Display (Neutral) Key variables for 2014: Supply for LCD

2014OUTLOOKREPORT

Display

(Neutral)

Key variables for 2014:Supply for LCD, demand for OLED

Jonathan Hwang

+822-768-4140

[email protected]

CONTENTS

2/77

[Summary] Differentiation is essential

[Introduction] Changes in the global IT mega-trend

I.

[LCD] Yet to hit bottom (★☆☆☆☆)

II.

[OLED] Tablet PCs and wearable devices (★★★★☆)

III.

[TSP] Crisis and change offer opportunities (★★★☆☆)

IV

.

[Investment strategy] OLED is still the best answer for differentiation strategy

V.

Top picks

SFA Engineering (056190 KQ/Buy/TP: W65,000)

Iljin

Display (020760 KS/Buy/TP: W26,000)

Silicon Works (108320 KQ/Buy/TP: W31,000)

......................................................................................................................... 3

⁄...............................................................................................4

............................................................................................................. 7

.................................................................................... 29

.............................................................................. 43

..................................................... 52

........................................................................................................................................................ 63

3/77

Investment

preferencefor the display sector: OLED > TSP > LCD

[Summary] Differentiation is essential

Panel makers in China are mounting an all-out expansion plan. Eight 8G LCD lines are expected to be online

in the country by 2015, up from two currently. With the LCD market now maturing, we are unlikely

to see any dramatic growth in demand, meaning competition will only get tougher. Chinese panel makers also have the full support of their countryÊs government, which plans to raise import tariffs on foreign LCD

panels to 8% in 2014 (from 5% currently). Domestic panel suppliers are increasingly losing their edges in costs and product differentiation, which have traditionally been major contributors to their valuation premiums. Unlike the semiconductor industry, in which domestic players enjoy clear cost advantages, the LCD industry is marred by a lack of technological innovation and supply chain commoditization, which have caused margin gaps between panel makers to narrow. Samsung Display (SDC) is the only industry player still enjoying high profits, largely because of its OLED technology. It is becoming more important for display players to endeavor to achieve differentiation.

[LCD] Chinese panel makersÊ

aggressive capacity expansion poses threat 2014 outlook: Supply and demand balance to improve slightly, but not enough to tackle overcapacity; Competition to intensify

Opportunities: 1) Sporting events, including the Winter Olympics and the World Cup, 2) TV replacement demand following the launches of ultra high definition TVs (UHD TV) and AppleÊs iTV, and 3) tablet market growth.

Risks: 1) Increased supply by Chinese manufacturers and 2) continued price cuts aimed at gaining market share

Investment merits:★☆☆☆☆.

Top pick: Silicon Works (108320 KQ/Buy/TP: W31,000)

[OLED] Capex

may slow, but overall direction remains intact 2014 outlook: Capacity ramp-ups to slow; New demand to emerge in 2014 for tablets and wearable devices

Opportunities: 1) Growth of OLED panels used in tablets and 2) the adoption of curved, flexible displays for use in wearable devices

Risks: 1) Stagnant growth of premium smartphones and 2) delays to OLED TV mass production

Investment merits:★★★★☆

Top Pick: SFA Engineering (056190 KQ/Buy/TP: W65,000)

[TSP] Poised to benefit from SECÊs tablet growth 2014 outlook: Once industry consolidation is over, the remaining survivors should reap the rewards; Domestic film-based TSP makers to gain market share.

Opportunities: 1) Growth of Samsung ElectronicsÊ (SEC) tablet shipments (+79% in 2014F), 2) increasing adoption of TSPs in notebooks and monitors, and 3) rising preference for film-based over glass-based technology

Risks: 1) Entries of large corporations and 2) increasing market presence of Chinese players

Investment merits:★★★☆☆

Top pick: Iljin Display (020760 KQ/Buy/TP: W26,000)

LCD (Liquid Crystal Display)

→ Current mainstream flat

panel display technology

OLED (Organic Light

Emitting Diode)

→ Self-emissive next

generation technology

TSP (Touch Screen Panel)

→ Input interface

technology for display

4/77

Korea IT hardware firms

Share performance of global IT firms:→US, China outperformed, while Korea, Taiwan underperformed

US IT hardware firms US IT software and internet services firms

Chinese/Taiwanese IT hardware firms

Source: Bloomberg, KDB Daewoo Securities Research


57

2211

-6 -7 -8 -11-23 -28-50

0

50

100

SSC

SK Hyn

ixSam

sung

SDI

SECSam

sung

Techwin

LG Innote

k

LGE

SEMCO

LGD

(%)

262

10879 66

44 41 40

0

100

200

300

Netflix

Groupo

n

Facebook

Yahoo

Google

Microso

ft

Amazon

(%)

101

18 632

-15 -21 -33 -37 -50-67-100

-50

0

50

100

150

O-Film

BOETCL C

orpora

tion

MediaTek

TPV Techno

logyFoxco

nn

AUO

Innolu

x

HTC

TPK

(%) China

Taiwan

4540

20 179

3

-2 -6

-20-40

-20

0

20

40

60

Infosys

Ingram M

icro

Cisco

Intel

Qualco

mm

Oracle

Apple

IBM

Broadc

om

(%) US corporate spending

5/77

Source: Bloomberg, KDB Daewoo Securities Research

Share performances of growth industries since the beginning of the year

Global investors are taking note of growth industries

Among global IT hardware firms, EV, LED, 3D printing, and solar PV companies have delivered solid share performances this year

Investors are paying attention to industries with high medium- to long-term growth potential

Corporate investment key words: 1) efficiency, 2) energy/environment, and 3) software services

Policy uncertainties, which have weighed on corporate investment, will likely dissipate gradually; Companies hold abundant cash


307

8966

48

98

467

321

0

100

200

300

400

500

Tesla Motors Panasonic Cree Stratasys 3D Systems SunPower SolarCity

(%) E V LE D 3D print ing S olar

6/77

Source: KDB Daewoo Securities Research

Shipments and shipment growth of major IT devices in 2013

TV and PC demand slowed; Demand for smartphones

and tablet PCs surged

Smartphone shipments (1.01bn units) to exceed feature phone shipments (850mn units) in 2013

Tablet PC shipments (215mn units) to surpass notebook shipments (179mn units)

IT demand remained robust thanks to rapid demand growth related to mobile devices

Demand growth has slowed over the years for high-end smart devices, including AppleÊs iPhone and iPad, and SECÊs Galaxy S and Galaxy Note series

In 2013, mobile device demand growth was driven by mid-

to low-

end products; Chinese white-box market grew rapidly

[Introduction] Changes in global IT demand in 2013

724

1,013 1,012

850

130

215 201 179148 136

203 202

0

200

400

600

800

1,000

1,200

12 13F 12 13F 12 13F 12 13F 12 13F 12 13F

S mart phone

(mn units)

Feature phone Tablet Notebook Desk-top TV

+40% -16%

+65%-11%

-8%-1%

7/77


LCD panel shipment value in 2013FLCD panel shipment area in 2013F


Proportion of large-sized panel shipments dropped due to sluggish PC-

and TV-use demand

LCD shipments to rise 6% YoY in terms of area, but fall 5% YoY in terms of value in 2013

Shipment breakdown (in terms of value): TV proportion to fall from 53% in 2012 to 50% in 2013; notebook/monitor proportion to drop from 24% in 2012 to 22%in 2013

Proportion of mobile panel shipments (in terms of value): handset proportion to rise from 14% in 2012 to 18% in 2013

TV-use still takes the lionÊs share of LCD shipments in terms of both area and value

[LCD] 2013

review: Drop in proportion of large panels

TV (69%)

Monitor (13%)

Notebook (8%)

Tablet PC

(3%) Smartphone

(4%)

Other (3%)

14,260m2 (equivalent to 1.4x the geographical area of Korea)

TV (50%)

Monitor

(13%)

Notebook (9%)

Other (7%)

Tablet PC

(7%)

Smartphone

(13%)

US$89.6bn (W95tr)

8/77


LCD panel price trendsOP margins at SECÊs CE division and LGEÊs

HE division

Source: WitsView, KDB Daewoo Securities Research

Competition intensified in the TV panel market

TV OP margins at SEC and LG Electronics (LGE) stand at around 2%

LCD panel supply diversification and increased price-cutting pressure: Chinese TV makers increased purchases from local LCD panel makers

Chinese LCD TV sales to fall by 13% YoY in 2H

TV panel prices to decrease by more than 10% YoY on average in 2H; fall in TV panel prices to continue into 1H14

[LCD] 2013

review: Solid in 1H and sluggish in 2H

-4

-2

0

2

4

6

8

10

12

1Q08 1Q09 1Q10 1Q11 1Q12 1Q13

LGE's HE OP margin SEC's CE OP margin

(%)

Panel prices weighed down by decreased TV margins

LED TV margins improved

Slowdown inLCD TV growth

-12

-10

-8

-6

-4

-2

0

2

4Notebook Monitor TV TV (open-cell)

(%)

1Q13 2Q13 3Q13 4Q13F

TV panel price decline acclerates in 3Q4Q prices continue to fall despite utilization pull back

9/77


Global LCD panel makersÊ

operating profit trends

Earnings entered a down cycle; Shares have already reflected the sluggishness

Demand for large-sized LCD panels slowed: PC and TV demand dropped

Chinese LCD makersÊ aggressive capacity ramp-ups and high utilization levels exacerbated oversupply

Protracted down cycle: Operating losses continued for more than six quarters during the previous down cycle

Because the LCD industry is entering maturity, the down cycle is likely to last longer than in the past

[LCD] 2013

review:

Industry has entered a down cycle

-1,500

-1,000

-500

0

500

1,000

1,500

1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14F

SDC LGD AUO Innolux

(Wbn)

Losses for six quarters

Beginning of down cycle

10/77

Source: Company data, KDB Daewoo Securities Research

Global LCD panel makersÊ

OP margin trends

OP margin gaps between panel makers are narrowing

The drivers of Korean panel makersÊ valuation premiums·cost competitiveness and product differentiation·are gradually dissipating

OP margin gaps between panel makers are narrowing due to technological stagnation and commoditization in the supply chain

Only SDC has delivered outstanding profitability (2013F OP margin of 14%) thanks to its OLED technology

For LCD panels, BOE is projected to show the highest 2013F OP margin at 10%

Key to earnings differentiation:1) cost leadership and 2) product differentiation

[LCD] 2013

review: Commoditization

-50

-40

-30

-20

-10

0

10

20

30

08 09 10 11 12 13

AUO BOE Innolux LGD SDC(%)

E arnings gaps to narrow;S DC to outperform thanks to OLE D

11/77


Quarterly shipments of TVs and TV panels

Utilization cuts to clear inventory appear unavoidable

Heightened inventory risks in 2H13: 1) Excessive TV panel shipments in 1H and 2) end of Chinese governmentÊs subsidies

Panel suppliersÊ utilization increases further added to inventory risks.

Inventory cycle is becoming increasingly important in the LCD panel industry.

Historically, LG DisplayÊs (LGD) stock has risen during restocking cycles and has fallen during destocking

cycles.

[LCD] Supply: Persistent overcapacity

0

10

20

30

40

50

60

70

1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13F

80

90

100

110

120

130Panel (L) Set (L) Panel/set (R)

(mn units) (%)

Peak during previouscycle

Highest panel/set ratiosince 3Q10

12/77


Utilization of Taiwanese and Chinese panel makersUtilization of Korean and Japanese panel makers


Taiwanese and Chinese makers battle over market control

Panel makers are competitively raising utilization, playing a game of chicken

Panel makers seem determined to expand their market position at the expense of profitability

If overcapacity continues, the industry down cycle could last longer than expected

[LCD] Supply: Persistent overcapacity

0

20

40

60

80

100

1/10 7/10 1/11 7/11 1/12 7/12 1/13 7/13

LGD SDC Sharp(%)

0

20

40

60

80

100

1/10 7/10 1/11 7/11 1/12 7/12 1/13 7/13

AUO BOE China Star Innolux(%)

13/77


Global LCD panel capacity (based on glass input)

Capacity to grow 3.5% in 2014 Capacity growth (based on area): +4.6% YoY in 2013F vs. +3.5% YoY in 2014F

Domestic panel suppliers: +2.1% YoY for SDC and -1.9% YoY for LGD in 2014F

Chinese panel suppliers: +30.1% YoY for BOE and +12.6% YoY for CSOT in 2014F

Increasing mix of high-end displays, like IPS and high-

resolution panels, is eroding productivity

[LCD] Supply: Medium-

to long-term capacity expansion plans

0

10

20

30

40

50

60

13 14F 15F 13 14F 15F 13 14F 15F 13 14F 15F 13 14F 15F 13 14F 15F

-20

0

20

40

60

804G and previous (L) 5G (L) 6G (L) 7G (L) 8G+ (L) YoY growth (R)

(mn ㎡) (%)

S E C LGD Innolux A UO B O E CS O T

14/77

Source: DisplaySearch, KDB Daewoo Securities Research

ChinaÊs LCD capacityLCD capacity by region


ChinaÊs aggressive capacity ramp-up plans

Eight 8G lines to be online in China by 2015 (currently two lines).

