hot issue hot issue. realized krw 580.4 billion in sales and krw 123.9 billion in operation income...

Hot Issue

Realized KRW 580.4 billion in sales and KRW 123.9 billion in operation income for 3Q

- Record-high quarterly sales, operating income, and net income

- Up 30.1% and 44.5% year-on-year in operating income and net income, respectively

Launched a self-sterilizing bidet "Secret Care"

- Separating spray nozzle for female to the side of seat to

ensure high hygiene

- Using electrolyzed safe water for cleaning

- Adopting 2-step self-sterilizing system

IR WEBZINE2015. November

Market ReviewStock Market

The KOSPI closed at 1,991.77 points at the end of November, 1.85% lower from the previous month, putting a brake on rebound since the end of October. It seemed to hold a place on 2,000 points by surpassing 120-day moving average line. However, uncertainties at home and abroad brought about the expansion of volatility and shrinkage of investment sentiment. In the aspect of technical analysis, the KOSPI and short, mid, and long-term moving average lines are converging.

The possibility of US interest rate increase in the near future unleashed the strength of market interest rate and US dollar, which made a negative effect on global stock markets. The domestic stock market could also hardly be free from this environment even though major companies realized favorable operating results for the third quarter.. During the period, pharmaceuticals, machinery, and chemical sectors were bullish, while paper & wood, steel & metal, vehicles & components sectors were relatively bearish.

In December, there's a chance that the domestic stock market will experience an impact if the FOMC carry out the increase of interest rate. However, many investors expect it will be limited and the solution of uncertainties will make a positive effect on the stock market. In addition, the government policy to expand dividend payout ratio is likely to encourage investments in valuable stocks.


Market ReviewStock Price

The stock price of Coway declined by 0.82% month-to-month to KRW 84,500 at the end of November. It seems to accumulate energy for the next step by fluctuating between KRW 85,000 and KRW 95,000 in the aspect of technical analysis. As concerns about selling Coway shares by the largest shareholder has diluted and positive prospects of our businesses for the coming years has been magnified, the stock price is expected to reflect the right value in the near future.

Coway achieved double digit growth in both sales and operating income on the consolidated base for the third quarter, showing an earnings surprise that outperform consumer goods players. These remarkable results were mainly attributable to our exclusive new product lineups demonstrating high functionality and innovation based on IoT technology. These products have led striking sales growth and high customer trust. Overseas business and cosmetics business have also been vitalizing. We expect our continuously growing operating results will grab attention of many investors.

During November, the number of shares held by foreigners increased 133,957 shares, or 0.3%, compared with the prior month. As of the end of November, they maintained 52.28% ownership. Domestic institutional investors marked net selling of 140,320 shares during the same period.

Classification% change of COWAY %change of

KOSPI%change of

KOSPI200Stock Price vs. KOSPI vs. KOSPI200

5 Days -0.82 -0.24 -0.14 -0.59 -0.68

20 Days -8.05 -5.93 -5.51 -2.13 -2.54

60 Days 4.45 0.44 -1.78 4.01 6.23


133,957shares(0.3%)

-140,320shares-0.82%

40,319,219 shares

(as of November. 30, 2015)

Changes in Stock Price in November

Changes in Shares Held by Foreigners in November

Net Changes in Shares Held by Institutional Investors in November

Market ReviewStock Price

• Strong Buy

• Buy

• Hold

• Underperform

• Sell

0

4

0

0

0

Average Ratings Average Target Price = \120,250

Sell StrongBuy Low :\100,000

High :\130,000

2015-11-04 | KDB Daewoo Securities | Target Price : 130,000 | BUY

A pleasant surprise in an otherwise ...For 3Q, Coway announced preliminary consolidated revenue of W580.4bn (+10.4% YoY) and operating profit of W123.9bn (+30.1% YoY; OP margin of 21.3%), topping consensus estimates by 4% and 14%, respectively. …

FULL REPORT VIEW

2015-11-04 | Shinhan Investment Corp | Target Price : 130,000 | BUY

Dividend yield of 3% China momentum expected ...Coway reported K-IFRS standalone sales of W545.7bn (+10.0% YoY) and operating profit of W125.6bn (+29.5% YoY) in 3Q15. The number of rental accounts went up 5.3% YoY to 4.78mn and rental sales …

FULL REPORT VIEW

2015-11-04 | Mirae Asset Securities | Target Price : 121,000 | BUY

3Q15 results reviewCoway reported healthy 3Q15 earnings results. We maintain our BUY rating for Coway, considering its: 1) solid 4Q15 earnings outlook; 2) 2.9% dividend yield for 2015; and 3) easing concerns …

FULL REPORT VIEW

2015-11-04 | Samsung Securities | Target Price : 100,000 | BUY

Core business keeps growingCoway yesterday reported that in 3Q its sales rose 10% y-y to KRW580.4b and operating profit jumped 30% y-y toKRW123.9b (with margin improving 1.5%pts y-y to 21.4%), both …

