.6 -3.0 -3.6 -14.0 23.1 611.0 -51.6 12/12F 9.9 3.8 0.7 1.8 584 1,513 7,962 100 14.6 1.7 26.9 88.1 TTB TTB 9.9 7.7 8.8 5.3 6.8 11.8 31.3 584.0 -51.6 12/13F 6.8 3.2 0.7 1.4 847 1,796 8,655 120 12.1 2.1 17.2 23.0 74.2 45.1 8.7 7.5 8.5 6.9 9.2 16.5 34.6 552.4 -51.9 12/14F 6.0 3.0 0.6 1.0 959 1,930 9,443 140 12.5 2.4 10.7 10.4 22.1 13.2 8.0 7.2 8.2 7.1 9.6 17.0 36.4 561.4 -54.8
48
April 17, 2012
P&Tel (054340 KQ)

Hold (Maintain)
Target Price (12M, W) Share Price (04/13/12, W) 2,490 Expected Return (%) 0.0 EPS Growth (12F, %) RR Market EPS Growth (12F, %) 19.2 P/E (12F, x) Market P/E (12F, x) 9.8 KOSDAQ 499.46 Market Cap (Wbn) 42 Shares Outstanding (mn) 17 Avg Trading Volume (60D, '000) 97 Avg Trading Value (60D, Wbn) 0 Dividend Yield (12F, %) 0.0 Free Float (%) 48.4 52-Week Low (W) 2,240 52-Week High (W) 6,800 Beta (12M, Daily Rate of Return) 0.9 Price Return Volatility (12M Daily, %, SD) 3.6 Foreign Ownership (%) 9.4 Major Shareholder(s) Kim Chul et al. (48.61%)
Murky outlook set to continue

Maintain Hold 1Q Preview: Largest customer has yet to place orders for new models; Projected to record an operating loss for the sixth consecutive quarter Conservative approach until the company receives new orders or secures new customers
We maintain our Hold rating on P&Tel. The stock is currently trading at a 2011F P/B of only 0.3x (BPS of W8,958) under non-consolidated IFRS. Even so, we remain neutral on the company in light of the large uncertainty over its earnings recovery, and a lack of growth momentum. We also considered the need to apply a discount to asset value, as the company has continued to post losses. In 1Q, P&Tel is anticipated to report revenues of W10.8bn (down 38.1% YoY) under non-consolidated IFRS, which is only 12.5% of the record-high quarterly revenues of W86.2bn recorded in 3Q09. The company is projected to post an operating loss (W2bn) for the sixth consecutive quarter due to the sharp top line contraction. Earnings are unlikely to improve for the time being, given the failure to secure orders for new models from its largest customer, as well as a delay in securing new customers. P&Tel was a major vendor to its largest customer, satisfying at least 25% of the customers handset case requirements. We expected P&Tel to turn around in 2011, as its largest customer, building on the success of its Galaxy 2 model, was very likely to expand its smartphone business aggressively. P&Tel also played a part in the customers technological development. The companys largest customer is showing strong growth as expected. However, P&Tel has not received orders for new models. As such, we believe that investors should take a conservative approach until the company receives orders for new smartphone models from the largest customer or attracts new customers.
Price Performance (%) 1M Absolute -11.1 Relative -10.3
6M -24.7 -34.9
12M -59.1 -53.7
Share price 140 120 100 80 60 40 4/11 8/11 12/11 4/12 KOSDAQ

FY 12/10 12/11 12/12F 12/13F 12/14F Revenues OP OP Margin NP EPS EBITDA FCF ROE P/E (Wbn) (Wbn) (%) (Wbn) (Won) (Wbn) (Wbn) (%) (x) 178 -1 -0.5 1 57 3 4 0.6 114. 54 -16 -28.9 -19 -1,156 -12 -14 -12.4 56 -5 -8.0 -2 -89 -1 -5 -1.0 67 2 2.3 5 297 5 -1 3.2 8.4 77 3 3.7 7 406 7 2 4.2 6.1 P/B EV/EBITDA (x) (x) 0.7 5.3 0.3 2.7 0.3 51.1 0.3 -10.4 0.3 -10.6
49
April 17, 2012

