korea consumer scope

Please refer to the important disclosures on inside back cover of this document, or on our website www.macquarie.com.au/research/disclosures.

Korea consumer scope KOREA

21 March 2007

Inside Education sector: More growth 2

Mega Study: Unrivalled leader 9

YBM Sisa.com: Overly concerned 12

Credu: Demanding valuation 16

Woongjin Thinkbig: New businesses to be a swing factor 19

Daekyo: Wait for concrete evidence of restructuring 23

Analysts Paul Hwang 822 3705 8678 [email protected]

Education sector: More growth This month we visited major listed education companies in Korea (including Credu, Mega Study, YBM Sisa.com, Daekyo and Woongjin Thinkbig) to discuss: 1) business overviews; 2) major trends in the education sector, and 3) the outlook for the education sector in 2007.

Despite slow growth in the domestic economy so far in 2007, we expect the private education market to post growth of around 10% YoY thanks to ceaseless ‘educational fervor’ in Korea. We expect online education companies to deliver strong FY07 sales and operating profit growth of 37% and 44%, respectively, compared with 9% and 34% growth for offline players.

We see two distinct trends in the Korean education market: 1) the accelerating penetration ratio of online education; and 2) efforts by education providers to find new growth engines – mainly from offline education companies.

Fig 1 Online education company sales and operating profit growth

0

50

100

150

200

250

300

FY01 FY02 FY03 FY04 FY05 FY06 FY07E

Combined sales Combined operating profit

CAGR 81%

CAGR 76%

Source: Company data, March 2007

Our impression on operations after company visits are:

⇒ Positive on YBM Sisa.com and Mega Study due to strong online education market growth and new growth engines.

⇒ Neutral on Daekyo and Woongjin Thinkbig due to uncertainty (or slower-than-expected execution) in new business areas amid stagnant core operations.

⇒ Neutral on Credu due to demanding valuations - trading at a 63% premium to the education sector average and 57% to online education peers.

Macquarie Research Equities - Report Korea consumer scope

21 March 2007 2

Education sector: More growth We visited major education companies in Korea including Credu, Megastudy, YBM Sisa.com, Daekyo and Woongjin Thinkbig to discuss: 1) their business overview; 2) major trends in the education sector, and 3) the 2007 education sector outlook.

Fig 2 Overview of major listed education companies

Company Ticker Market cap

(US$m) Description

Megastudy 072870 KS 931 Leading online high school education company with 50% market share

Daekyo 019680 KS 803 Largest study guide provider for elementary and pre-school kids in Korea with 38% market share

Woongjin Thinkbig 016880 KS 543 Third-largest study guide provider for elementary and pre-school kids in Korea

Credu 067280 KS 338 Online education company focused on providing professional job training to corporations / government institutions

YBM Sisa.com 057030 KS 214 Leading online English education lecture/ contents provider

Source: Company data, Macquarie Research, March 2007

Ceaseless ‘educational fervor’ in Korea Korea is well-known for its nationwide ‘educational fervor’ – more than 82% of high school students in Korea pursued tertiary education (vs. the OECD average of 53%) in 2005. Education expenditure as a percentage of GDP in Korea registered 8.2% in 2005, far exceeding the OECD average of 5.6%. According to the National Statistics Office, average monthly household education spending reached Won258k (accounting for 11.8% of total monthly household spending) in 2006.

It appears that public education has failed to fully satisfy the ‘educational fervor’ among Korean students and parents, prompting them to turn to the private education sector. Korea’s private education expenditure as a percentage of GDP reached 3.4% in 2005, the highest among the OECD countries.

Fig 3 Education expenditure as a percentage of GDP

Fig 4 Korea household average education spending

3.47%4.66%

6.82%5.08% 4.79% 4.96%

1.15%0.82%

2.26% 3.41%

0.65%

0.28%

0%

2%

4%

6%

8%

10%

Japan UK Denmark US Korea Countrymean

Public % of GDP Priv ate % of GDP

11.8%11.8%

11.2%

11.3%11.2%

11.7%11.6%

100

150

200

250

300

2000 2001 2002 2003 2004 2005 2006

(Won 1,000)

10.8%

11.0%

11.2%

11.4%

11.6%

11.8%

12.0%

Av erage monthly education spending (Won thousand)

Education as % of monthly household spending

Source: OECD, Macquarie Research, March 2007. Source: National Statistics Office, Macquarie Research, March 2007.


21 March 2007 3

Fig 5 Private education market size

Fig 6 Private education market size by age

2.79 3.24 3.53 3.76 4.000.52 0.60 0.70 0.81 1.007.08 7.85

9.16 7.87 7.000.46

0.610.80 1.29 1.452.58

2.892.89 2.34 2.800.95

1.06

2.76 4.24 5.24

0

5

10

15

20

25

FY01 FY02 FY03 FY04 FY05

(Won tr)

Study guide Home-schooling Learning institute

Online education Publication Others

CAGR 11%

1.7

9.0

5.2

3.02.6

0

2

4

6

8

10

Pre-school Elementary Middle-school

High school Adult

(Won tr)

Source: Company data, Macquarie Research, March 2007. Source: Company data, Macquarie Research, March 2007.