2014F: BOE B5 (Hefei) and SDC Suzhou in 1Q; LGD Guangzhou in 3Q.

2015F: BOE B8 (Chongqing), CSOT Shenzhen 2, CEC Panda/Sharp.

ChinaÊs LCD capacity to overtake KoreaÊs in 2018.



0

5

10

15

20

25

30

06 07 08 09 10 11 12 13 14F 15F 16F

Korea Taiwan China Japan

(mn m2)

0

2

4

6

8

10

12

14

16

18

06 07 08 09 10 11 12 13 14F 15F 16F

0

20

40

60

80

100

120

BOE (L) CSOT (L)

SDC (L) LGD (L)

Other (L) YoY growth (R)

(mn m2) (%)

15/77

Source: Company materials



BOE has been most aggressive in increasing capacity

16/77


Global display equipment investment

Equipment investment should recover in 2014, but still fall short of levels during previous cycles

77% of equipment spending in 2014 will go to production facilities in China

Chinese governmentÊs tariff hike on foreign-made panels (5%8%) is spurring capacity expansion within China

A recovery of the equipment market will require greater investments in new technologies (LTPS, OLED, etc.)

Equipment price declines due to the stalled development of LCD technologies are among the main culprits behind the sluggish equipment market.



0

2

4

6

8

10

12

14

16

00 02 04 06 08 10 12 14F

-100

-80

-60

-40

-20

0

20

40

60

80

100

120Display equipment investment (L)

YoY growth (R)

(US$bn) (%)

Display equipment investment will recover next year,but remain low

17/77


Global TV shipments and growth

If it werenÊt for China⁄ Global LCD TV shipments were resilient at 90.7mn units (+4% YoY) in 1H13.

But China accounted for 24.9mn units (+29% YoY) thanks to rush purchases ahead of the end of subsidies ⁄

⁄ overshadowing weak demand in developed countries, which contributed only 37.3mn units (-10% YoY) in 1H13.

Regional breakdown of TV shipments

(2013F)

- North America:

37.7mn units

(19%)

- Latin America: 22.85mn units

(11%)

- Europe: 45mn units

(22%)

- China: 50.7mn units

(25%)

- Japan: 5.8mn units

(3%)

- Asia: 25mn units

(13%)

- MENA:

13.78mn units

(7%)

[LCD] Demand: LCD TV growth engine losing steam

0

5

10

15

20

25

30

Japan North America Europe China Asia-Pacific Latin America Middle East andAfrica

-30

-20

-10

0

10

20

30

401H12 (L) 1H13 (L) YoY growth (R)

(mn units) (%)

1H13 global LCD TV shipments: 90.7mn units(+4% YoY)

18/77Source: KDB Daewoo Securities Research

Chinese government's subsidy program

ChinaÊs subsidiesChina ended its energy-efficient subsidy program in May 2013

Potential renewal in January 2014 likely to have smaller impact than previous program

1) Subsidies to be given to manufacturers instead of end-consumers.

2) New program estimated to be around RMB8-10bn, much smaller than previous program (RMB26.5bn)

3) Benefits likely to be applied only to large, high-end TVs due to stricter energy efficiency index (EEI) standards

China has implemented subsidy policies for major household appliances since 2008 to stimulate domestic consumption


Rural home appliance subsidy Urban home appliance subsidy Energy-efficiency subsidy

OverviewSubsidies for rural residents and laborerswho purchase home appliances

Subsidies for urban residents in 28 citieswho replace old home appliances with new ones

Subsidies to promote the consumptionof energy-saving home appliances

Pilot period 12/07 11/08 6/09 5/10

Full-scale implementationperiod

12/08 11/12 6/10 2/11 6/12 5/13

Region

Three provinces during pilot period;14 provinces during full-scaleimplementationperiod

Nine provinces during pilot period;Expanded to 28 provinces in June,2009

Nationwide

Subsidy 13% of sales price 10% of sales price

Subsidy capby product(RMB

TV: 455Desktop PC : 390Laptop: 585Handset: 130Air conditioner: 455

TV: 400Desktop PC : 400Air conditioner: 350

TV: 100-400Air conditioner: 180~400

Budget (RMBbn) 66.2 30 26.5Sales volume (mn units) 240 92.48Sales value (RMBbn) 567.49 342

19/77


ChinaÊs LCD TV shipmentsJapanÊs LCD TV shipments


Subsidies do not generate demand, they merely pull in demand

LCD TV sales in developed markets have continued to decline after peaking in 2010

Based on demographic trends, JapanÊs quarterly TV sales should be around 2.5mn unitsdemand was pulled forward in 2010-2011.

ChinaÊs LCD TV growth engine is also running out of steam50.7mn units (+3% YoY) in 2013F.


0

1

2

3

4

5

6

7

8

1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13

-100

-50

0

50

100

150LCD TV sales (L) YoY growth (R)

(mn units) (%)

LCD TV demand declinedsignificantly after end of eco-

point program

0

2

4

6

8

10

12

14

16

18

1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13

-50

0

50

100

150LCD TV sales (L) YoY growth (R)

(mn) (%)

End of energysubsidies

First YoY decline

20/77


Global LCD TV shipment trend

Lack of catalysts for TV replacement demand

In developed markets, LCD TV consumption sharply increased during 2006-08 (average usage of 5-7 years)

In emerging markets, LCD TV consumption grew full swing during 2009-10

The average TV replacement cycle is 7 years, suggesting a new cycle is imminent in developed marketshowever, there are no catalysts.

CRT LCD (2006), LCDLED (2009), LED? (3D, Smart, UHD, OLED).

Smartphones

have a replacement cycle of 1-2 years, much shorter than the 7-8 years for TVs

Without any new breakthroughs in viewer experience, the TV market is likely to remain weak for a prolonged period


0

20

40

60

80

06 07 08 09 10 11 12 13 14F

-20

0

20

40

60

80

100

120

LCD TV shipments (L) YoY growth (R)

Developed markets: Replacement cycle

Emerging markets:Replacement cycle

TV market s tagnat ion cont inues

(mn units) (%)

21/77

Source: Business Insider

NBA Finals TV viewers (Michael Jordan

vs. LeBron

James)TV ratings for the opening game of the World Series

Source: Business Insider

Younger generation is increasingly breaking away from the traditional TV platform

US cable TV subscribers: 45mn (2009)40mn (2013F)

Time Warner Cable saw its subscribers decrease by 310,000 in 3Q alone

Fixed-line internet subscribers are also on the decline (cord-cutting)

[LCD] Demand: Breaking away from the traditional TV platform

9.4

10.9

13.7

9.5

8.0

10.5

9.2

11.9

8.7

5.06.0

8.0

4.63.6

5.84.8

6.37.6

8.9

3.6

4.24.7

0

2

4

6

8

10

12

14

16

18

02 03 04 05 06 07 08 09 10 11 12

Overall ratings Ratings among 18-49 year olds

(%)

24

21

2725 26

29

9

18 1716

0

5

10

15

20

25

30

35

1991 v

s. Lak

ers

1992 v

s. Trail B

lazers

1993 v

s. Sun

s

1996 v

s. Sup

erSonic

s199

7 vs.

Jazz

1998 v

s. Ja

zz

2007 v

s. Spu

rs

2011 v

s. Mave

ricks

2012 v

s. Thun

der

2013 v

s. Spu

rs

(mn)

22/77


US media consumption Percentage of population that watches regular broadcast channels

is on the decline

Source: eMarketer, Business Insider

Access to broadcast content via internet-connected devices is increasing

Proportion of the population accessing broadcast content via internet-connected devices (excluding TV) is rising

Percentage watching VODs (time-shifting) and broadcast content via mobile devices (space-shifting) is on the rise

Rising speed of wireless broadband: Download time for a movie 30 min (2G)6 min (3G)1 min (4G LTE)

[LCD] Demand:

Breaking away from the traditional TV platform

0

10

20

30

40

50

TV Online Radio Print Other Mobile

2009 2010 2011 2012 2013

(%)(%)

15.6

19.5 19.8

0

10

20

30

40

50

2011 2012 2013

Watch first-run programming Regularly watch Do not watch

23/77Source: Ministry of Science, ICT and Future Planning, KDB Daewoo

Securities Research

Next-generation broadcast technology road map

Proliferation of UHDTVs

is unlikely until 2016

HDTV: It took seven years to: 1) set standards, 2)transmit pilot broadcasts, and 3) sell HDTVs

Official HDTV broadcasting began in 1998 under Advanced Television Systems Committee (ATSC) standards

UHDTV sales forecasts: 2mn units (1%, 2013F)11mn units (5%, 2014F)

Proliferation of UHDTVs is unlikely to occur until UHD broadcast content is available (2016)

UHDTVs

boast resolution four times higher than that of existing

HDTVs

[LCD] Demand: UHD TV

2013 2014 2015 2016 2017 2018

Broadcast environment analysis

Establishment of pilot studio

Transmission/encoding research

4K

pilot transmissionComparison

of transmission standards

Setting of domesticstandards

4K

pilot broadcasts

Commercialization

Commercial production Of set-top boxes

Terrestrial

4K

pilot broadcasts

4K UHDcommercialization

Cable

4K

pilot broadcasts

4K UHDcommercialization

4K UHD

pilot broadcasts for settingstandards

SatelliteChollian(KA-band)

Olleh

1(KU-band)

8K UHD

pilot broadcasts for setting standards

4K UHD

pilot broadcasts for setting

standards

4K UHD

pilot broadcasts for setting

standards

24/77


[LCD] Demand: Apple iTV

Apple iTV (expected to be launched in 2H14) could trigger TV replacement demand; But uncertainties remain high

=

Chasm“A deep separation between visionaries (early adopters, values technology, and performance) and pragmatists (mass majorities, values solution and convenience). Disruptive or discontinuous innovation creates a bandwagon effect in which enough momentum builds, then the product becomes a de facto standard.” — Geoffrey A. Moore, Crossing the Chasm

25/77


Tablet PC shipments and M/S of Apple and SECGlobal tablet PC shipments and average display size


Tablet PCs to expand to the B2B market

Global tablet PC shipment forecasts: 215mn units (+79% YoY) in 2013F297mn units (+38% YoY) in 2014F

It took three years for Android smartphones to catch up with the iPhonetablet PCs to follow a similar trajectory

Tablet PCs to expand from the B2C market to the B2B market, including the public services, education, and healthcare sectors

In terms of shipment area, however, tablet PCs account for only 5-6% of the overall LCD market

[LCD] Demand:

Second growth story for tablet PCs

0

5

10

15

20

25

30

1Q10 1Q11 1Q12 1Q13 1Q14F

0

20

40

60

80

100Apple (L) SEC (L) Apple M/S (R) SEC M/S (R)

(mn units) (%)

0

20

40

60

80

100

1Q10 1Q11 1Q12 1Q13 1Q14F

0

2

4

6

8

10

12Shipments (L) Avg. display size (R)

(mn units) (inches)

iP ad mini ef fect

26/77

Global desktop PC shipments

Entered a long-term low growth phase without sales volume growth

Global tablet PC shipmentsGlobal notebook shipments

Global LCD TV shipments

Source: IDC, DisplaySearch, KDB Daewoo Securities Research

[LCD] Demand

by application

0

50

100

150

200

250

07 08 09 10 11 12 13F 14F 15F

-20

-10

0

10

20

30

40Shipments (L) YoY growth (R)

(mm units) (%)179mn(-11%) 164mn

(-8%)

0

100

200

300

400

07 08 09 10 11 12 13F 14F 15F

0

50

100

150

200

250


(mn units) (%)

215mn(+79%)

297mn(+38%)