1Q Revenues Operating profit Pretax profit Net profit EPS OP margin Pretax margin Net margin 17.5 -2.9 -2.2 -2.1 -127 -16.5 -12.6 -12.2 2011 2Q 13.0 -3.8 -2.9 -1.9 -111 -29.1 -22.4 -14.3 3Q 12.8 -3.8 -3.0 -2.9 -174 -29.9 -23.4 -22.8 4Q 10.6 -5.1 -14.5 -12.5 -744 -48.0 -137.1 -118.4 1QF 10.8 -2.0 -0.9 -0.9 -55 -18.4 -8.6 -8.6 2012F 2QF 13.2 -1.9 -1.1 -1.1 -63 -14.6 -8.0 -8.0 3QF 17.5 -0.8 0.9 0.9 51 -4.4 4.9 4.9 4QF 14.4 0.2 -0.4 -0.4 -22 1.6 -2.6 -2.6 YoY -38.1 RR RR RR RR -1.9 4.1 3.6
(Wbn, %)
1Q12F QoQ Previous Change 2.7 RR RR RR RR 29.6 128.5 109.9 10.8 -1.2 -0.3 -0.3 -18 -11.1 -2.9 -2.9 0.0 RR RR RR RR -7.3 -5.7 -5.7

2011 2012F Previous 2013F 64.4 2.3 5.7 5.7 341 3.6 8.9 8.9 2014F 71.4 2.6 6.0 6.0 360 3.6 8.5 8.5 2012F 55.9 -4.5 -1.5 -1.5 -89 -8.0 -2.7 -2.7 Revised 2013F 66.8 1.6 5.0 5.0 297 2.3 7.5 7.5 2014F 77.2 2.8 6.8 6.8 406 3.7 8.8 8.8 2012F 0.0 RR TTR TTR TTR -4.6 -5.3 -5.3
(Wbn, W, %, %p)
% Diff. 2013F 3.6 -32.7 -12.8 -12.8 -12.8 -1.3 -1.4 -1.4 2014F 8.2 10.3 13.0 13.0 13.0 0.1 0.4 0.4
Revenues 53.8 55.9 Operating profit -15.6 -1.9 Pretax profit -22.6 1.5 Net profit -19.4 1.5 EPS -1,156 88 OP margin -28.9 -3.4 Pretax margin -41.9 2.6 Net margin -36.1 2.6 Source: KDB Daewoo Securities Research
50
April 17, 2012
P&Tel (054340 KQ/Hold)

(Wbn) Revenues Cost of Revenues Gross Profit SG&A Expenses Operating Profit (Adj) Operating Profit Non-Operating Profit Net Financial Income Net Gain from Inv in Associates Pretax Profit Income Tax Profit from Continuing Operations Profit from Discontinued Operations Net Profit Controlling Interests Non-Controlling Interests Total Comprehensive Profit Controlling Interests Non-Controlling Interests EBITDA FCF (Free Cash Flow) EBITDA Margin (%) Operating Profit Margin (%) Net Profit Margin (%) 12/11 54 57 -3 13 -16 -16 -7 -3 -10 -23 -3 -19 0 -19 -19 0 -18 -18 0 -12 -14 -22.7 -28.9 -36.1 12/12F 56 52 5 9 -5 -5 3 -3 0 -2 0 -2 0 -2 -2 0 0 0 0 -1 -5 -1.4 -8.0 -2.7 12/13F 67 55 12 11 2 2 3 -3 0 5 0 5 0 5 5 0 7 7 0 5 -1 7.7 2.3 7.5 12/14F 77 62 15 12 3 3 4 -4 0 7 0 7 0 7 7 0 9 9 0 7 2 8.4 3.7 8.8