Due to the vast range of private education services and the existence of many smaller players (including one-on-one private tutoring provided by university students), education companies’ estimates of the private education market size vary from Won16tr to Won30tr. However, companies agree that the total private education market showed at least +10% CAGR growth from 2001-05.

According to Daekyo, learning institutes (also known as ‘hakwon’) accounted for 33% of the total private education market, followed by study guides (19%), publications (13%), online education (7%) and home schooling (5%). The elementary segment accounted for the biggest portion of the private education market (roughly 42%), followed by middle school (24%), high school (14%), adult (12%) and the pre-school (8%) segments.

Distinct market positioning of education companies According to a survey by the National Statistics Office, there are more than 120,800 education companies in Korea. Amid this fragmented market, it appears that the education companies we visited have established a unique position in their respective segment.

Fig 7 Education provider market positioning

OnlineOffline

Pre-school

Adult

Daekyo

Woongjin Thingbig

Mega Study

Credu YBM Sisa.com

Source: Macquarie Research, March 2007

These companies are clearly distinguished by their channel (online / offline) and main target customers. Credu, Mega Study and YBM Sisa.com mainly provide online education services — Credu focuses on professional job training for adults, YBM Sisa.com specialise in English education and Mega Study concentrates on the high school / middle school segments.


21 March 2007 4

Daekyo and Woongjin Thinkbig provide offline education for pre-school and elementary kids. Although some of its target customers overlap, Daekyo has strength in the elementary market (nearly 75% of Daekyo’s current subscribers are elementary students), while Woongjin Thinkbig possesses a strength in the pre-school market (accounting for 50% of the company’s total study guide subscribers).

We see a significant valuation gap between online and offline education players – with online players receiving a sizable premium (74%) over offline players thanks to stronger growth prospects in the online education market and higher profitability.

Fig 8 Education industry peer valuation comparison Mega Study YBM Sisa.com Woongjin Thinkbig Credu Daekyo

Share price (Won) 138,000 17,950 15,500 56,600 79,900Market cap (Won bn) 875.0 201.4 511.8 318.6 756.4Sales (Won bn) 2006 101.3 42.6 591.9 49.1 835.02007E 148.0 53.4 653.7 62.0 900.0OP (Won bn) 2006 32.3 12.7 43.0 10.4 61.62007E 50.0 16.6 59.5 13.0 81.0NP (Won bn) 2006 26.5 10.3 31.4 8.4 51.52007E 39.0 12.6 42.7 10.6 59.9Operating margin (%) 2006 31.9 29.9 7.3 21.1 7.42007E 33.8 31.0 9.1 21.0 9.0Net margin (%) 2006 26.1 24.2 5.3 17.1 6.22007E 26.4 23.6 6.5 17.1 6.7EPS (Won) 2005 3,464 899 1,502 1,572 5,8242006 4,347 920 926 1,488 4,9412007E 6,151 1,124 1,259 1,881 5,753PER (x) 2006 31.7 19.5 16.7 38.0 16.22007E 22.4 16.0 12.3 30.1 13.9EPS growth (% YoY) 2006 25.5 2.4 -38.4 -5.3 -15.22007E 41.5 22.1 36.0 26.4 16.4ROE (%) 2006 25.7 22.9 13.6 21.5 8.82007E 28.3 23.4 16.3 16.7 9.5EV/EBITDA (x) 2006 23.7 11.2 7.4 24.1 6.12007E 15.2 8.5 6.2 16.5 5.1P/BV (x) 2006 7.6 4.1 2.1 5.5 1.42007E 5.5 3.4 1.8 4.7 1.3Source: Company data, Macquarie Research, March 2007


21 March 2007 5

Fig 9 P/BV vs ROE

Fig 10 PER vs EPS growth

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1

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3

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5 10 15 20 25 30

ROE (%)

P/BV (x)

Woongjin Thinkbig

Megastudy

Credu

YBM Sisa.com

Daekyo

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EPS Gr (%)

PER (x)

Woongjin ThinkbigDaekyo

YBM Sisa.com

Credu

Megastudy

Source: Company data, March 2007 Source: Company data, March 2007

Fig 11 EV/EBITDA vs EBITDA margin

Fig 12 EV/EBITDA vs EBITDA growth

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EBITDA margin (%)

EV/EBITDA (x)

Credu

Daekyo

YBM Sisa.comWoongjin Thinkbig

Megastudy

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YBM Sisa.com


Trends we see in Korean education sector 1. Accelerating penetration ratio of online education

We see stronger growth prospects for online education companies. Online education companies’ collective sales and operating profit should grow at respective CAGRs of 76% and 81% in FY01-FY07E vs. offline education companies’ collective sales and operating profit CAGR of +5% and +9% during the same period.