0

40

80

120

160

200

07 08 09 10 11 12 13F 14F 15F

-20

-10

0

10

20


(mn units) (%)

136mn(-8%)

128mn(-6%)

0

40

80

120

160

200

240

07 08 09 10 11 12 13F 14F 15F

-20

0

20

40

60

80Shipments (L) YoY growth (R)(mn units) (%)202mn

(-1%)206mn(+2%)

27/77


[LCD] Supply/demand to improve only modestly

(supply +3.5% < demand

+5.5%)

▶ Supply 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13F 1Q14F 2Q14F 3Q14F 4Q14F 2011 2012 2013F 2014F 2015FGlass input capacity (km2) 50,164 52,255 53,966 55,070 54,946 54,904 55,440 55,905 56,092 56,633 57,558 58,649 197,345 211,455 221,194 228,932 243,177

SDC 12,428 12,441 12,356 12,316 12,151 12,026 11,923 11,894 11,876 12,216 12,403 12,518 48,529 49,541 47,993 49,013 50,733LGD 10,968 12,020 12,810 13,005 12,871 12,485 12,469 12,552 12,357 12,107 12,272 12,684 45,308 48,803 50,377 49,421 53,115Innolux 8,279 8,296 8,342 8,406 8,406 8,713 8,907 9,092 9,082 9,082 9,082 9,082 32,162 33,323 35,117 36,326 36,306AUO 7,225 7,330 7,207 7,433 7,475 7,475 7,606 7,606 7,676 7,758 7,758 7,751 28,224 29,195 30,161 30,944 30,911Sharp 3,735 3,769 3,833 3,824 3,819 3,819 3,764 3,762 3,761 3,761 3,862 3,853 14,781 15,161 15,163 15,237 15,412BOE 1,786 2,116 2,693 2,907 2,918 3,026 3,191 3,356 3,672 3,878 4,173 4,533 5,305 9,501 12,491 16,256 20,358CSOT 495 990 1,403 1,865 1,984 1,988 1,990 1,990 1,990 2,155 2,320 2,485 248 4,752 7,952 8,951 11,838Other 5,248 5,294 5,322 5,316 5,323 5,373 5,591 5,653 5,678 5,675 5,688 5,742 22,788 21,180 21,939 22,784 24,505

Panel shipment area (km2) 28,250 31,034 34,497 36,584 31,376 34,183 34,912 36,103 31,752 33,869 37,701 38,705 112,566 130,365 136,574 142,027 151,694Notebook 3,136 3,440 3,548 3,242 2,539 2,909 2,728 2,580 2,411 2,514 2,673 2,749 12,479 13,366 10,756 10,348 10,036Tablet PC 469 711 837 1,347 677 957 1,421 1,582 1,330 1,665 1,894 2,453 1,740 3,364 4,637 7,342 8,405PC monitor 5,568 5,437 5,464 5,649 4,840 5,203 5,051 5,080 5,093 5,191 5,013 5,422 23,180 22,119 20,174 20,718 21,019LCD TV 18,643 20,968 24,085 25,862 22,756 24,542 25,072 26,219 22,335 23,861 27,397 27,388 73,335 89,558 98,590 100,981 109,333Other 433 479 564 483 564 571 641 642 582 639 724 693 1,832 1,959 2,418 2,638 2,901

Capacity conversion ratio (%) 65.9% 69.0% 73.8% 76.4% 65.7% 71.7% 72.6% 74.4% 65.0% 68.5% 74.9% 75.3% 67.8% 71.4% 71.1% 71.0% 71.3%Utilization (%) 76% 78% 83% 82% 80% 88% 90% 85% 79% 83% 91% 91% 76% 80% 86% 86% 88%Yield efficiency (%) 86% 88% 89% 93% 82% 82% 81% 87% 82% 82% 82% 83% 89% 89% 83% 83% 81%

YoY capacity growth (%) 5.7 6.6 7.0 9.1 9.5 5.1 2.7 1.5 2.1 3.1 3.8 4.9 14.6 7.1 4.6 3.5 6.2SDC 6.4 2.9 0.1 -0.8 -2.2 -3.3 -3.5 -3.4 -2.3 1.6 4.0 5.3 17.7 2.1 -3.1 2.1 3.5LGD 2.3 7.7 9.1 11.3 17.4 3.9 -2.7 -3.5 -4.0 -3.0 -1.6 1.1 18.8 7.7 3.2 -1.9 7.5Innolux 8.0 3.8 1.5 1.5 1.5 5.0 6.8 8.2 8.0 4.2 2.0 -0.1 11.7 3.6 5.4 3.4 -0.1AUO 5.6 3.5 0.5 4.2 3.5 2.0 5.5 2.3 2.7 3.8 2.0 1.9 7.1 3.4 3.3 2.6 -0.1Sharp 0.0 0.9 2.6 6.9 2.2 1.3 -1.8 -1.6 -1.5 -1.5 2.6 2.4 -0.2 2.6 0.0 0.5 1.1BOE 86.5 72.2 93.1 68.6 63.4 43.0 18.5 15.5 25.8 28.2 30.8 35.1 146.2 79.1 31.5 30.1 25.2CSOT 653.3 300.8 100.8 41.9 6.7 0.3 8.4 16.6 24.9 0.0 1,820.0 67.3 12.6 32.3Other -5.5 -4.7 -4.8 -2.6 1.4 1.5 5.1 6.3 6.7 5.6 1.7 1.6 20.7 -7.1 3.6 3.8 7.6

▶ Demand

Set units ('000 units) 148,848 153,096 166,366 204,122 170,056 168,774 177,398 215,438 177,686 185,931 196,617 234,912 629,194 672,432 731,666 795,145 836,884Notebook 49,942 48,786 51,802 50,439 42,878 42,514 45,396 48,573 39,265 38,562 41,503 44,757 209,201 200,969 179,361 164,087 158,344Tablet PC 17,100 23,466 26,946 52,445 48,477 46,817 48,879 70,500 61,500 67,000 73,500 95,000 59,736 119,957 214,673 297,000 340,000Desktop PC 38,601 36,592 36,496 36,529 33,880 33,144 34,098 34,876 32,035 32,050 32,078 32,182 154,977 148,218 135,998 128,345 126,420LCD TV 43,205 44,252 51,122 64,709 44,821 46,299 49,025 61,488 44,886 48,318 49,536 62,973 205,279 203,288 201,633 205,713 212,120

Set area (km2) 24,203 25,207 28,916 35,427 26,217 26,975 28,893 35,358 27,115 29,006 30,342 37,421 105,248 113,753 117,443 123,884 132,370Notebook 2,864 2,738 2,939 2,858 2,430 2,407 2,589 2,766 2,236 2,194 2,379 2,561 11,752 11,399 10,191 9,370 9,087Tablet PC 500 686 792 1,545 1,108 1,042 1,077 1,557 1,335 1,446 1,571 2,035 1,741 3,522 4,784 6,388 7,312Desktop PC 4,669 4,407 4,457 4,585 4,245 4,177 4,289 4,509 4,134 4,160 4,156 4,286 18,256 18,119 17,220 16,736 16,980LCD TV 15,776 16,941 20,215 26,000 17,923 18,831 20,355 25,941 18,846 20,635 21,596 27,896 71,834 78,932 83,050 88,973 96,331Other 394 436 512 439 512 519 582 584 564 571 641 642 1,665 1,781 2,198 2,418 2,660

Panel/set ratio (%) 116.7% 123.1% 119.3% 103.3% 119.7% 126.7% 120.8% 102.1% 117.1% 116.8% 124.3% 103.4% 107.0% 114.6% 116.3% 114.6% 114.6%Notebook 112% 121% 122% 123% 105% 116% 102% 103% 109% 110% 108% 110% 106% 117% 106% 110% 110%Tablet PC 79% 96% 72% 102% 63% 90% 108% 109% 96% 110% 105% 140% 100% 96% 97% 115% 115%Desktop PC 123% 123% 121% 128% 115% 123% 115% 118% 123% 125% 119% 123% 127% 122% 117% 124% 124%LCD TV 114% 113% 104% 118% 124% 125% 108% 117% 113% 113% 111% 113% 102% 113% 119% 113% 113%Other 104% 101% 118% 102% 109% 104% 110% 112% 103% 105% 113% 110% 110% 110% 110% 109% 109%

YoY demand area growth (%) 8.4% 7.4% 6.8% 9.4% 8.3% 7.0% -0.1% -0.2% 3.4% 7.5% 5.0% 5.8% 13.2% 8.1% 3.2% 5.5% 6.8%Notebook 7% 2% -7% -12% -15% -12% -12% -3% -8% -9% -8% -7% 4% -3% -11% -8% -3%Tablet PC 126% 74% 66% 139% 122% 52% 36% 1% 21% 39% 46% 31% 254% 102% 36% 34% 14%Desktop PC 9% -1% -7% -3% -9% -5% -4% -2% -3% 0% -3% -5% 2% -1% -5% -3% 1%LCD TV 7% 9% 11% 11% 14% 11% 1% 0% 5% 10% 6% 8% 16% 10% 5% 7% 8%Other 17% -3% 17% 0% 30% 19% 14% 33% 10% 10% 10% 10% 39% 7% 23% 10% 10%

▶ Supply-demand

Oversupply ratio (%)Managed utilization 114% 115% 107% 119% 118% 122% 109% 116% 113% 114% 111% 115% 106% 114% 116% 113% 113%Full utilization 142% 139% 123% 137% 140% 133% 115% 129% 136% 130% 116% 120% 133% 135% 129% 125% 122%

28/77

Source: SECÊs

Analyst Day 2013

Global

LCD supply/demand

Appropriate utilization level is estimated at 88%

Oversupply ratio: Supply capacity/demand (in terms of shipment area) 129% in 2013F 125% in 2014F

Supply/demand conditions to improve YoY, but not enough to resolve oversupply

Utilization for the maintenance of appropriate inventory levels and stable prices is estimated at 88%

if global average utilization exceeds 88%, the likelihood of an increase in inventories and a fall in prices will climb

Normal level: Supply is 10% higher than demand

[LCD] Conclusion: Limited improvement in supply/demand conditions and intense competition in 2014

0

10

20

30

40

50

1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14F

80

90

100

110

120

130

140

150

160Supply (L) Demand (L) Oversupply (R)

(mn m2) (%)

Ove r su p p l y

Sh o r ta g e

Supply/demand ratio assuming100% utilization

29/77

Source: Gartner

OLED production capacityGartnerÊs Hype Cycle for OLED

Source: DisplaySearch, KDB

Daewoo Securities Research

Expectations have been sufficiently lowered

Historically, new technologies have passed through phases of inflated expectations and subsequent disillusionment

Markets for new technologies typically start taking off after escaping the trough of disillusionment

In 2014, companies to focus more on securing new technologies than on capex

[OLED] Reigniting growth engines after disillusionment

0

500

1,000

1,500

2,000

2,500

10 11 12 13 14F 15F

0

50

100

150

200

250

3004G (L) 5.5G (L) 6G (L)

8G (L) YoY growth (R)

(km2) (%)

30/77

Source: SECÊs

Analyst Day 2013

SDCÊs

medium-

to long-term revenue trend

SEC to increasingly use OLED displays in its products

SECÊs smartphone shipment outlook: 310mn units (+34% YoY) in 2013F 380mn units (+23% YoY) in 2014F

OLED penetration: 18% of global smartphones; 55% of SECÊs smartphones

Competition to shift to form factor from resolution applications of flexible OLED to expand

OLED technology has a wide range of applications

[OLED] Reigniting growth engines after disillusionment

SDC to pursue AMOLED-

driven growth

31/77

Source: Company data, KDB


LGE G2 Quick Window caseSEC Galaxy S4 S-View case

Source: Company data, KDB


Partial activation of display to minimize power consumption

It is impossible to turn on only a portion of an LCD screen, as the entire display needs backlighting

With OLED, only the area that needs to be turned on can be activated, with other areas remaining dark

As each individual pixel directly emits light in an OLED display, electric current does not flow through the inactive area

(LCD displays suffer from light leakage lower contrast ratio than OLED displays)

[OLED] Key strengths: 1) Lower power consumption

OLED: Partial activation of screen possible

reduced power consumption

LCD: Partial activation of screen impossible

no reduction in power consumption

32/77

Source: Company data

LGEÊs

G Flex and SECÊs Galaxy Round SECÊs curved OLED TV (55‰)


OLED technology can be fabricated on plastic (instead of glass) substrates, facilitating innovative form factor designsbendable, rollable, and foldable displays

Smartphones with flexible OLED displays: 0.2% (2013F) 2% (2015F) 40% (2018F)

With the rise of the wearable device market, flexible OLED technology to gain increasing importance

[OLED] Key strengths: 2) Design

Curved and flexible display

33/77

Source: World Wide Web

Microsoft 3D desktop with a transparent display Transparent display featured in Minority Report


Transparent displays to have wide applications in various industries

Organic materials: Transparent and light-emitting (backlight units are not necessary)

Applications: Vehicle head-up displays (HUD), wearable devices, furniture and home appliances, advertising, etc.