FULL REPORT VIEW


http://www.cowayir.co.kr/fileupload/eng/eannalist/20151104_coway4_e.pdf




Coway News

Won the Innovation Grand Prize at the "Web Award Korea"

Coway won the grand prize in the design innovation category at the "12th Web

Award Korea.“

The award is held by KIPFA (Korea Internet Professionals Association) and

sponsored by the MSIP (Ministry of Science, ICT and Future Planning) and KISA

(Korea Internet & Security Agency) and recognized as one of website evaluation

events of authority. A panel of website evaluation experts take part in selecting

the most innovative and excellent websites in the aspects of visual design, UI

design, technology, contents, marketing, and service.

Coway's design website introduces its product design philosophy "Design the

Basic" on the basis of storytelling and visuals. This website gained high

recognition in the way that it helps users understand product design concepts

easily and contributes to raising confidence on and awareness of brands.

Another excellence was to give new experience value to users by offering

illustration-based simulation how Coway's products are harmonized with interior

space.

Yeom, Il-soo, head of Design Research Center, said, "Our website provides users

with new brand experience and plays a role as efficient online communication

channel beyond just a function of information delivery, which receives very

positive responses from users. We will continue to develop contents that benefit

users and customers."


Coway News

Launched an upgraded version of "Re:NK Homme Line"


Coway's anti-aging cosmetics brand Re:NK launched an upgraded version of

"Re:NK Homme Line" to fundamentally care men's skin and provide skin care

solutions.

Core ingredient "enercell 2.0 men's" containing plant components helps users

enhance skin elasticity. In addition, this product boasts Re:NK Homme's unique

perfume that represents dynamic and energetic sense.

Re:NK Homme Line is composed of 3-step skin care solutions by total clear

cleansing foam, essence skin, and rebalancing moisturizer.

Total clear cleansing foam keeps the skin clean by deeply cleansing waste on the

skin and pore of the skin. Essence skin offers moisture element to dry skin by

washing and shaving. Rebalancing moisturizer plays a role for balancing skin oil

and moisture.

Cha, Yu-jeong, a Re:NK brand staff member, said, "In line with increasing men's

interest in skin care, professional and functional homme products are catching

popularity today. We also expect Re:NK Homme Line to much appeal to male

consumers."

Coway News

Coway's Environmental Technology Research Institute obtained the "CVC for authorized testing lab."


Coway obtained the "CVC (China Vkan Certification) for authorized testing lab"

for the first time in environmental home appliances industry.

The obtainment makes it possible for Coway to authorize the CCC (China

Compulsory Certification) and CQC (China Quality Certification) for the safety of

water purifier, air purifier, bidet, and juicer with the results conducted by self-

testing at its International Certification Center of Environmental Technology

Institute. The CCC is mandatory for Korean companies to export their electric and

electronic appliances to China.

The obtainment allows Coway to shorten the period for certification

authorization by approximately four weeks. It also raises the company's global

presence in product safety and competitiveness.

The authorization process of CCC and CQC has required much time and costs

because products were transported to authorized testing labs in China before the

obtainment. To reduce time and costs in line with authorization, Coway has built

testing facilities in its International Certification Center of Environmental

Technology Institute and strived for securing testing ability.

Lee, Seon-yong, head of Environmental Technology Institute, said, "The

obtainment enables us to supply safe products more rapidly. We will make a

concerted effort to develop safer products.“

Coway established the International Certification Center with internationally

agreed-upon testing equipment in Yugu Factory in 2012 for the first time in the

domestic environmental home appliances industry. Since then, the company has

been conducting testing and certification management works on product safety

by capitalizing on cutting-edge equipment and technologies. Today, the center

has 14 qualifications for authorized testing lab.

Coway News

Launched the Velvet CC Cushion Holiday Limited Edition


Coway's anti-aging cosmetics brand Re:NK launched the " Velvet CC Cushion

Holiday Limited Edition" for the winter season.

This product has the concept of "Royal Winter" and package design embodies

cell pattern into crystal snow to enhance artistic value.

Re:NK's best selling product Velvet CC Cushion enables 3-step skin texture

control - care, correction, and maintenance. Liquid base foundation pack ensures

user convenience. This product also boasts high hygiene by adding silver thread

to velvet with 99.9% anti-virus function.

Coway News

Selected as a company with excellent quality competitiveness for five consecutive years

- Practicing quality management from product development to sales and disposal- Quality enhancement systems such as "Daily Quality Mesh" and "QS7" - Encouraging suppliers to ensure quality through "Quality Innovation Project


Coway was selected as a company with excellent quality competitiveness for five

consecutive years at the “2015 National Quality Management Competition” held

by Korean Agency for Technology and Standards and hosted by Korea Standard

Association.