21 March 2007 6

Fig 13 Online education companies’ collective sales and operating profit growth

Fig 14 Offline education companies’ collective sales and operating profit growth

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Combined sales Combined operating profit

CAGR 81%

CAGR 76%

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1,400

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1,800


Combined sales Combined operating prof it

CAGR 9%

CAGR 5%


According to the Ministry of Commerce, Industry and Energy (MoCIE), the size of the online education market grew by 10% YoY to Won1.6tr in 2006, up from Won1.3tr in 2004. Online education for corporations accounted for 47% of the total online education market, followed by individuals (43%), government/public institutions (8%) and public education institutions (2%). Of note, the government announced ‘e-learning industry advancement and promotion plans’ in January 2007 to expand the online education market size to Won6.8tr by 2010.

We see ample room for online penetration of the education market as it only accounted for 7% of the total private education market as of 2006. For instance, Mega Study estimates that penetration of the high school (excluding vocational schools) segment stood at 17% in 2006 (vs. 15% in 2005), implying significant upside.

In 2006, KT launched ‘KT Campus’ and SK Telecom acquired ‘e-toos’ to enter the online education market. However, we are seeing a minimal presence of KT and SKT so far. Looking at monthly traffic statistics from Rankey.com, Mega Study’s website traffic increased to 510k in December 2006 (vs. 330k in January 2006), while ‘e-toos’ traffic fell to 160k in December 2006 from 180k in January 2006. KT Campus traffic remained flat at an average of 20k. We attribute this to KT and SKT failing to recruit competent lecturers and a lack of understanding of the students’ tastes/needs, despite conglomerates’ superior financial capabilities.

2. Looking for business diversification to seek a new growth engine

Given a slowdown in study guide market growth (flat at Won1.9tr in 2006), major listed offline players (Daekyo and Woongjin Thinkbig) are actively looking for business diversification. Accordingly, offline players’ net cash fell with several M&As, increased investments and entry into new business areas.


21 March 2007 7

Fig 15 Education provider net cash positions

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10

30

50

70

90

110

Mega Study YBM Sisa.com Credu Woongjin Thinkbig Daekyo

FY05 FY06


Compared to offline education companies looking for business diversification, online education companies are focused on expanding their range of customers. YBM Sisa.com plans to target students under the age of 20, while Mega Study merged with MBest to strengthen its position in the middle school market. Credu plans to more aggressively target small-to-medium enterprises.

Here are some examples of education companies seeking new opportunities:

⇒ After-school class market: Daekyo (entered in 1997) and Woongjin Thinkbig (entered in 2004) hold the No. 1 & 3 positions, respectively, in the after-school computer class market with contracts with 416 and 392 elementary schools, respectively. However, due to heightening competition in the after-school computer class market (resulting in higher required initial investments), margins have declined. Daekyo’s after-school class division recorded an operating loss in FY06, while Woongjin Thinkbig’s operating margin in this division fell to 4% in FY06 from 5% in FY05.

⇒ Middle school online education market: Daekyo and Mega Study entered the middle school online education market through the acquisitions of Fermat Edu and MBest, respectively. Online education accounts for less than 1% of the total middle school private education market (Won5tr).

⇒ Adult niche market: Woongjin Thinkbig entered the adult education market through Woongjin Passone (75%-owned affiliate, specializing in state exam preparation courses). Woongjin Passone offers offline learning institutes, online education and publishing.

Our impression after company visits are: The education sector has outperformed the KOSPI by 41% in the past twelve months thanks to steady earnings growth, despite sluggish domestic consumption. We prefer online education players over offline education players in the long term, due to higher earnings growth prospects and wider margins.

Impressions after our visits were are:

⇒ Positive on YBM Sisa.com and Mega Study due to strong online education market growth and new growth engines.

⇒ Neutral on Daekyo and Woongjin Thinkbig due to uncertainty (or slower-than-expected execution) in new business areas amid stagnant core operations.

⇒ Neutral on Credu due to demanding valuations - trading at a 63% premium to the average education sector and 57% over online education peers.


21 March 2007 8

Fig 16 Education sector relative share price performance (vs. KOSPI)

Fig 17 Education companies' relative share price performance (vs. KOSPI)

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

Dec-05 Apr-06 Aug-06 Dec-06

-50%

0%

50%

100%

150%

Dec-05 Apr-06 Aug-06 Dec-06

Daekyo Mega Study

Woongjin Thinkbig Credu

YBM Sisa.com

Source: WiseFN, Macquarie Research, March 2007. Source: WiseFN, Macquarie Research, March 2007.


21 March 2007 9

Mega Study KOREA

21 March 2007

072870 KQ Not rated

Share data Won 138,300 Market cap Won bn 876.9 US$ m 931.1 Issued shares m 6.3 4-mth avg turnover Won m 4.6 52-wk hi/low Won 146,100 / 62,500 Foreign holdings % 45.7 Free float % 65.1 Major shareholders CEO and affiliates % 25.9 Source: Company data, March 2007

Financial data Year end 31 Dec

2003A 2004A 2005A 2006A

Total revenue b 46.0 50.3 71.0 101.3 EBIT b 20.5 19.8 24.7 32.3 Reported profit b 15.1 14.8 21.0 26.5 EPS Won 3,234 3,112 3,464 4,347 EPS growth % 121.7 -3.8 11.3 25.5 PER x 42.8 44.4 39.9 31.8 DPS Won 0 0 750 900 Yield % 0.0 0.0 0.5 0.7 ROE % 83.1 32.6 27.0 25.7 Price/book x 25.0 12.9 9.3 7.6 Source: Company data, March 2007

072870 KQ rel. KOSPI performance

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3/06 6/06 8/06 10/06 1/07

(Won)

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Share price (LHS) Rel perf (RHS)

Source: WiseFN, March 2007

Analyst Paul Hwang 822 3705 8678 [email protected]

Unrivalled leader Event We visited Mega Study, a leading online high school education company in

Korea with a 50% market share, and left with a positive impression of its operations.