Transparent display market to grow from US$1bn (2017F) to US$10bn (2022F)

Current transparency is only 60%

oxide TFT, transparent wiring, and high UV-resistant materials are needed

[OLED] Key strengths: 3) Creation of new demand

34/77

Source: SECÊs Analyst Day 2013

SDCÊs

smartphone

segment strategy

OLED panels to be adopted in low-

to mid-end smartphone

models

SDC to shut down its 4G LCD line; small- to medium-sized display lines to be fully dedicated to OLED production

High-end models: Flexible display technology (profitability)

Mid-end models: Economies of scale and cost-cutting (price competitiveness)

Demerits of OLED (relative to LCD):

1) Difficult to make high-resolution displays

2) High price point

3) Short product life

However, technological advances seems to have resolved most of these problems

[OLED] Smartphones

(low-

to mid-end models)

35/77

Source: SECÊs Analyst Day 2013

SDCÊs

tablet PC segment strategy

OLED to significantly boost performance of large-display devices

SECÊs OLED-equipped Galaxy Tab 7.7 failed to take off (high price point, low picture quality, short battery life)

1) Glass substrates and 2) batteries make large-sized tablet PCs thick and heavy

SECÊs premium tablet PC model expected to adopt OLED beginning next year (thickness and weight to decrease by 40-45%)

LTPS and oxide TFT can significantly reduce power consumption smaller battery

Devices with large displays (greater than 7ÊÊ) have been criticized for their bulkiness and weight

AppleÊs iPad

has become thicker and heavier since it adopted Retina

Apple is now more interested in reducing power consumption (with oxide TFT) than in improving picture quality

[OLED] Tablet PCs

36/77

Global tablet PC shipments and % of OLED-equipped devicesGlobal mobile phone shipments and % of OLED-equipped phones

18% of smartphones

and 3% of tablet PCs to adopt OLED by 2015

SEC: 36% of mobile phones (and 50% of smartphones) to use OLED displays

OLED to become a differentiating factor amid fierce competition in the mid-end smartphone segment

In 2014, 3% of SECÊs tablet PCs to be equipped with OLED panels (1.9mn units)

[OLED] Mobile-use demand outlook

Source: KDB Daewoo Securities Research Source: KDB Daewoo Securities Research

0

20

40

60

80

100

120

1Q10 1Q11 1Q12 1Q13 1Q14F 1Q15F

0

2

4

6

8

10Excluding SEC (L)

SEC (L)

OLED proportion (R)

(mn units) (%)

0

100

200

300

400

500

600

700

1Q10 1Q11 1Q12 1Q13 1Q14F 1Q15F

0

10

20

30

40

50

60Smartphone (L)

Feature phone (L)

OLED proportion within SEC (R)

OLED proportion (R)

(mn units) (%)

37/77

OLED panel shipment areaGlobal TV sales and % of OLED-equipped products

Mass production of OLED TVs to be delayed by at least a year

Sluggish TV market, marketing focus on UHDTV, and delays to the launch of the Apple iTV

OLED TV sales forecast for 2015 was revised down from 3.4mn units (1.5%) to 1.75mn (0.8%)

In terms of shipment area, sales should surge 100% YoY in 2015

[OLED] TV-use

demand outlook

Source: KDB Daewoo Securities Research Source: KDB Daewoo Securities Research

0

200

400

600

800

1,000

1,200

1,400

1Q10 1Q11 1Q12 1Q13 1Q14F 1Q15F

0

50

100

150

200

250

300Handset (L) Tablet (L)

TV (L) YoY growth (R)

(km2) (%)

OLED proportion in TV segment: 1.0%OLED proportion in tablet segment: 3.4%

0

20

40

60

80

1Q10 1Q11 1Q12 1Q13 1Q14F 1Q15F

0

1

2

3

4

5Excluding SEC (L)

SEC (L)

OLED proportion (R)

(mn units) (%)

38/77

Cost breakdown for 5‰

OLED panels Cost breakdown for small-

and mid-sized OLED panels

Small-

and mid-sized OLED panels are more cost competitive than LCDs

5‰-or-smaller OLED panels no longer incur heavier production costs than LCDs

OLED production can achieve greater economies of scale than LCD production, given its heavy fixed cost burdens (e.g., depreciation and personnel costs)

Cost reduction is easier for OLED than for LCD

In light of its improved cost competitiveness, OLED technology is likely to be used in low-end smartphones

[OLED] Cost breakdown

Source: DisplaySearch, KDB Daewoo Securities Research Source: DisplaySearch, KDB Daewoo Securities Research

Module38%

Encapsulation2%Array

3%

Depreciation22%

Labor14%

Indirect5%

OLED materials16% 0

5

10

15

20

25

30

1Q13 3Q13 1Q14F 3Q14F 1Q15F 3Q15F

Module Encapsulation OLEDArray Depreciation Labor

Indirect

(US$)

Current 5" LCD panel cost level

39/77

Cost breakdown for 55‰

OLED TV panel OLED and LCD panel costs

Large-sized OLED still incurs greater costs than LCD

Tablet PCs: 7‰ LCD cost: US$32; 7.7‰ OLED cost: US$63 (+60%; based on the same size)

TV: 55‰ LCD cost: US$450; 55‰ OLED cost: US$2,300 (+5.1x)

OLED TV costs are projected to fall by a CAGR of 30% through 2016; Likely to fall to US$780 in 2016

[OLED] Cost breakdown

Source: DisplayBank, KDB Daewoo Securities Research Source: DisplaySearch, KDB Daewoo Securities Research

0

20

40

60

80

100

2012 2013

7.0" LCD 9.0" LCD 7.7" OLED

(US$)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

1Q13 3Q13 1Q14F 3Q14F 1Q15F 3Q15F

Module Encapsulation OLEDArray Depreciation LaborIndirect

(US$)

Current 55" LCD panel cost

40/77


[OLED] Supply outlook

41/77


[OLED] Demand outlook

Outlook for OLED-based device demand

Smartphone

commoditization likely to drive up tablet PC business growth

2014F OLED panel demand growth (based on area): +57% YoY

Smartphone-use: +28% YoY; 160mn units (2013F) 210mn units (2014F)

Tablet PC-use: +12,348% YoY; 15,000 units (2013F) 1.9mn units (2014F)

OLED TV-use: +1,070% YoY; 31,000 units (2013F) 370,000 units (2014F)

★ Demand 1Q13 2Q13 3Q13 4Q13F 1Q14F 2Q14F 3Q14F 4Q14F 1Q15F 2Q15F 3Q15F 4Q15F 2012F 2013F 2014F 2015F 2016F

▶ OLED demandPanel units ('000 units)

Phone (smartphone) 32,046 40,513 47,330 45,066 46,284 51,211 55,356 58,709 55,994 61,954 66,970 71,026 117,513 164,955 211,560 255,944 282,750Mobile PC (tablet PC) 15 48 201 458 1,160 1,234 1,974 2,221 3,624 0 15 1,867 9,053 28,433TV 2 9 9 11 55 71 110 132 260 338 525 629 0 31 367 1,752 3,722

Total 32,063 40,522 47,339 45,077 46,386 51,482 55,924 60,001 57,488 64,266 69,715 75,280 117,513 165,002 213,795 266,749 314,905QoQ growth (%) 1% 26% 17% -5% 3% 11% 9% 7% -4% 12% 8% 8%YoY growth (%) 19% 43% 53% 41% 45% 27% 18% 33% 24% 25% 25% 25% 61% 40% 30% 25% 18%

Average display size (inches)Phone (smartphone) 4.8'' 4.8'' 4.8'' 4.9'' 5.0'' 4.9'' 4.9'' 4.8'' 5.0'' 5.0'' 5.0'' 5.1'' 4.7'' 4.8'' 4.9'' 5.0'' 5.2''Mobile PC (tablet PC) 7.7'' 8.4'' 8.3'' 8.3'' 8.3'' 8.4'' 8.5'' 8.6'' 8.7'' 7.7'' 8.3'' 8.6'' 9.0''TV 55.0'' 55.0'' 55.0'' 55.0'' 55.0'' 55.0'' 55.0'' 55.0'' 55.0'' 55.0'' 55.0'' 55.0'' 55.0'' 55.0'' 55.0'' 55.0''

Panel area (km2)Phone (smartphone) 227 289 344 346 357 383 414 436 464 526 578 646 795 1,208 1,591 2,221 2,603Mobile PC (tablet PC) 0 1 4 9 22 24 39 45 75 0 0 36 183 635TV 2 8 8 9 46 59 92 110 217 282 437 525 0 26 306 1,461 3,104

Total 229 297 351 355 403 446 514 568 705 847 1,061 1,246 795 1,235 1,934 3,865 6,341QoQ growth (%) -2% 30% 18% 1% 13% 11% 15% 11% 24% 20% 25% 17%YoY growth (%) 37% 52% 59% 49% 76% 50% 46% 60% 75% 90% 106% 119% 55% 57% 100% 64%

42/77


Global OLED supply and demand conditions

OLED business is likely to regain traction next year due to

its adoption in tablet PCs and

wearable devices

In 2014, demand growth (57%) is expected to outpace capacity expansion (37%)

Smartphones: Small- and medium-sized OLEDs are likely to be used in low-end smartphones thanks to improved cost competitiveness.

Tablet PCs: Still more expensive than LCDs, but likely to be used in high-priced tablet PCs due to superior form factor

Wearable devices: Curved or flexible displays for wearable devices

TVs: Full-swing mass production of UHDTVs unlikely to materialize until end-2016

OLED capacity likely to grow 37% (based on input area) in 2014

Considering improving production yields, supply growth is forecast to outstrip capacity expansion.

Supply and demand likely to be in balance in 2014

[OLED] Conclusion

0

200

400

600

800

1,000

1,200

1,400

1Q10 1Q11 1Q12 1Q13 1Q14F 1Q15F

0

20

40

60

80

100

120

140Supply (L) Demand (L) Oversupply ratio (R)

(km2) (%)

43/77


Global TSP shipments (in terms of value)Global TSP shipments (in terms of area)


TSP market exhibited only modest growth despite rapid shipment area expansion

Smartphones: Shipment volume rose; average screen size expanded; shipment area increased by 54% YoY

Tablet PCs: Shipment volume rose; average screen size shrank; shipment area increased by 59% YoY

Average TSP price per unit area appears to have declined by 30%

[TSP] 2013

review

0

2

4

6

8

10

12

14

16

2012 2013F

Handset Tablet Notebook Other

(mn m2)

+69% YoY

0

5

10

15

20

25

30

35

2012 2013F

Handset Tablet Notebook Other

(US$bn)

+17% YoY

44/77

[TSP] Medium-

to long-term market outlook

TSP market to expand at CAGR of 16%; TSP PCs to account for 35%

of total PCs by 2016


2.23.1

4.3

7.6

12.5

20.5

27.0

31.7

35.0

37.8

0

5

10

15

20

25

30

35

40

45

07 08 09 10 11 12 13F 14F 15F 16F

0

20

40

60

80

100

120

140Revenue (L) YoY growth (R)

(US$bn) (%)

iPhone

Galaxy S,iPad

Notebooks, monitorsadopt touch UI

45/77


[TSP] SWOT analysis of Korean TSP makers

STRENGTHS WEAKNESSES

OPPORTUNITIES THREATS

1.

Customers include SEC and LGE

2.

Market dominance to increase on advanced technology, high productivity, and abundant cash

1.

Relatively high cost structure

2.

Lack of vertical integration for reinforced glass and ITO film

1.

SEC to enhance tablet

PC marketing campaigns

2.

TSP to be adopted full swing in laptops and monitors

3.

Film-based TSP has higher price competitiveness than glass-based TSP

1.

Intense competition: Entries of large companies

2.