The competition aims to select companies with comprehensive competitiveness

in the fields of products, services, customer satisfaction, and operating

performance.

Coway was highly recognized in the way that it has secured quality

competitiveness in all processes from product development to sales and disposal,

and has continuously focused on quality management.

The company operates “Daily Quality Mesh” analysis center engaging in real-time

monitoring of product quality in order to rapidly and correctly ameliorate product

quality. “QS7 (Quality Solution 7 Days)” system aims to improve all quality-related

issues within 7 days, which has dramatically contributed to the enhancement of

customer satisfaction. In addition, Coway’s innovative production technologies

ensure industry-leading manufacturing quality competitiveness.

Furthermore, Coway is proactive in supporting its suppliers to secure quality

competitiveness through the “Quality Innovation Project” aimed at stabilizing

suppliers’ product and process quality.

Coway News

Won the “CES 2016 Innovation Award” in eight categories

- Our six products won the “CES Innovation Award” in eight categories- High recognition on our unique and innovative customer care services


Coway's innovative technology and design obtained universal recognition by

winning the "CES Innovation Award" in eight categories before the world's

largest electronics show "CES (Consumer Electronics Show)" to be held in Las

Vegas from January 6 to 9, 2016.

The CES Innovation Award is given to excellent entries among those submitted to

the CES after the evaluation of technology, design, and innovation by CEA

(Consumer Electronics Association) and IDSA (International Design Excellence

Awards).

CES announced on November 10 that Coway's six products - dual care air purifier IoCare (AP-1515D), self-sterilizing water

purifier IoCare (CHP-470L), barista ice water purifier (CHPCI-430N), clinic bidet (BASH21-A), air purifier for vehicle, and

portable air purifier - won the award in eight categories. In spite of the first participation in the CES, Coway achieved

meaningful performances.

The above prize-winning products demonstrate excellence in innovation, technology, and design. Dual care air purifier

adopted IoT technology to show air condition in real time and provide tailored air control solutions, offering new air care

experience to consumers. Self-sterilizing water purifier IoCare automatically sterilize and manage all water paths and also

provides differentiated care services through smart phone application. Barista ice water purifier is a hybrid product to offer

clean, cool, and hot water, ice, and coffee. Coway's clinic bidet was created through joint research with proctological

surgery of Seoul National University Hospital, offering new values of cleaning, hygiene, and health. Air purifier for vehicle

ensures systematic air care in vehicle through IoT-based air quality monitoring system. Coway's portable air purifier

ensures tailored air care and targets single-person households.

Kim, Dong-hyun, the CEO, said, "We are proud of winning the award in that our efforts to deliver customers innovative

and distinctive life care value were recognized in the world. We plan to present our new vision and innovative customer

experience based on IoT technologies at the CES 2016."

Coway News

Launched a self-sterilizing bidet "Secret Care"

- Separating spray nozzle for female to the side of seat to ensure high hygiene- Using electrolyzed safe water for cleaning - Adopting 2-step self-sterilizing system


Coway launched a self-sterilizing bidet "Secret Care" on November 10.

■ Secret spray nozzle for female users

This product gives consideration to female users who are sensitive to hygiene.

Cleaning nozzle is located on the side of seat and finely soft water spray reduces

skin stimulation, which ensures both high hygiene and cleaning power. In case of

most competitors' bidets, stimulation is strong and cleaning scope is narrow

because they jet bold water spray.

■ Using electrolyzed safe water for cleaning

Electrolyzed safe water ensures high hygiene. In case of washing anal,

electrolyzed safe water first cleans anus and then general water is jetted for

another cleaning. In consideration of the difference of human body, 3-step water

jet system is adopted.

■ Adopting 2-step self-sterilizing system

The first step is to automatically sterilize nozzle after users leave the seat. The second step is to clean all water paths once

a day without any control of users automatically. This system uses electrolyzed safe water which is harmless to human and

eliminates over 99.9% of bacteria such as colon bacillus and staphylococcus aureus.

■ Waterproof rating of IPX5

This product obtained the waterproof ration of IPX5 from Korea Testing Laboratory, ensuring safe use at a humid

environment such as toilet. In addition, self-developed smart energy-saving technology "Green Plug" reduces electricity

cost.

Park, Yong-joo, head of Marketing HQ, said, "This new bidet has diverse functions for safe use in addition to special

functions for female users. We will continue to lead the bidet market by capitalizing on our unique product concept and

technologies."

Coway News

Selected as the best company at the "2015 CDP Water Korea"

- Recognized for excellence in water management activities- Ranked the winner in the carbon management sector for seven consecutive years


Coway was selected as the best company at the "2015 CDP Water Korea" and

the winner in the carbon management sector for seven consecutive years at the

"2015 CDP Korea" in recognition of its excellence in response to climate change.