Impact In December 2006 Mega Study merged with MBest, an online middle school

education provider that recorded Won14.9bn sales and Won2.6bn operating profit in FY06. Through the merger, the company acquired MBest’s existing 215k registered members and made a notable entry into the middle school online education market.

Mega Study sees potential in the middle school online education market, as online education currently accounts for less than 1% of this segment (market size: Won5tr), which compares to the 6% penetration for the high school private education market as of 2006.

In FY07, the company expects MBest to achieve Won23bn sales (+54% YoY), driven by an accelerating online penetration ratio and enhanced brand power through the ‘Mega Study’ brand. Moreover, Mega Study expects MBest’s operating margins to improve to the 25% level in FY07 (vs. 17% in FY06) as: 1) MBest is likely to enjoy greater scalability from FY07 with more than Won20bn sales, based on Mega Study’s experience; and 2) merger synergies flow through in the form of cost reductions (including marketing and IT-related expenses).

Outlook In 2007, Mega Study plans to open one new directly-owned offline learning

institute in Namyangju and expand its existing Gangbuk learning institute, while closing down its Mokdong learning institute. Though the offline business generates lower operating margins of around 20% than the 45% of the online business, Mega Study considers the offline business to be important since: 1) offline lectures provide content for online education; and 2) offline institutes act as debut stages for potential competent lecturers. The company expects the sales contribution from the offline business to remain steady at 31% in FY07 (vs 32% in FY06).

Mega Study is guiding for 47% YoY sales growth from the online business and 44% YoY growth from the offline business, which translates to Won148bn sales (46% YoY) in FY07. The strong sales growth should be driven by: 1) diversification of offered subjects in online education; 2) a full-year sales contribution from MBest; and 3) increasing offline sales from newly-opened Namyangju learning institute and expansion of the Gangbuk learning institute.


21 March 2007 10

Stripping out the full-year sales contribution from MBest, Mega Study expects 26% YoY sales growth from its existing business lines, which it believes is not too aggressive given the accelerating penetration ratio of online education.

The company is guiding for Won50bn operating profit (+55% YoY) and Won39bn net profit (+48% YoY) in FY07.

Fig 1 FY07 company guidance vs. consensus estimates (Won bn) Company guidance Consensus estimates Diff (%)

Sales 148.0 149.8 -1%Operating Profit 50.0 51.1 -2%Recurring Profit 54.0 54.7 -1%Net Profit 39.0 39.1 0%Source: Company data, WiseFN, March 2007.

Valuation The shares are at an FY07E PER of 22.5x on EPS growth of 42% YoY, based on company

guidance. A 31% premium to the education sector may not be considered demanding given the company’s leading position in the online middle school and high school market, the strong growth prospects of the online education market and Mega Study’s superior operating margins.

Fig 2 Megastudy: Financial summary (Won bn) FY03 FY04 FY05 FY06 FY07E

Sales 46.0 50.3 71.0 101.3 148.0Operating Profit 20.5 19.8 24.7 32.3 50.0Recurring Profit 21.2 21.0 28.9 36.6 54.0Net Profit 15.1 14.8 21.0 26.5 39.0Growth(%) Sales 125.9 9.3 41.4 42.6 46.1Operating Profit 118.1 -3.6 25.0 30.9 54.6Net Profit 121.7 -2.0 41.4 26.1 47.4Profitability (%) Operating margin 44.6 39.3 34.8 31.9 33.8Net margin 32.9 29.5 29.5 26.1 26.4ROE 83.1 32.6 27.0 25.7 28.3Source: Company data, March 2007 * Note: FY07 estimates are based on company guidance.

Fig 3 Megastudy: SWOT analysis

Strengths Weaknesses- Leading high school online education company with 50% MS - Good reputation among students and parents - Stable profitability from online education

- Increasing exposure to the offline business that offers lower margins- Member range limited to high school students

Opportunities Threats- Entry into the middle school online market through merger with MBest- Change in college entrance exams (for eg, more emphasis on essay writing that require extensive preparation over a longer period of time)

- Increasing competition in the high school online education market (for eg, conglomerates like KT and SKT entering the market)



21 March 2007 11

Profit breakdown (Won bn) Sales breakdown (%)Yr to Dec 02 03 04 05 06 Yr to Dec 02 03 04 05 06Turnover 20.4 46.0 50.3 71.0 101.3 Online education 91.9 89.7 83.5 73.1 68.4