Mid-

to low-end mobile devices driving growth

3.

Chinese makersÊ

aggressive marketing campaigns

46/77

Adoption of film-based TSPs

to expand


[TSP] Core trends: 1) Film-based TSP

Mobile (smartphones, tablet PCs)

Large-sized

(monitors, AIO PCs)

Mid-

to large-sized

(laptops)ITO film supply shortages to easeSlim GFF (0.25mm)

Resistive(ITO)

Capacitive(ITO)

Capacitive(Metal)

AlternativeTechnology

Projected (Self)

Projected (Mutual)

Surface

Metal Mesh

Silver Nano Wire

Infra Red

Acoustic

Optical

CNT / Graphene

Film

Integrated

Glass

G2(OGS) GG(SITO) GG(DITO)

On - Cell In - Cell

GF2(DITO) G1F GFF

Resistive(ITO)

Capacitive(ITO)

Capacitive(metal)

Alternativetechnologies

Projected (self)

Projected (mutual)

Surface

Metal mesh

Silver

nanowire

Infrared

Acoustic

Optical

CNT/graphene

Film

Integrated

Glass

G2

(OGS) GG

(SITO) GG

(DITO)

On-cell In-cell

GF2

(DITO) G1F GFF

47/77

Source: Displaybank, KDB Daewoo Securities Research

Comparison of narrow bezels

Photo process is essential for narrow bezel design

Demand for narrow bezel designs that meet both large-sized and mobile needs is rising

Commercial production of 30/30um products started this year; Bezels to narrow further to 20/20um and 10/10um in 2014

Photo process: Photosensitive paste method (Ag) has recently been preferred to metal-on-ITO technology

[TSP] Core trends: 2) Narrow bezel design

Differentiation factor for TSPs: Ensuring high narrow bezel production yields using photo process Galaxy Note 8.0 Galaxy Tab

3 8.0

Screen printing Photo process

48/77


TSP for notebooksTSP for mobile devices

Source: AUO, KDB Daewoo Securities Research

Shifting from made-to-order production to standardization

TSP for mobile devices:made-to-order production (labor-intensive)

1) Unique design, 2) camera and speaker windows, 3) bezel, logo, etc.

TSP for notebooks and monitorsstandardized (capital-intensive)

Mass production of a few different kinds of products; suitable for large panel makers

[TSP] Core trends: 3)

One-glass solution (OGS)

Unique cover glass designs,cutouts for speakers/cameras,bezel color and logos

49/77

Raising OGS productivity is necessary for the production of low-priced TSP solutions for notebooks and monitors


Produced based on the needs of each customer;

A variety of TSP technologies exist

Cost reductions via mass production arising from

standardization


One-glass solution (OGS)

▶ Smartphone

11 12 13F 14F 15F 16F

Add-on type (GG, G1F, GFF) 70% 62% 49% 39% 32% 27%

In-cell 0% 8% 15% 16% 16% 16%

On-cell 9% 13% 16% 18% 20% 22%

OGS 2% 3% 9% 20% 25% 29%

Other 20% 14% 10% 8% 7% 6%

▶ Tablet PC11 12 13F 14F 15F 16F

Add-on type (GG, G1F, GFF 95% 84% 71% 62% 45% 23%In-cell 0% 0% 0% 0% 1% 11%On-cell 0% 5% 12% 16% 22% 30%OGS 2% 8% 14% 18% 28% 33%Other 3% 4% 4% 4% 4% 3%

▶ Notebook11 12 13F 14F 15F 16F

Add-on type (GG, G1F, GFF 54% 52% 11% 4% 2% 2%In-cell 0% 0% 0% 0% 0% 0%On-cell 0% 0% 0% 0% 0% 0%OGS 13% 12% 65% 78% 82% 83%Other 34% 36% 24% 18% 16% 16%

50/77


Cambrios

ClearOhm

(silver nanowire)UniPixel

UniBoss

(metal mesh)


Metal mesh and silver nanowire

are suitable for large-sized TSPs

ITO: 1) Increased resistance for large-sized TSP; 2)concerns about indium supply; 3) not applicable to flexible displays

Metal mesh: Forms grid-type electrodes with a line width of 1-6um using conductive metal materials

Silver nanowire: Solutions that include coating materials in which silver nanowires are suspended

CNT and graphene: Stronger than iron and more conductive than copper; highly flexible


Replacements for ITO

51/77


Large-sized TSP market share by country (2012)Small-

and mid-sized TSP market share by country (2012)


Korean TSP makers to see a turning point in 2014

Opportunities: SEC to adopt TSPs in its PCs and tablet PCs full swing

Risks: 1) Intense competition and 2) entries of large companies

Major trends: 1) film-based TSP, 2) narrow bezel design, 3) OGS, 4) ITO replacements

Core competitiveness factors: 1) cost leadership and 2) product differentiation

[TSP] Conclusion: Crisis and change offer opportunities

Taiwan53%

China28%

Korea19%

Taiwan71%

China20%

Korea9%

52/77

Rating Target price Current price Upside

(W) (W) (%) 12 13F 14F 12 13F 14F 12 13F 14F 12 13F 14F

SFA Engineering Buy 65,000 41,200 57.8 11.9 10.7 9.3 2.1 1.6 1.5 -19.6 -3.4 15.6 19.6 16.4 16.1

Iljin Display Buy 26,000 17,050 52.5 9.4 8.1 6.9 4.5 3.4 2.3 104.4 -10.6 17.2 53.3 38.3 36.3

Silicon Works Buy 31,000 (Raise) 24,300 27.6 12.1 9.3 8.3 1.4 1.4 1.3 25.1 -26.7 24.7 17.3 11.5 13.2

LG Display Hold - 23,800 - 0.0 0.0 0.0 47.6 19.2 21.1 TTB -4.3 -7.8 7.4 6.8 6.9

ROE (%)Stock

P/E (x) P/B (x) EPS growth (%)


[Investment Strategy] OLED is still the best answer for differentiation strategy

Relevant stocks, including top picks

LCD: Unlikely to hit bottom until: 1) panel prices fall to cash cost levels, or 2) Chinese and Taiwanese makers lower their utilizations (2Q14F)

OLED: Market sentiment is at bottom due to excessive concerns about delays in investments, offering bottom-fishing opportunities

TSP: Excessive competition to continue due to low entry barriers; top-tier firms to fare well, widening their gap with second-tier players

Major signals: Decline in supply for LCD; for OLED, a pickup in demand arising from robust sales of tablet PCs, wearable smart devices, and mid- to low-end smartphones should be noted

Top picks: SFA Engineering (OLED), Iljin Display (TSP), Silicon Works (LCD)

Display sector investment preference:OLED > TSP > LCD

Top picks

53/77


[Investment Strategy] LCD: Global peer group analysis

Valuations of global LCD makers

Relative share performances of global LCD makers ROE-P/B comparison of global LCD makers (2014F)

13F 14F 13F 14F 13F 14F 13F 14F 13F 14F 13F 14F 13F 14F

LGD 26,700 25,443 1,059 565 443 404 4.3 3.8 19.2 21.1 0.8 0.8 2.0 2.2

SEC 228,418 242,791 38,861 43,167 31,413 35,038 23.8 21.6 8.0 7.1 1.7 1.4 3.7 3.3

Sharp 28,098 28,328 779 900 24 239 5.9 30.5 165.1 21.1 3.2 2.8 8.0 7.7

AUO 14,730 14,515 277 183 91 41 1.7 1.2 35.4 56.9 0.5 0.5 3.1 3.3

CMI 15,059 13,798 610 383 225 162 3.5 2.2 15.6 26.7 0.5 0.5 2.9 3.5

Average 7.8 11.9 48.6 26.6 1.3 1.2 3.9 4.0

ROE P/E P/B EV/EBITDARevenue OP NP

LGD

S E C

LGE

AUO

CMI

Sharp

Sony

Hitachi

0.0

0.5

1.0

1.5

2.0

2.5

3.0

0 5 10 15 20 25 30 35

(ROE, %)

(P/B, x)

0

100

200

300

400

500

11/11 2/12 5/12 8/12 11/12 2/13 5/13 8/13 11/13

LGD AUO CMI Sharp

(-1Y=100)

54/77


[Investment Strategy] OLED:

Global peer group analysis

Valuations of global OLED makers

Relative share performances of global OLED makers ROE-P/B comparison of global OLED makers (2014F)

13F 14F 13F 14F 13F 14F 13F 14F 13F 14F 13F 14F 13F 14FSFA Engineering 512 650 76 92 69 80 16.4 16.1 10.7 9.3 1.6 1.5 4.4 2.9Wonik

IPS 393 587 36 100 17 71 6.0 22.0 41.3 9.7 2.5 2.0 14.5 5.8AP

Systems 289 324 27 33 22 27 22.9 21.2 10.3 8.3 1.9 1.6 6.0 5.2KC Tech 196 226 20 25 17 19 8.8 9.1 9.3 8.3 0.8 0.7 5.8 4.6Avaco 152 178 4 8 -28 7 -38.5 10.9 - 9.1 1.1 1.0 7.3 3.4AMAT 9,782 10,610 1,931 2,320 1,346 1,645 17.0 17.5 15.9 13.6 2.7 2.4 9.6 8.4TEL 6,205 6,981 303 709 215 483 3.5 7.5 46.3 21.4 1.6 1.5 12.9 7.8Lam Research 4,735 4,987 830 923 653 703 13.4 12.6 12.7 11.5 1.7 1.4 7.3 6.3Dainippon Screen 2,347 2,495 86 142 53 94 6.3 11.1 24.6 13.9 1.5 1.4 12.2 8.4Ulvac 1,879 1,974 110 122 61 68 9.3 9.8 12.2 10.9 1.4 1.2 8.1 7.6Daifuku 2,373 2,562 107 130 61 78 6.9 8.5 25.6 20.1 1.7 1.6 11.9 10.0Average 6.5 13.3 20.9 12.4 1.7 1.5 9.1 6.4

Revenue OP NP ROE P/E P/B EV/EBITDA

Daifuku

Ulvac

Dainippon Screen

Lam ResearchTEL

AMAT

A vaco

K C Tech

AP Systems

Wonik IPS

S FA

0.5

1.0

1.5

2.0

2.5

3.0

0 5 10 15 20 25

(ROE, %)

(P/B, x)

-50

0

50

100

150

200

250

300

11/11 2/12 5/12 8/12 11/12 2/13 5/13 8/13 11/13

SFA AP Systems AMAT Daifuku Ulvac

(-1Y=100)

55/77


[Investment Strategy] TSP: Global peer group analysis

Valuations of global TSP makers

Relative share performances of global TSP makers ROE-P/B comparison of global TSP makers (2014F)

13F 14F 13F 14F 13F 14F 13F 14F 13F 14F 13F 14F 13F 14FS-MAC 584 707 43 46 25 32 20.7 21.9 9.4 7.2 1.8 1.4 4.1 3.5Iljin

Display 714 895 67 83 60 70 38.3 36.3 8.1 6.9 3.4 2.3 6.5 4.9Melfas 795 694 0 14 -3 13 -1.8 7.7 - 13.6 1.1 1.0 17.0 8.0TPK Holding 5,490 5,116 405 247 293 171 17.8 10.0 7.0 11.4 1.2 1.2 4.1 4.7Wintek 2,795 2,654 -183 -113 -210 -122 -18.2 -13.7 - - 0.6 0.6 17.6 9.0Young Fast 357 389 -9 -7 -11 -6 0.9 1.2 - - 0.4 0.4 1.4 0.9J Touch 424 597 2 24 3 21 3.1 19.7 28.7 5.2 1.1 0.9 11.3 -Atmel 1,475 1,587 79 235 -7 161 8.0 20.1 27.7 14.0 3.4 2.9 15.8 8.9Synaptics 858 941 166 181 104 116 21.0 19.9 13.5 13.0 2.6 2.1 9.1 8.0Cypress 769 783 36 73 -44 10 10.2 31.0 25.1 18.4 8.3 8.2 13.9 15.1ILI Technology 360 352 14 11 13 10 11.8 7.7 9.3 9.4 1.2 1.1 8.5 8.5Average 10.2 14.7 16.1 11.0 2.3 2.0 9.9 7.1

Revenue OP NP ROE P/E P/B EV/EBITDA

0

50

100

150

200

250

11/11 2/12 5/12 8/12 11/12 2/13 5/13 8/13 11/13

Iljin Display Melfas Atmel

Synaptics Cypress ILI Technology

(-1Y=100)