(Wbn) Cash Flows from Op Activities Net Profit Non-Cash Income and Expense Depreciation Amortization Others Chg in Working Capital Chg in AR & Other Receivables Chg in Inventories Chg in AP & Other Payables Income Tax Paid Cash Flows from Inv Activities Chg in PP&E Chg in Intangible Assets Chg in Financial Assets Others Cash Flows from Fin Activities Chg in Financial Liabilities Chg in Equity Dividends Paid Others Increase (Decrease) in Cash Beginning Balance Ending Balance 12/11 -19 -19 11 4 0 -1 -11 -5 1 -6 0 -27 -2 0 -21 -4 0 0 0 0 0 -45 50 5 12/12F -2 -2 1 4 0 1 -1 -2 0 1 0 10 -3 0 0 13 0 0 0 0 0 8 5 13 12/13F 3 5 0 4 0 1 -2 -4 -1 2 0 9 -4 0 0 13 0 0 0 0 0 12 13 25 12/14F 6 7 0 4 0 1 -1 -2 0 1 0 10 -4 0 0 14 0 0 0 0 0 15 25 40
P/E (x) P/CF (x) P/B (x) EV/EBITDA (x) EPS (W) CFPS (W) BPS (W) DPS (W) Payout ratio (%) Dividend Yield (%) Revenue Growth (%) EBITDA Growth (%) Operating Profit Growth (%) EPS Growth (%) Accounts Receivable Turnover (x) Inventory Turnover (x) Accounts Payable Turnover (x) ROA (%) ROE (%) ROIC (%) Liability to Equity Ratio (%) Current Ratio (%) Net Debt to Equity Ratio (%) Interest Coverage Ratio (x) 12/11 12/12F 12/13F 12/14F 8.4 6.1 -2.7 19.3 4.9 4.0 0.3 0.3 0.3 0.3 2.7 51.1 -10.4 -10.6 -1,156 -89 297 406 -930 129 511 622 8,947 8,958 9,356 9,863 0 0 0 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -69.7 3.9 19.3 15.7 TTR RR TTB 25.7 RR RR TTB 82.2 TTR RR TTB 36.7 8.2 9.5 8.2 7.6 36.2 44.0 37.6 34.8 10.6 12.2 10.4 9.6 -11.5 -0.9 3.0 3.9 -12.4 -1.0 3.2 4.2 -60.9 -14.7 4.9 8.5 5.9 7.2 8.9 9.2 1,437.9 1,213.5 1,026.2 1,053.6 -49.7 -54.8 -60.3 -66.4 -4,617.8 -3,699.4 1,294.3 2,358.0
51
April 17, 2012
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 Samsung Electro-Mechanics, Samsung Techwin, Seoul Semiconductor and LG Electronics 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. has been acting as a financial advisor to Telechips for its treasury stock trust, and other than this, Daewoo Securities has no other special interests in the companies covered in this report. As of the publication date, Daewoo Securities Co., Ltd. has interest in LG Electronics in accordance with a subscription agreement, etc. As of the publication date, Daewoo Securities Co., Ltd. issued equity-linked warrants with Samsung Electro-Mechanics, Samsung Techwin, Seoul Semiconductor and LG Electronics as an underlying asset, and other than this, Daewoo Securities has no other special interests in the covered companies.
Stock Ratings Buy Trading Buy Hold Sell Relative performance of 20% or greater Relative performance of 10% or greater, but with volatility Relative performance of -10% and 10% Relative performance of -10%
Industry Ratings Overweight Neutral Underweight Fundamentals are favorable or improving Fundamentals are steady without any material changes Fundamentals are unfavorable or worsening
* 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 analysts 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) 200,000 150,000 100,000 50,000 0 4/10 10/10 4/11 10/11 4/12 LG Electronics (W) 200,000 150,000 100,000 50,000 0 4/10 10/10 4/11 10/11 4/12 Samsung Electro-Mechanics (W) 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 4/10 10/10 4/11 10/11 4/12 0 4/10 10/10 4/11 10/11 4/12 50,000 100,000 Samsung T echwin (W) 150,000 LS
(W) 250,000 200,000 150,000 100,000 50,000 0 4/10
LG Innotek
(W) 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0
Partron
(W) 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0
Intops
(W) 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0
Seoul Semiconductor
10/10
4/11
10/11
4/12
4/10
10/10
4/11
10/11
4/12
4/10
10/10
4/11
10/11
4/12
4/10
10/10
4/11
10/11
4/12
(W) 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 4/10
KH VAT EC
(W) 10,000 8,000 6,000
Amotech
(W) 20,000 15,000 10,000
Telechips
(W) 12,000 10,000 8,000 6,000 4,000 2,000 0
P&Tel
4,000 2,000 0 10/10 4/11 10/11 4/12 4/10 10/10 4/11 10/11 4/12 5,000 0 4/10 10/10 4/11 10/11 4/12
4/10
10/10
4/11
10/11
4/12
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 Analysts 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.
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April 17, 2012 Industry Report