Gross profit 13.6 30.3 32.1 43.9 63.1 Offline education 7.9 10.3 16.5 26.9 31.6

SG&A 4.2 9.8 12.3 19.3 30.8

Labour costs 1.2 2.7 3.6 6.1 8.6

Marketing exp 1.3 3.1 4.1 5.2 6.7

Others 1.7 3.9 4.6 7.9 15.4

Operating profit 9.4 20.5 19.8 24.7 32.3Non-oper gain 0.2 0.7 1.2 4.2 4.3 Cash flow statement (Won bn) Net interest inc 0.3 0.7 1.0 1.1 1.0 Yr to Dec 02 03 04 05 06 Associates - - - - 0.7 Operating CF 9.9 19.8 11.6 20.3 31.4 Forex - - - - - Net profit 6.8 15.1 14.8 21.0 26.5

Others (0.1) (0.0) 0.2 3.1 2.6 Depn/amort 0.2 0.5 0.7 1.3 2.1

Exceptionals (0.0) (0.0) 0.0 - - Others 0.2 0.2 0.1 (2.5) 2.3

Pre-tax profit 9.6 21.2 21.0 28.9 36.6 Ch in work cap 2.8 4.0 (4.0) 0.5 0.5

Taxation 2.8 6.0 6.1 7.9 10.1 Acc't receiv (0.4) (0.2) (0.6) (0.6) (2.2)

Net profit 6.8 15.1 14.8 21.0 26.5 Inventory (0.0) 0.0 - - (0.1)

EBITDA 9.6 20.9 20.5 26.0 34.5 Acc't pay 0.3 (0.0) 0.1 0.5 0.6

Others 2.8 4.3 (3.5) 0.6 2.3Ratios (%)Yr to Dec 02 03 04 05 06 Investment CF (3.7) (10.6) (23.9) (35.6) (4.1)Growth (%) Capex (0.6) (8.2) (1.1) (16.1) (8.7)

Sales 375.8 125.9 9.3 41.4 42.6 Other investment (3.1) (2.4) (22.8) (19.4) 4.5

Operating profit 636.1 118.1 -3.6 25.0 30.9

Net profit 673.4 122.9 -2.0 41.4 26.1 Financing CF - 0.4 24.0 - (4.5)EBITDA 596.0 119.3 -2.1 26.7 32.6 ST debt - - - - -

Margins (%) LT debt - - - - -

Gross profit 66.7 65.8 63.9 61.9 62.3 Cash dividend - - - - (4.5)

Operating profit 46.2 44.6 39.3 34.8 31.9 Capital increase - 0.4 25.0 - -

Net profit 33.4 32.9 29.5 29.5 26.1 Others - (0.0) (1.1) - -

EBITDA 46.9 45.6 40.8 36.6 34.0

ROIC (%) 94.9 80.5 30.7 23.1 22.7 Ch cash/(debt) 6.2 9.6 11.7 (15.2) 22.7Net DE (%) N/C N/C N/C N/C N/C Beg cash/(debt) 2.9 9.1 18.6 30.4 15.1Int cover (x) N/M N/M N/M N/M N/M End cash/(debt) 9.1 18.6 30.4 15.1 37.9

Balance sheet (Won bn) Share performanceAs at Dec 02 03 04 05 06 Current 3m 6m 12mCurr assets 12.8 22.8 56.1 57.1 73.1 Price 138,300 127,900 105,500 65,500

Cash and equiv 9.1 18.6 30.4 15.1 37.9 KOSPI Index 1444 1442 1366 1347

Acc't receiv 0.6 0.9 1.5 2.1 4.3 Absolute (%) 8.1 31.1 111.1

Inventory 0.0 - - - 0.1 Relative (%) 8.0 25.4 103.9

Others 3.1 3.3 24.2 39.9 30.9 No of shares (m) 6.3 Free float (%) 65.1

Invest assets 1.4 3.4 8.2 23.9 39.0 Mkt cap (Won bn) 876.9 Av.day t/o (US$m) 4.7

Other assets 0.6 8.6 9.3 24.3 31.3 Mkt cap (US$m) 931.1 52-wk hi/lo (Won)146,100/62,500

Total assets 14.8 34.9 73.6 105.2 143.4 Book value (Won) 18,193 Price/bk ratio (x) 7.6

For.holdings (%) 45.7

Current liab 4.1 8.0 7.9 12.3 22.4

Acc't payable 0.6 0.5 0.6 1.1 1.7

ST debt - - - - -

LT debt-curr - - - - -

Others 3.5 7.5 7.3 11.2 20.7

LT liabilities 0.3 0.8 0.6 2.4 5.7

LT debt - - - - -

Others 0.3 0.8 0.6 2.4 5.7

Total liabilities 4.4 8.8 8.5 14.7 28.1

Paid-in capital 1.2 2.4 3.0 3.0 3.2

Capital surplus 1.6 0.8 24.1 24.1 28.3

Retained earnings 7.7 22.8 37.7 58.7 80.5

Capital adj - 0.1 0.3 4.8 3.3

Total s’holders’ eq 10.4 26.0 65.1 90.5 115.4

Source: Company data Paul Hwang (822) 3705 8678

Price chart

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21 March 2007 12

YBM Sisa.com KOREA

21 March 2007

057030 KQ Not rated

Share data Share price Won 17,950 Market cap Won bn 201.4 US$ m 213.8 Issued shares m 11.2 4-mth avg turnover Won bn 1.0 52-wk hi/lo Won H27,700/L15,300 Foreign holdings % 31.2 Free float % 21.8 Major shareholders YBM Sisa % 12.1 CEO and affiliates % 41.6 Fidelity % 11.3 Source: Company data, March 2007