ILI Technology

S MA C

I l j in Display

MelfasTPK HoldingWintek

Young Fast

J Touch

Atmel

Synaptics

Cypress

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

-30 -20 -10 0 10 20 30 40 50

(ROE, %)

(P/B, x)

56/77


[Investment Strategy] Earnings and share performances of global peers

Earning and share performance of AUO Earning and share performance of Innolux Earning and share performance of Sharp

Earning and share performance of Sony Earning and share performance of Panasonic Earning and share performance of Hitachi

-30

-20

-10

0

10

20

30

40

08 09 10 11 12 13

0

10

20

30

40

50

60

Quarterly OP (L)

Share price (R)

(NT$bn) (NT$)

-25

-20

-15

-10

-5

0

5

10

15

08 09 10 11 12 13

0

10

2030

40

50

6070

80

90

Quarterly OP (L)

Share price (R)(NT$bn) (NT$)

-120

-100-80

-60

-40-20

0

2040

60

06 07 08 09 10 11 12 13

0

500

1,000

1,500

2,000

2,500

Quarterly OP (L)

Share price (R)(JPYbn) (JPY)

-400

-300

-200

-100

0

100

200

300

06 07 08 09 10 11 12 13

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000Quarterly OP (L)

Share price (R)

(JPYbn) (JPY)

-200

-150

-100

-50

0

50

100

150

200

06 07 08 09 10 11 12 13

0

500

1,000

1,500

2,000

2,500

3,000

Quaterly OP (L)

Share price (R)

(JPYbn) (JPY)

-100

-50

0

50

100

150

200

250

06 07 08 09 10 11 12 13

01002003004005006007008009001,000

Quarterly OP (L)

Share price (R)

(JPYbn) (JPY)

57/77

De-rating is not over yet

Notes: K-IFRS consolidated financial statements; net profit attributable to controlling interests; Based on the November

27, 2013 closing price

Source: Daewoo Securities Research


Share performanceEarnings forecasts and stock information

LG

Display (034220 KS/Hold)

Valuation premium (owing to cost competitiveness and product differentiation vs. Taiwanese makers) is narrowing

Inventory is likely to pile up, as panel makers have increased capacity utilization despite sluggish TV sales

Price continues to fall as capacity utilization remains elevated at Taiwanese and Chinese makers

Increases in small- and medium-sized panel shipments are not sufficient to offset decreasing profitability of TV panels

LCD industry unlikely to pick until after 2Q14

FY (Dec.) 12/10 12/11 12/12 12/13F 12/14F 12/15F

Revenue (Wbn) 25,512 24,291 29,430 26,700 25,443 26,288OP (Wbn) 1,311 -764 912 1,059 565 872OP Margin (%) 5.1 -3.1 3.1 4.0 2.2 3.3NP (Wbn) 1,156 -771 233 443 404 641EPS (W) 3,232 -2,155 652 1,237 1,130 1,790ROE (%) 11.0 -7.3 2.3 4.3 3.8 5.9P/E (x) 12.3 - 47.6 18.8 20.6 13.0P/B (x) 1.4 0.9 1.1 0.8 0.8 0.8

Share Price (11/27/13, W) 23,800 2,028.81Expected Return - 8,516OP (13F, Wbn) 1,059 Shares Outstanding (mn) 358Consensus OP (13F, Wbn) 1,122 Free Float (%) 62.1EPS Growth (13F, %) 89.8 Foreign Ownership (%) 26.4Market EPS Growth (13F, %) 13.4 Beta (12M) 1.2P/E (13F, x) 18.8 21,800Market P/E (13F, x) 11.3 36,100

KOSPIMarket Cap (Wbn)

52-Week Low (W)52-Week High (W)

LG Display

Trading volume

58/77


Annual operating profit trend and forecast

TV panel profitability has plunged

LG

Display

(034220 KS/Hold)

Earnings to weaken due to deteriorating profitability of TV panels

AppleÊs profit contribution: Loss (1Q-2Q13)BEP (3Q13)W150bn (4Q13F)

TV panel profitability started to plunge in 2H13 (and has neared the BEP)

TV panel OP margin: 4.6% (2013F)2.0% (2014F)

In 2013, W800bn out of total operating profit of W1.06tr is estimated to have come from the TV panel unit

0

200

400

600

800

1,000

1,200

1,400

1,600

2012

Deprecia

tion

IT/mob

ile TV

2013F

Deprecia

tion

IT/mob

ile TV

2014F

(Wbn)

912

1,059

565

+574

-185

-29-586+121

Consensus:W1.0t r

-242

59/77


Operating profit and 12 month-forward P/BLCD panel shipment area


Valuation is nearing historic low

Structural growth (i.e., valuation re-rating) depends on recovery in the TV market

AppleÊs momentum to weaken if the launch of the iTV is further delayed

LG Display (034220 KS/Hold)

0

2

4

6

8

10

12

1Q09 1Q10 1Q11 1Q12 1Q13 1Q14F

-30

-20

-10

0

10

20

30

40Shipment area (L) QoQ growth (R)

(mn m2) (%)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

04 05 06 07 08 09 10 11 12 13 14

-600

-400

-200

0

200

400

600

800

1,000OP (R)P/B (L)

(x) (Wbn)

P eak

Trough

1.5

2.5

2.2

1.2

0.6

1.6

1.3

0.7

60/77



1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13F 1Q14F 2Q14F 3Q14F 4Q14F 2012F 2013F 2014F 2015F

Shipment area (km2) 8,089 8,553 9,173 10,062 8,182 8,890 8,784 8,835 8,315 8,555 8,993 8,890 35,818 34,661 34,752 36,905

Notebook 1,201 1,130 1,181 1,115 798 947 952 948 763 930 928 957 4,627 3,645 3,578 3,470

Monitor 1,381 1,133 1,193 1,413 1,456 1,439 1,387 1,358 1,593 1,509 1,321 1,449 5,120 5,640 5,872 5,784

TV 4,906 5,516 5,894 6,181 4,989 5,898 5,586 5,323 4,867 5,299 5,799 5,217 22,497 21,796 21,182 22,934

Small- to medium-sized 600 775 905 1,295 910 606 859 1,206 1,092 817 945 1,266 3,574 3,581 4,121 4,717

ASP (US$/m2) 669 701 733 802 770 657 678 704 705 645 646 731 731 700 681 669

Revenue (Wbn) 6,184 6,910 7,593 8,743 6,803 6,571 6,579 6,746 6,358 5,983 6,182 6,919 29,430 26,700 25,443 26,288

Notebook 928 967 987 874 612 723 724 692 546 657 640 654 3,756 2,751 2,497 2,328

Monitor 1,299 1,175 1,215 1,399 1,429 1,380 1,316 1,237 1,427 1,336 1,141 1,239 5,089 5,361 5,143 4,890

TV 2,906 3,386 3,569 3,759 2,925 3,352 2,895 2,490 2,193 2,267 2,329 2,055 13,621 11,661 8,845 9,203

Small- to medium-sized 1,051 1,382 1,822 2,710 1,837 1,117 1,645 2,328 2,192 1,723 2,072 2,971 6,965 6,927 8,958 9,867

COGS (Wbn) 5,856 6,140 6,792 7,637 6,099 5,607 5,591 5,976 5,733 5,241 5,283 5,961 26,425 23,273 22,217 22,623

Materials 4,427 4,712 5,233 5,929 4,500 4,165 4,214 4,561 4,293 3,799 3,762 4,463 20,301 17,440 16,316 16,651

Depreciation 990 1,065 1,188 1,227 1,118 959 892 927 950 950 1,025 1,000 4,470 3,896 3,925 3,945

SG&A 539 531 504 519 553 599 599 617 636 655 675 695 2,093 2,368 2,660 2,793

Operating profit (Wbn) -211 239 297 587 151 366 389 153 -11 87 225 264 912 1,059 565 872

OP margin (%) -3.4 3.5 3.9 6.7 2.2 5.6 5.9 2.3 -0.2 1.5 3.6 3.8 3.1 4.0 2.2 3.3

EBITDA (Wbn) 779 1,304 1,485 1,814 1,269 1,380 1,349 1,192 1,104 1,173 1,351 1,266 5,382 5,190 4,894 5,147

EBITDA margin (%) 12.6 18.9 19.6 20.7 18.6 21.0 20.5 17.7 17.4 19.6 21.9 18.3 18.3 19.4 19.2 19.6

Shipment area growth (%) -3.9 5.7 7.2 9.7 -18.7 8.6 -1.2 0.6 -5.9 2.9 5.1 -1.1 15.2 -3.2 0.3 6.2

Notebook -5.1 -6.0 4.6 -5.6 -28.4 18.7 0.5 -0.4 -19.6 21.9 -0.2 3.1 -0.3 -21.2 -1.9 -3.0

Monitor -5.0 -18.0 5.3 18.5 3.0 -1.2 -3.6 -2.1 17.3 -5.2 -12.5 9.7 -13.9 10.1 4.1 -1.5

TV -1.5 12.4 6.9 4.9 -19.3 18.2 -5.3 -4.7 -8.6 8.9 9.4 -10.0 20.9 -3.1 -2.8 8.3

Small- to medium-sized -18.3 29.1 16.8 43.1 -29.7 -33.5 41.9 40.4 -9.5 -25.1 15.6 34.0 88.1 0.2 15.1 14.5

ASP growth (%) -2.2 4.8 4.6 9.4 -4.0 -14.7 3.2 3.8 0.1 -8.5 0.2 13.2 -0.4 -4.2 -2.7 -1.8

61/77



Financial statement (forecast)Comprehensive income statement (forecast)

12/12 12/13F 12/14F 12/15F 12/12 12/13F 12/14F 12/15F29,430 26,700 25,443 26,288 8,915 9,259 9,335 9,89626,425 23,273 22,217 22,623 2,339 2,829 3,173 3,554

3,005 3,427 3,225 3,665 3,524 3,197 3,047 3,1482,093 2,368 2,660 2,793 2,390 2,168 2,066 2,135

912 1,059 565 872 347 315 300 310912 1,059 565 872 15,541 14,890 14,997 15,103

-454 -321 -40 -40 402 445 493 540159 148 145 141 13,108 12,398 12,473 12,528

36 48 48 48 498 475 468 465459 738 525 832 24,456 24,149 24,331 25,000222 290 116 183 9,206 7,751 7,425 7,644236 448 410 649 6,958 5,803 5,529 5,713

0 0 0 0 1,015 830 830 830236 448 410 649 1,233 1,118 1,066 1,101233 443 404 641 5,009 5,746 6,112 6,178

3 6 5 9 3,441 3,896 3,896 3,89696 360 322 561 1,388 1,622 1,940 2,00694 352 314 550 14,215 13,497 13,536 13,8222 8 8 11 10,210 10,562 10,697 11,069

5,382 5,150 4,749 5,072 1,789 1,789 1,789 1,789-431 -232 276 693 2,251 2,251 2,251 2,25118.3 19.3 18.7 19.3 6,239 6,682 6,907 7,369

3.1 4.0 2.2 3.3 30 90 98 109

0.8 1.7 1.6 2.4 10,240 10,652 10,795 11,178

Controlling InterestsNon-Controlling Interests

Non-Controlling InterestsEBITDAFCF (Free Cash Flow)EBITDA Margin (%)

Operating Profit Margin (%)

Net Profit Margin (%)

Total Comprehensive ProfitControlling Interests

Non-Operating ProfitNet Financial IncomeNet Gain from Inv in Associates

Pretax ProfitIncome TaxProfit from Continuing OperationsProfit from Discontinued OperationNet Profit

Intangible Assets

Inventories

(Wbn)

Cost of SalesGross Profit

Other Current AssetsSG&A ExpensesOperating Profit (Adj)

Property, Plant and Equip

Current Assets

Non-Current Assets

(Wbn)

Operating Profit

Revenue

AP & Other PayablesShort-Term Financial LiabOther Current Liabilities

Cash and Cash EquivalenAR & Other Receivables

Total AssetsCurrent Liabilities

Investments in Associates

Non-Controlling Interests

Capital StockCapital Surplus

Non-Current LiabilitiesLong-Term Financial LiabOther Non-Current Liabilit

Total LiabilitiesControlling Interests

Retained Earnings

Stockholders' Equity

62/77



Valuation multiples (forecast)Cash flow statement (forecast)