▣ Became Korea's first company to be selected as the best player

The CDP Water Korea was first introduced this year and 45 domestic listed and

unlisted companies were invited to the evaluation. Among Korean companies,

Coway became the only company to be selected as the best player. Evaluation

categories included the levels of disclosure, awareness, management, and

leadership.

Coway has been leading the water issues under the corporate philosophy of "Offering healthy life through clean water."

Coway manages all water data which are directly and indirectly used in all processes of production, usage, and disposal in

order to lead water saving. The company also conducts the "Water Comma" campaign aimed at forming healthy water-

drinking habits and enlightening the importance of water.

▣ Ranked the winner in the carbon management sector for seven consecutive years at the "2015 CDP Korea"

In recognition of outstanding performances in the carbon management, Coway ranked the winner in the selected

consumer goods category for seven consecutive years.

At the event, Coway entered the "A list," the highest level, thanks to high recognition for the fidelity to carbon

information disclosure. More than 5,500 companies in the world and 250 domestic companies in terms of market

capitalization were evaluated this year, of which only 189 global companies and 11 domestic companies entered the "A

list." In particular, Coway entered the highest group among companies which were not included in GHG and energy

target management system and emissions trading scheme.

Coway established solar power generation system in all worksites to reduce energy use and strives to enhance energy

efficiency through developing environmental technologies.

Shin, Kwang-sik, head of Environmental Quality Research Center, said, "Our company gained recognition in the world for

both carbon management and water management this year. We will fulfill our role and responsibility as Korea's leading

company in environmental management."

Coway News

Realized KRW 580.4 billion in sales and KRW 123.9 billion in operation income for 3Q


Coway achieved remarkable operating performances in 3Q. Sales grew 10.4% year-on-year to KRW 580.4 billion.

Operating income and net income also soared 30.1% and 44.5% to KRW 123.9 billion and KRW 92.4 billion on a K-IFRS

consolidated base, respectively. These results came mainly from continuous growth of environmental home appliances

business, progress of overseas subsidiaries, and increases of sales and accounts from home care business.

▲ Continuous growth of environmental home appliances business

Sales from environmental home appliances business recorded KRW 486.5 billion, up 11.1% year-on-year or 5.0%

quarter-to-quarter. In particular, lump-sum and other sales from electric range, massage chair, and water softener soared

32.1% to KRW 50.8 billion.

Rental sales increased 6.7% year-on-year to KRW 376.4 billion, thanks to enhancing sales power as well as launching new

products such as IoT-based premium water purifiers and air purifiers. Net increase of cumulative rental accounts for 3Q

recorded 179 thousand, an increase of 76 thousand from the previous year. As a result, the number of total accounts

surpassed 5.72 million, a record high.

▲ Progress of overseas subsidiaries

The US subsidiary saw an increase of 35% in sales by achieving KRW 14.2 billion. The number of accounts reached 92

thousand. Sales of Malaysia subsidiary also realized KRW 24.7 billion, up 13.7% year-on-year, in sales. The number of

cumulative accounts also rose by 35.1% to 264 thousand at the end of 3Q.

▲ Increases of sales and accounts from home care business

Sales from home care business skyrocketed 109.3% from the previous year thanks to continuous increase of mattress care

rental accounts. The number of rental accounts in home care business increased 28.1% year-on-year to 254 thousand at

the end of 3Q. This business is evolving into a new growth engine for Coway.

Lee, Jae-ho, CFO of Coway, said, "In the third quarter, we achieved stable growth of environmental home appliances

business and improvement in lump-sum sales. We will continue this growth trend by launching innovative products such

as dual power air purifier IoCare and sleep-supporting air purifier and strengthening sales power in the next quarter as

well."

- Record-high quarterly sales, operating income, and net income - Up 30.1% and 44.5% year-on-year in operating income and net income, respectively

IR Activities

EVENT

DATE

LOCATION

NOTE

IR Conference_Earning Release for 3Q 2015

2015 – 11 - 03

KDB Daewoo Securities

-


EVENT

DATE

LOCATION

NOTE

Overseas NDR

2015 – 11 - 04 ~ 11 - 06

USA

Morgan Stanley

EVENT

DATE

LOCATION

NOTE

Overseas NDR

2015 – 11 - 11 ~ 11 - 13

Singgapore

Korea Investment & Securities Co., Ltd.

EVENT

DATE

LOCATION

NOTE

Domestic NDR

2015 – 11 – 16 ~ 11 - 17

Domestic institutional investors

Hana Securities

EVENT

DATE

LOCATION

NOTE

Overseas NDR

2015 – 11 - 18 ~ 11 - 20

HongKong

Korea Investment & Securities Co., Ltd.

hot issue hot issue. realized krw 580.4 billion in sales and krw 123.9 billion in operation income...

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