Financial data 2003A 2004A 2005A 2006A Total revenue b 20.9 29.4 35.6 42.6 EBIT b 6.4 7.5 10.8 12.7 Reported profit b 5.7 5.8 10.1 10.3 EPS Won 630 563 899 920 EPS growth % 125.9 -10.6 59.8 2.4 PER x 28.5 31.9 20.0 19.5 DPS Won 0 250 300 300 Yield % 0.0 1.4 1.7 1.7 ROE % 63.6 26.4 27.6 22.9 Price/book x 10.4 4.8 4.5 4.1 Source: Company data, March 2007

Share performance chart

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Overly concerned Event We visited YBM Sisa.com, a leading online English education lecture / content

provider, and left with a positive impression of its operations. Online education accounted for 41% of total sales in FY06, followed by online testing (18%), digital content (16%), MOS (13%), software localisation (5%) and others (7%).

Impact Core business remains solid. The company expects online education and

online testing (which collectively accounted for 60% of total sales in FY06) to post solid sales growth of 18% YoY in FY07, driven by continuous expansion of the online English education market and a recovery in the number of TOEIC (Test of English for International Communication) participants after the changes in the TOEIC test in May 2006. Of note, the company saw a temporary slowdown in online education and online testing sales growth during 2Q-4Q06 (+ 9% YoY during 2Q-4Q06 vs. +20 % YoY in 1Q06) as demand was strong for TOEIC preparation before the changes in the TOEIC test.

Outlook In the long run, the company expects accelerating adoption of the new writing

and speaking section of the TOEIC test to drive growth given: 1) the higher commission fee for this section of the test, ranging from Won6,000 to Won8,000 (vs.Won3,300 for the existing TOEIC exam); and 2) its lucrative operating margins of 35-40%.

MOS, a next growth driver. YBM Sisa is the official test administrator for MOS (Microsoft Office Specialist) in Korea and the number of MOS applicants surged to 135k in 2006 (vs. 54k in 2005). The company believes that it has reached a tipping point where MOS test adoption is likely to accelerate. Management forecasts the number of MOS applicants to reach 250k in 2007, with MOS sales of Won10.0bn (+83% YoY) in FY07. Of note, MOS test-taker numbers reached 56k in Jan-Feb 2007.

Moreover, the company signed a five-year exclusive contract with Certiport China (the official distributor of MOS in China) to administer MOS in Beijing, where it began promotional / marketing activities from 2006. Management expects around Won160m in sales (or roughly 4,000 MOS test-takers) from the Beijing MOS business in FY07, which would provide another growth engine in the long term.

Digital contents, another growth engine. The company expects the digital content (DC) division to post 41% YoY sales growth in FY07 (following 20% YoY growth in FY06) thanks to increasing demand for e-dictionaries from new applications, including MP3s and portable multimedia players (PMP).

YBM Sisa provides digital content to electronic dictionary makers Reigncom (060570 KQ, Won5,580, Not rated) and A-tree, PMP maker Digital Cube, and Internet portals Yahoo Korea and NHN. The company forecasts digital content sales to reach Won9.5bn in FY07 (accounting for 18% of total sales), with a lucrative operating margin of around 40%.


21 March 2007 13

Fig 1 Digital content division sales

0.1 0.2

1.5

2.9

5.6

6.7

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7

8

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Minimal impact from TOEIC elimination from state exams (the worst case). YBM Sisa’s share prices declined 28% in the past three months because a congressman suggested in January that the TOEIC should be excluded from the official state exams. However, the company believes this news will have a minor impact on earnings given: 1) the uncertainty over whether this proposal will be passed in Congress; and 2) applicants who fall under this category should account for less than 3% of total TOEIC applicants, even if the bill is passed. Moreover, it would take at least 3~4 years to develop and administer an alternative exam if, in the worst case, the TOEIC were replaced.

Company earnings guidance The company is guiding for Won53.4bn sales (+26% YoY), Won16.6bn operating profit (+30%

YoY) and Won12.6bn net profit (+22% YoY) in FY07, driven by stable earnings from online education and online testing and accelerating growth from MOS administration and the digital content division.

Fig 2 Company guidance vs. consensus estimates Company guidance Consensus estimates Diff (%)

Sales 53.4 53.0 1%Operating Profit 16.6 16.1 3%Recurring Profit 17.8 17.3 3%Net Profit 12.6 12.7 -1%Source: Company data, WiseFN, March 2007


21 March 2007 14

Valuation The shares are trading at an FY07E PER of 16.0x, with EPS growth of 22% YoY based on the

company’s guidance.