12/12 12/13F 12/14F 12/15F 12/12 12/13F 12/14F 12/15F

4,730 4,654 4,585 4,953 47.6 18.8 20.6 13.0

236 448 410 649 2.4 1.8 1.8 1.75,292 4,836 4,340 4,422 1.1 0.8 0.8 0.84,197 3,827 3,925 3,945 2.4 2.0 2.1 1.9

273 264 259 255 652 1,237 1,130 1,790-805 -265 158 153 13,143 12,671 12,823 13,526-721 -342 -49 65 27,143 28,193 28,590 29,635

-1,457 217 151 -101 0 500 500 500-73 222 102 -69 0.0 40.4 44.3 27.9148 -690 -273 184 0.0 2.2 2.2 2.2-78 -288 -116 -183 21.2 -9.3 -4.7 3.3

-3,655 -4,251 -4,208 -4,204 86.4 -4.3 -7.8 6.8-3,914 -3,620 -4,000 -4,000 TTB 16.1 -46.6 54.3

-286 -252 -252 -252 TTB 89.9 -8.7 58.5509 -420 0 0 9.7 8.4 8.6 9.036 41 44 48 12.5 11.7 12.0 12.5

-241 24 -34 -368 7.4 6.8 6.9 7.2-61 210 0 0 1.0 1.8 1.7 2.6

0 0 0 0 2.3 4.3 3.8 5.90 0 -179 -179 4.4 5.6 4.0 6.2

-180 -186 145 -189 138.8 126.7 125.4 123.7821 491 343 382 96.8 119.5 125.7 129.5

1,518 2,339 2,829 3,173 17.6 10.8 7.4 3.82,339 2,829 3,173 3,554 4.9 5.6 3.0 4.6

OthersIncrease (Decrease) in CashBeginning Balance

Cash Flows from Fin ActivitiesChg in Financial LiabilitiesChg in EquityDividends Paid

Chg in InventoriesChg in AP & Other Payables

Income Tax PaidCash Flows from Inv Activities

Chg in PP&EChg in Intangible AssetsChg in Financial AssetsOthers

Non-Cash Income and ExpenseDepreciationAmortizationOthers

Chg in Working CapitalChg in AR & Other Receivables

Net Profit

Cash Flows from Op Activities(Wbn)

P/B (x)P/CF (x)

P/E (x)

DPS (W)Payout ratio (%)

CFPS (W)BPS (W)

ROA (%)ROE (%)

EV/EBITDA (x)EPS (W)

EPS Growth (%)Accounts Receivable Turnove

EBITDA Growth (%)Operating Profit Growth (%)

Dividend Yield (%)Revenue Growth (%)

Inventory Turnover (x)Accounts Payable Turnover (

Ending BalanceNet Debt to Equity Ratio (%)Current Ratio (%)

ROIC (%)Liability to Equity Ratio (%)

Interest Coverage Ratio (x)

63/77

Time is on the side of OLED OLED smartphone sales to increase by 29% YoY to 210mn units in 2014

Applications of OLED panels to expand from premium smartphones to tablet PCs, mid- to low-end smartphones, and wearable smart devices

Both top and bottom lines to improve on increasing sales of front-end process equipment (e.g., 8G organic evaporators,encapsulation and PECVD equipment)

Cost reduction via higher productivity and in-house production of parts


Share performanceEarnings and valuation metrics

SFA Engineering (056190 KQ/Buy/TP: W65,000) TOP PICK

FY (Dec.) 12/10 12/11 12/12 12/13F 12/14F 12/15F

Revenue (Wbn) 655 782 508 512 650 709OP (Wbn) 69 109 70 76 92 106OP Margin (%) 10.5 13.9 13.8 14.8 14.2 15.0NP (Wbn) 55 89 71 69 80 92EPS (W) 3,049 4,943 3,972 3,837 4,437 5,144ROE (%) 21.6 28.0 19.6 16.4 16.1 16.6P/E (x) 16.1 12.3 11.9 10.7 9.3 8.0P/B (x) 3.0 3.0 2.1 1.6 1.5 1.3

Share Price (11/27/13, W) 41,200 511.65Expected Return 58% 740OP (13F, Wbn) 76 Shares Outstanding (mn) 18Consensus OP (13F, Wbn) 77 Free Float (%) 52.1EPS Growth (13F, %) -3.4 Foreign Ownership (%) 15.1Market EPS Growth (13F, %) 13.4 Beta (12M) 0.8P/E (13F, x) 10.7 40,050Market P/E (13F, x) 11.3 69,100

KOSDAQMarket Cap (Wbn)





SFA

Trading volume

64/77

Global handset growth

Growth potential of OLED is widely underestimated

Gross profit marginNet profit and share performance

Global OLED capacity



0

50

100

150

200

250

300

350

07 08 09 10 11 12 13

0

5

10

15

20

25

30

35New orders (L)Revenue (L)Gross margin (R)

(Wbn) (%)Structural improvement in fundamentals

0

5

10

15

20

25

30

1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14F

0

20

40

60

80Net profit (L)

Share price (R)

(Wbn) (W'000)

0

20

40

60

80

100

2011 2012 2013F 2014F 2015F

Handset growth Smartphone growth OLED smartphone growth(%)

0

500

1,000

1,500

2,000

2,500

10 11 12 13 14F 15F

0

50

100

150

200

250

3004G (L) 5.5G (L) 6G (L)

8G (L) YoY growth (R)

(Km2) (%)

65/77


Balance sheetIncome statement


12/12 12/13F 12/14F 12/15F 12/12 12/13F 12/14F 12/15F508 512 650 709 439 455 540 608372 371 486 524 40 134 141 141136 141 164 185 162 61 81 88

66 65 71 79 5 5 7 770 76 92 106 2 3 3 470 76 92 106 140 160 175 18823 15 10 12 0 0 0 0

-10 -4 -6 -7 114 115 121 1270 0 0 0 14 26 29 32

93 91 102 118 579 615 715 79722 22 23 26 183 114 150 16371 69 80 92 160 98 130 1420 0 0 0 0 3 3 3

71 69 80 92 23 13 17 1971 69 80 92 23 34 41 460 0 0 0 0 0 0 0

71 69 80 92 19 28 31 3671 69 80 92 206 148 191 2090 0 0 0 373 467 524 588

79 83 103 120 9 9 9 935 86 79 84 20 27 27 27

15.5 16.3 15.9 16.9 392 444 501 565

13.8 14.8 14.2 15.0 0 0 0 0

14.1 13.5 12.3 13.0 373 467 524 588








Intangible Assets

Inventories

(Wbn)




Current Assets

Non-Current Assets

(Wbn)

Operating Profit

Revenue









Retained Earnings


66/77


ValuationsCash flow statement


12/12 12/13F 12/14F 12/15F 12/12 12/13F 12/14F 12/15F

53 100 101 103 11.9 10.7 9.3 8.0

71 69 80 92 10.6 9.7 8.2 7.022 22 24 27 2.1 1.6 1.5 1.3

9 3 3 4 7.4 4.4 2.9 2.00 4 8 9 3,972 3,837 4,437 5,144

-1 3 5 6 4,457 4,252 5,057 5,887-7 30 20 9 22,686 25,333 28,263 31,688

-26 102 -20 -7 1,000 1,300 1,600 1,80011 0 -2 -1 23.8 33.4 35.5 34.511 -60 32 12 2.1 3.2 3.9 4.4

-34 -20 -23 -26 -35.1 0.9 26.9 9.1-43 -35 -71 -75 -31.8 5.7 24.1 16.0

-5 -7 -10 -10 -35.5 8.2 21.6 15.5-9 -12 -12 -12 -19.6 -3.4 15.6 15.9

-34 -25 -55 -60 3.4 4.6 9.2 8.45 9 6 7 50.6 99.5 108.6 99.4

-56 28 -23 -28 3.9 4.4 6.2 5.7-2 0 0 0 12.4 11.5 12.0 12.2

-31 45 0 0 19.6 16.4 16.1 16.6-23 -17 -23 -28 57.3 65.5 101.6 123.8

0 0 0 0 55.1 31.7 36.4 35.5-47 94 8 0 239.9 400.4 360.4 372.587 40 134 141 -72.2 -82.2 -85.3 -86.240 134 141 141 1,488.5








Net Profit


P/B (x)P/CF (x)

P/E (x)


CFPS (W)BPS (W)

ROA (%)ROE (%)









67/77

Time to be optimistic

•

The largest beneficiary of SEC’s tablet PC sales growth: 70% of the company’s revenue stems from SEC’s tablet PC

unit

1) Apple’s iPad:

+19% YoY

from 73mn units (2013F market share of 34%)

to 87.5mn units (2014F market share of

29%)

2) SEC’s tablets:

+79% YoY

from 41.9mn units (2013F market share of 19%) to 75mn units (2014F market share of

25%)

•Demand for narrow-bezel touch panels is growing

1) Strong consumer desire for large screens and portability

2) Photolithography process is crucial for narrow-bezel production

Source: Under non-consolidated K-IFRS; based on November 27, 2013

closing price



Share performance Earnings and valuation metrics

Iljin

Display (020760 KS/Buy/TP: W26,000) TOP PICK

FY (Dec.) 12/10 12/11 12/12 12/13F 12/14F 12/15F

Revenue (Wbn) 114 324 597 714 895 974OP (Wbn) 15 36 65 67 83 91OP Margin (%) 12.7 11.2 10.8 9.4 9.3 9.3NP (Wbn) 12 31 64 60 70 74EPS (W) 446 1,153 2,356 2,106 2,468 2,632ROE (%) 25.3 43.2 53.3 38.3 36.3 28.8P/E (x) 25.4 10.1 9.4 7.7 6.6 6.2P/B (x) 8.7 4.6 4.5 3.2 2.2 1.7

Share Price (11/27/13, W) 17,050 2,028.81Expected Return 52% 483OP (13F, Wbn) 67 Shares Outstanding (mn) 28Consensus OP (13F, Wbn) 67 Free Float (%) 53.7EPS Growth (13F, %) -10.6 Foreign Ownership (%) 13.9Market EPS Growth (13F, %) 13.4 Beta (12M) 0.7P/E (13F, x) 7.7 14,550Market P/E (13F, x) 11.3 23,500

KOSPIMarket Cap (Wbn)


Iljin Display

Trading volume

68/77


GFF vs. G1F technology

GFF technology actually results in lower costs than G1F technology

G1F technology requires glass patterning

defective product means a waste of cover glass (30% of materials

cost)

As such, G1F technology is not widely used despite its various strengths in terms of transparency and thinness

Display Panel (LCD/OLED)

ITO layer (Tx, Driving Line)

ITO layer (Rx, Sensing Line)

OCA (Optical Clear Adhesive)


Cover Glass

PET Film


PET Film






Cover Glass

PET Film


PET Film





Cover Glass


PET Film





Cover Glass


PET Film

GFF(Glass-Film-Film)

G1F(Glass-Film)

Iljin

Display (020760 KS/Buy/TP: W26,000) TOP PICK

69/77

Source: Displaybank,

Narrow bezel comparison

Photolithography process is crucial for narrow-bezel production

Demand for narrow-bezel displays is growing in line with increasing consumer desire for large screens and portability

90% of Iljin DisplayÊs products are based on photolithography; scheduled to begin mass production of 30um products

Iljin

Display

(020760

KS/Buy/TP:

W26,000)

Galaxy Note 8.0 Galaxy Tab3 8.0

Screen printing Photolithography

TOP PICK

70/77

Iljin

Display

(020760

KS/Buy/TP:

W26,000) TOP PICK



12/12 12/13F 12/14F 12/15F 12/12 12/13F 12/14F 12/15F597 714 895 974 158 164 235 288505 620 776 845 53 35 67 106

92 94 119 129 75 88 118 12827 27 35 38 25 29 39 4265 67 83 91 1 1 1 165 67 83 91 114 175 205 232-5 6 4 2 1 1 1 01 2 2 1 87 146 171 1960 0 0 0 18 18 18 17

60 73 87 93 273 339 440 520-5 14 17 19 114 171 205 21764 60 70 74 78 95 127 1380 0 0 0 33 71 71 71

64 60 70 74 3 6 8 864 60 70 74 8 8 11 110 0 0 0 4 0 0 0

63 58 69 73 0 0 0 063 58 69 73 122 179 215 2270 0 0 0 151 160 225 293

74 80 99 106 14 14 14 1462 -3 35 45 36 -8 -8 -8

12.4 11.2 11.0 10.9 102 156 222 291

10.8 9.4 9.3 9.3 0 0 0 0

10.8 8.3 7.8 7.6 151 160 225 293








Intangible Assets

Inventories

(Wbn)