Telecom equipment/Electronic components (Overweight)

Wonjae Park +822-768-3372 william.park@dwsec.com Young Ryu +822-768-4138 young.ryu@dwsec.com

Investment strategy: Opportunities re-emerging

10,000 06 07 08 09 10 11F 12F 13F

Source: KDB Daewoo Securities Research

April 17, 2012

Telecom equipment/Electronic components

I. 1Q Preview and mid- to long-term outlook

Figure 2. 1Q12 Operating profit growth (YoY)

Source: Company data, KDB Daewoo Securities Research

Source: Company data, KDB Daewoo Securities Research

Figure 3. 1Q12 Revenue growth (QoQ)

Figure 4. 1Q12 Operating profit growth (QoQ)

Source: Company data, KDB Daewoo Securities Research

Source: Company data, KDB Daewoo Securities Research

KDB Daewoo Securities Research

April 17, 2012

Telecom equipment/Electronic components

Sharp growth of SECs smartphone sales to be positive for domestic IT companies

SEC became the leader of the global handset market in 1Q12

0 1Q08 1Q09 1Q10 1Q11 1Q12F

Source: Gartner, KDB Daewoo Securities Research

Figure 6. SECs smartphone sales volume

Figure 7. SECs operating profit trend

0 1Q08 1Q09 1Q10 1Q11 1Q12F

0 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12F

Source: Company data, KDB Daewoo Securities Research

Source: Company data, KDB Daewoo Securities Research

KDB Daewoo Securities Research

April 17, 2012

Telecom equipment/Electronic components

Figure 8. Quarterly global smartphone market share trend

SEC became the leader of the global smartphome market in 3Q11

0 1Q08 1Q09 1Q10 1Q11 1Q12F

Source: Gartner, KDB Daewoo Securities Research

Figure 9. Apples earnings trend

Source: Company data, KDB Daewoo Securities Research

Figure 10. Market cap trends of Apple and SEC

0 4/09 10/09 4/10 10/10 4/11 10/11 4/12

Source: Thomson Reuters, KDB Daewoo Securities Research

KDB Daewoo Securities Research

April 17, 2012

Telecom equipment/Electronic components

Table 1. 1Q12 Earnings estimates for telecom equipment/electronic component companies

Recent pullback is only a technical correction

Handset/components KOSDAQ KOSPI

130 118.1p 110 113.5p 111.1p

90 9/11 12/11 3/12

Source: Thomson Reuters, KDB Daewoo Securities Research

Figure 12. Share price performances of LED companies

90 9/11 11/11 1/12 3/12

Source: Thomson Reuters, KDB Daewoo Securities Research

KDB Daewoo Securities Research

April 17, 2012

Telecom equipment/Electronic components

Earnings improvement to gain speed in 2Q

Figure 14. 2Q12 Operating profit growth (YoY)

Figure 15. 2Q12 Revenue growth (QoQ)

Figure 16. 2Q12 Operating profit growth (QoQ)

Source: Company data, KDB Daewoo Securities Research

Source: Company data, KDB Daewoo Securities Research

KDB Daewoo Securities Research

April 17, 2012