Fig 3 YBM Sisa.com: Financial summary FY03 FY04 FY05 FY06 FY07E

Sales 20.9 29.4 35.6 42.6 53.4Operating Profit 6.4 7.5 10.8 12.7 16.6Recurring Profit 6.6 8.3 11.5 14.1 17.8Net Profit 5.7 5.8 10.1 10.3 12.6Growth(%) Sales 73.3 40.7 21.2 19.5 25.5Operating Profit 118.7 16.9 43.2 18.1 30.0Net Profit 125.9 2.4 74.3 2.4 22.1Profitability (%) Operating margin 30.9 25.6 30.3 29.9 31.0Net margin 27.0 19.7 28.3 24.2 23.6ROE 63.6 26.4 27.6 22.9 23.4Source: Company data, March 2007 *FY07 estimates based on company’s guidance.

Fig 4 YBM Sisa.com: SWOT analysis

Strengths Weaknesses- Leading online English education company - Wide client base (over 650 corporate clients)- Quality content provided by parent company, YBM Sisa

- Weak presence in younger education market (age under 20)

Opportunities Threats-Continuous growth of online education market in Korea- Growing demand for digital content in diversified applications (MP3s, PMPs, etc)

- Increasing competition in the online education market- Changes in TOEIC test – difficulty in content development- Possible elimination of TOEIC in state exams

Source: Macquarie Research, March 2007.


21 March 2007 15

Profit breakdown (Won bn) Sales breakdown (%)Yr to Dec 02 03 04 05 06 Yr to Dec 02 03 04 05 06Turnover 12.1 20.9 29.4 35.6 42.6 Online education 44.8 43.9 40.9

Gross profit 8.8 14.9 20.5 27.6 30.4 Online testing 27.5 28.8 30.8

SG&A 5.8 8.5 13.0 16.8 17.7 Digital contents 9.8 15.7 15.8

Labour costs 1.6 2.1 3.5 5.0 6.0 S/W Localization 6.9 6.4 5.3

Marketing exp 3.2 5.1 7.6 8.7 8.0 Others 10.9 5.3 7.2

Others 1.1 1.3 1.9 3.1 3.7

Operating profit 2.9 6.4 7.5 10.8 12.7Non-oper gain (0.1) 0.2 0.7 0.7 1.3 Cash flow statement (Won bn) Net interest inc 0.1 0.2 0.7 1.0 1.5 Yr to Dec 02 03 04 05 06 Associates - - - - - Operating CF 3.3 5.5 5.2 13.0 13.5 Forex 0.0 0.0 0.0 0.0 (0.1) Net profit 2.5 5.7 5.8 10.1 10.3

Others (0.2) (0.0) 0.0 (0.3) (0.1) Depn/amort 0.3 0.5 0.9 1.5 1.8

Exceptionals - 0.0 (1.6) 0.0 0.0 Others 0.3 0.3 2.1 1.3 0.6

Pre-tax profit 2.9 6.6 6.7 11.5 14.1 Ch in work cap 0.2 (0.9) (3.7) 0.1 0.8

Taxation 0.4 1.0 0.9 1.4 3.8 Acc't receiv 0.1 (1.8) 0.6 (1.5) (1.0)

Net profit 2.5 5.7 5.8 10.1 10.3 Inventory (0.3) (0.2) (0.5) 0.5 (0.0)

EBITDA 3.3 6.9 8.5 12.3 14.5 Acc't pay 0.0 0.2 0.2 (0.3) 0.1

Others 0.3 0.9 (3.9) 1.5 1.8Ratios (%)Yr to Dec 02 03 04 05 06 Investment CF (0.3) (1.2) (3.8) (3.3) (9.8)Growth (%) Capex (0.4) (1.1) (1.8) (0.8) (1.0)

Sales 169.8 73.3 40.7 21.2 19.5 Other investment 0.2 (0.2) (2.0) (2.5) (8.9)

Operating profit 197.3 118.7 16.9 43.2 18.1

Net profit 270.1 125.9 2.4 74.3 2.4 Financing CF - 14.7 (1.3) (2.6)EBITDA 169.5 110.9 22.2 45.5 17.9 ST debt - - - -

Margins (%) LT debt - - - -

Gross profit 72.7 71.5 69.8 77.4 71.5 Cash dividend - - (1.3) (2.6)

Operating profit 24.5 30.9 25.6 30.3 29.9 Capital increase - 14.7 - -

Net profit 20.7 27.0 19.7 28.3 24.2 Others - 0.0 (0.0) (0.0)

EBITDA 27.2 33.1 28.8 34.5 34.1

ROIC (%) 51.8 61.8 29.8 25.9 20.8 Ch cash/(debt) 3.0 4.3 16.0 8.4 1.1Net DE (%) N/C N/C N/C N/C N/C Beg cash/(debt) 0.8 3.8 8.1 24.2 32.6Int cover (x) N/M N/M N/M N/M N/M End cash/(debt) 3.8 8.1 24.2 32.6 33.7