Current Assets

Non-Current Assets

(Wbn)

Operating Profit

Revenue









Retained Earnings


71/77

Iljin

Display

(020760

KS/Buy/TP:

W26,000) TOP PICK



12/12 12/13F 12/14F 12/15F 12/12 12/13F 12/14F 12/15F

97 78 78 85 9.4 7.7 6.6 6.2

64 60 70 74 8.2 6.4 5.4 5.121 24 29 32 4.5 3.2 2.2 1.79 12 15 15 8.0 6.2 4.7 4.00 1 1 1 2,356 2,106 2,468 2,632

-12 6 7 4 2,705 2,552 3,014 3,17912 3 -4 -3 4,865 5,021 7,308 9,725

-31 -12 -30 -11 200 150 180 200-4 -3 -10 -3 8.5 7.1 7.3 7.636 13 32 11 0.9 0.9 1.1 1.20 -9 -17 -19 83.9 19.7 25.3 8.9

-43 -76 -39 -38 69.1 7.5 23.8 7.9-36 -72 -40 -40 77.6 3.8 24.2 9.3

0 0 0 0 104.4 -10.6 17.2 6.6-6 -5 0 0 12.4 10.6 10.5 9.6-2 1 1 2 22.6 26.5 26.3 24.0

-23 -19 -7 -8 15.8 11.9 11.8 10.8-20 33 0 0 28.3 19.5 17.9 15.5

2 5 0 0 53.3 38.3 36.3 28.8-3 -6 -4 -5 55.2 34.7 33.4 31.8-2 -51 -3 -3 80.7 111.5 95.9 77.631 -17 32 39 139.6 95.7 114.8 133.121 53 35 67 -13.8 15.6 -2.9 -15.753 35 67 106 44.6 24.9 30.9 33.8








Net Profit


P/B (x)P/CF (x)

P/E (x)


CFPS (W)BPS (W)

ROA (%)ROE (%)









72/77

Needs to reduce dependence on Apple

Shipments to increase on supply for use in AppleÊs second-generation iPad mini and iPad Air

T-con market share for LGEÊs TVs: 8%(2013F)30%(2014F)

Likely to emerge as a supplier of core chips for UHDTVs and AppleÊs iTV

Commercial production of new products (including mobile single-chip solutions, touch ICs, and LED ICs) to start next year

Outlook for car ICs (angular sensors and position sensosr) is also positive in the medium to long term

Raise target price by 7% to W31,000 (revise up 2014F EPS by 8% in light of progress of new businesses)


Share performanceEarnings and valuation metrics

Silicon Works (108320 KQ/Buy/TP: W31,000) TOP PICK




FY (Dec.) 12/10 12/11 12/12 12/13F 12/14F 12/15F

Revenue (Wbn) 257 302 473 400 440 525OP (Wbn) 38 25 44 28 36 44OP Margin (%) 14.7 8.2 9.2 7.0 8.2 8.4NP (Wbn) 41 33 41 30 38 45EPS (W) 2,688 2,021 2,529 1,855 2,312 2,735ROE (%) 27.5 15.5 17.3 11.5 13.2 14.1P/E (x) 12.5 15.4 8.8 13.2 10.6 9.0P/B (x) 2.7 2.2 1.4 1.4 1.3 1.2

Share Price (11/27/13, W) 24,300 511.65Expected Return 28% 395OP (13F, Wbn) 28 Shares Outstanding (mn) 16Consensus OP (13F, Wbn) 29 Free Float (%) 72.2EPS Growth (13F, %) -26.7 Foreign Ownership (%) 26.0Market EPS Growth (13F, %) 13.4 Beta (12M) 1.0P/E (13F, x) 13.2 19,500Market P/E (13F, x) 11.3 27,000

KOSDAQMarket Cap (Wbn)


Silicon Works

Trading volume

73/77

Silicon Works (108320 KQ/Buy/TP: W31,000) TOP PICK



12/12 12/13F 12/14F 12/15F 12/12 12/13F 12/14F 12/15F473 400 440 525 301 235 259 288394 336 364 434 116 184 209 238

78 63 76 91 85 0 0 035 36 40 47 42 0 0 044 28 36 44 5 0 0 044 28 36 44 35 37 41 44

6 7 8 8 3 3 3 3-6 -3 -3 -3 14 13 13 120 0 0 0 8 7 6 5

50 35 44 52 336 272 300 3329 5 6 8 79 0 0 0

41 30 38 45 65 0 0 00 0 0 0 0 0 0 0

41 30 38 45 14 0 0 041 30 38 45 1 1 1 20 0 0 0 0 0 0 0

41 30 38 45 1 1 1 141 30 38 45 80 1 1 20 0 0 0 256 270 299 331

46 30 37 45 8 8 8 8-5 79 32 39 69 69 69 69

9.8 7.5 8.5 8.6 180 200 228 260

9.2 7.0 8.2 8.4 0 0 0 0

8.7 7.6 8.5 8.5 256 270 299 331








Intangible Assets

Inventories

(Wbn)




Current Assets

Non-Current Assets

(Wbn)

Operating Profit

Revenue









Retained Earnings


74/77

TOP PICKSilicon Works (108320 KQ/Buy/TP: W31,000)



12/12 12/13F 12/14F 12/15F 12/12 12/13F 12/14F 12/15F

0 81 31 38 8.8 13.2 10.6 9.0

41 30 38 45 8.3 12.4 10.2 8.78 1 0 1 1.4 1.4 1.3 1.22 1 1 1 4.2 5.5 3.7 2.51 1 1 1 2,529 1,855 2,312 2,735

-2 4 5 5 2,697 1,974 2,401 2,814-48 62 0 0 15,791 17,065 18,851 20,860-52 83 0 0 650 600 800 0-14 42 0 0 25.0 30.9 33.0 0.026 -66 0 0 2.9 2.4 3.3 0.0-1 -12 -6 -8 56.8 -15.4 10.1 19.21 4 3 3 72.4 -35.5 25.5 21.1

-1 -3 0 0 75.5 -35.9 29.0 22.4-5 0 0 0 25.1 -26.7 24.7 18.35 3 0 0 8.7 5.03 3 3 3 13.4 9.5

-5 -16 -9 -12 9.6 6.40 0 0 0 13.6 9.9 13.2 14.11 -5 0 0 17.3 11.5 13.2 14.1

-6 -10 -9 -12 66.0 51.4 170.8 225.00 0 0 0 31.5 0.5 0.4 0.5

-5 69 25 29 379.9120 116 184 209 -66.2 -86.9 -86.9 -87.1116 184 209 238








Net Profit


P/B (x)P/CF (x)

P/E (x)


CFPS (W)BPS (W)

ROA (%)ROE (%)









75/77

Important disclosures & disclaimers

DisclosuresAs of the publication date, Daewoo Securities Co., Ltd. has acted as a liquidity provider for equity-linked warrants backed by shares of LG Display 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 acted as a liquidity provider for the shares of LG Display, 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 SFA Engineering 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. issued equity-linked warrants with LG Display as an underlying asset, and other than this, Daewoo Securities has no other special interests in

the covered companies.Of the equity-linked warrants covered in this report, Daewoo Securities Co., Ltd. has acted as a liquidity provider for equity-linked warrants backed by shares of LG Display as underlying assets.

Stock Ratings Industry Ratings

Buy Relative performance of 20% or greater Overweight Fundamentals are favorable or improving

Trading Buy Relative performance of 10% or greater, but with volatility Neutral Fundamentals are steady without any material changes

Hold Relative performance of -10% and 10% Underweight Fundamentals are unfavorable or worsening

Sell Relative performance of -10%

* Ratings and Target Price History (Share price (----), Target price (----), Not covered (■), Buy (▲), Trading Buy (■), Hold (●), Sell (◆))* Our investment rating is a guide to the relative return of the

stock versus the market over the next 12 months.* Although it is not part of the official ratings at 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 analystÊs 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.

SFA Engineering

0

20,000

40,000

60,000

80,000

100,000

11/11 5/12 11/12 5/13 11/13

(W) Iljin Display

0

5,000

10,000

15,000

20,000

25,000

30,000

11/11 5/12 11/12 5/13 11/13

(W) Silicon Works

0

10,000

20,000

30,000

40,000

50,000

11/11 5/12 11/12 5/13 11/13

(W) LG Display

0

10,000

20,000

30,000

40,000

50,000

11/11 5/12 11/12 5/13 11/13

(W)

76/77


Analyst CertificationThe 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 AnalystÊs 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 in the 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.

DisclaimersThis report is published by Daewoo Securities Co., Ltd. („Daewoo‰), a broker-dealer registered in the Republic of Korea and a member of the Korea Exchange. Information and opinions contained herein have been compiled from sources believed to be reliable and in good faith, but such information has not been independently verified and Daewoo makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy, completeness or correctness of the information and opinions contained herein or of any

translation into English from the Korean language. If this report is an English translation of a report prepared in the Korean language, the original Korean language report may have been made available to investors in advance of this report. Daewoo, its affiliates and their directors, officers, employees and agents do not accept any liability for any loss arising from the use hereof. This report is for general information purposes only and it is not and should not be construed as an offer or a solicitation of an offer to effect transactions in any securities or other financial instruments. The intended recipients of this report are sophisticated institutional investors who have substantial knowledge of the local business environment, its common practices, laws and accounting principles and no person whose receipt or use of this report would violate any laws and regulations or subject Daewoo and its affiliates to registration or licensing requirements in any jurisdiction should receive or make any use hereof. Information and opinions contained herein are subject to change without notice and no part of this document may be copied or reproduced in any manner or form or redistributed or published, in whole or in part, without the prior written consent of Daewoo. Daewoo, its affiliates and their directors, officers, employees and agents may have long or short positions in any of the subject securities at any time and may make a purchase or sale, or offer to make a purchase or sale, of any such securities or other financial instruments from time to time in the open market

or otherwise, in each case either as principals or agents. Daewoo and its affiliates may have had, or may be expecting to enter

into, business relationships with the subject companies to provide investment banking, market-making or other financial services as are permitted under applicable laws and regulations. The price and value of the investments referred to in this report and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur.

77/77


DistributionUnited Kingdom: This report is being distributed by Daewoo Securities (Europe) Ltd. in the United Kingdom only to (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), and (ii) high net worth companies and other persons to whom it may lawfully be communicated, falling within Article 49(2)(A) to (E) of the Order (all such persons together being referred to as “Relevant Persons”). This report is directed only at Relevant Persons. Any person who is not a Relevant Person should not act or rely on this report or any of its contents. United States: This report is distributed in the U.S. by Daewoo Securities (America) Inc., a member of FINRA/SIPC, and is only intended for major institutional investors as defined in Rule 15a-6(b)(4) under the U.S. Securities Exchange Act of 1934. All U.S. persons that receive this document by their acceptance thereof represent and warrant that they are a major institutional investor and have not received this report under any express or implied understanding that they will direct commission income to Daewoo or its affiliates. Any U.S. recipient of this document wishing to effect a transaction in any securities discussed herein should contact and place orders with Daewoo Securities (America) Inc., which accepts responsibility for the contents of this report in the U.S. The securities described in this report may not have been registered under the U.S. Securities Act of 1933, as amended, and, in such case, may not be offered or sold in the U.S. or to U.S. persons absent registration or an applicable exemption from the registration requirements. Hong Kong: This document has been approved for distribution in Hong Kong by Daewoo Securities (Hong Kong) Ltd., which is regulated by the Hong Kong Securities and Futures Commission. The contents of this report have not been reviewed by any regulatory authority in Hong Kong. This report is for distribution only to professional investors within the meaning of Part I of Schedule 1 to the Securities and Futures Ordinance of Hong Kong (Cap. 571, Laws of Hong Kong) and any rules made thereunder and may not be redistributed in whole or in part in Hong Kong to any person. All Other Jurisdictions: Customers in all other countries who wish to effect a transaction in any securities referenced in this report should contact Daewoo or its affiliates only if distribution to or use by such customer of this report would not violate applicable laws and regulations and not subject Daewoo and its affiliates to any registration or licensing requirement within such jurisdiction.

Documents

Display (Neutral) Key variables for 2014: Supply for LCD