Acc't receiv 0.6 2.4 1.8 3.3 4.3 Absolute (%) -28.3 -22.0 -16.1

Inventory 0.3 0.4 1.0 0.5 0.5 Relative (%) -28.5 -27.6 -23.4



Other assets 1.3 2.2 4.1 5.0 5.9 Mkt cap (US$m) 213.8 52-wk hi/lo (Won) 27,700/15,300



Current liab 1.2 3.1 3.4 4.4 6.9

Acc't payable 0.1 0.3 0.4 0.1 0.2

ST debt

LT debt-curr

Others 1.1 2.8 3.0 4.3 6.8

LT liabilities 0.1 0.3 0.5 0.6 0.6

LT debt

Others 0.1 0.3 0.5 0.6 0.6


Paid-in capital 3.4 3.4 4.3 5.1 5.6

Capital surplus 13.8 13.8


Capital adj (0.3) (0.2) (0.3) (0.1) (0.0)



Price chart

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21 March 2007 16

Credu KOREA

21 March 2007

067280 KQ Not rated

Share data Share price Won 56,600 Market cap Won bn 318.6 US$ m 338.3 Issued shares m 5.6 4-mth avg turnover Won bn 4.6 52-wk hi/low Won H72,900/L41,200 Foreign holdings % 3.6 Free float % 36.9 Major shareholders Cheil Comm % 26.7 SERI % 10.7 Samsung Everland % 8.9 Source: Company, Macquarie Research, March 2007

Financial data 2003A 2004A 2005A 2006A Total revenue bn 20.7 30.7 41.9 49.1 EBIT bn 4.1 6.3 8.5 10.4 Reported profit bn 3.0 4.6 6.5 8.4 EPS Won 734 1,117 1,572 1,488 EPS growth % 57.9 52.1 40.7 -5.3 PER x 77.1 50.7 36.0 38.0 ROE % 39.1 40.2 38.8 21.5 Price/book x 25.2 17.1 11.8 5.5 Source: Company, March 2007

Share performance data

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Source: WiseFN, Macquarie Research, March 2007


Demanding valuation Event We visited Credu, an online education provider with a focus on providing job

training courses to corporations/government institutions, and came back with a neutral impression of its operations. Credu (former online education division of Samsung HR development centre) was spun off from the Samsung Group in 2000. In FY06, 81% of its sales came from e-learning services, followed by content production 9%, systems development 8% and others 2%.

Impact Strong corporate and government growth prospects. The online

education market for corporates and government institutions grew by 13% and 46% YoY in 2006, according to the Ministry of Commerce, Industry and Energy. This exceeded the 8% growth in the online education market for individuals. Corporations, government institutions and individuals accounted for 47%, 8% and 43% of the total online education market (estimated collective market size of Won1.6tr) in 2006.

Targeting SMEs. As a former in-house online education division of Samsung group, around 36% of Credu’s sales came from Samsung affiliates in FY06. Credu aims to reduce its dependence on the Samsung group companies and actively target small-to-medium enterprises (SMEs), especially in view of a the low online education penetration rate among SMEs (15.6% as of 2006 vs. 51.9% among large corporations).

Increasing sales contribution from newly launched business. Credu expects new business lines (launched in 2H06) to collectively account for 10% of sales in FY07 vs. 2% in FY06). New business areas include: 1) administration of OPIc (Oral Proficiency Interview-computer) and providing online OPIc preparation courses (expecting Won2.5bn sales in FY07) ; 2) providing e-learning content and solutions to universities (expecting Won1bn sales in FY07), and 3) book publishing - planning to publish over 20 titles in 2007 with estimated sales of Won1bn (vs. Won250m in FY06). Of note, OPIc was adopted by the CJ and Samsung Group companies in January 2007.

Earnings guidance. Credu is guiding for Won62.0bn sales (+26% YoY), Won13.0bn operating profit (+25% YoY) and Won10.6bn net profit (+26% YoY) in FY07, thanks to steady growth in the online education market and increasing sales contribution from newly launched business.

Outlook The shares are trading at an FY07E PER of 30.1x with projected EPS growth

of +26% YoY based on consensus forecasts.


21 March 2007 17

Fig 1 FY07 company guidance vs. consensus estimates (Won bn) Company guidance Consensus Diff (%)

Sales 62.0 63.1 -2%Operating profit 13.0 13.3 -2%Recurring profit 14.6 14.6 0%Net profit 10.6 10.5 +1%Source: Company data, WiseFN, March 2007

Fig 2 Credu: Financial summary (Won bn) FY03 FY04 FY05 FY06 FY07E

Sales 20.7 30.7 41.9 49.1 62.0Operating profit 4.1 6.3 8.5 10.4 13.0Recurring profit 4.3 6.5 8.9 11.5 14.6Net profit 3.0 4.6 6.5 8.4 10.6Growth(%) Sales 56.1 48.2 36.5 17.2 26.2Operating profit 51.1 52.1 34.2 22.7 25.4Net profit 57.9 52.1 40.7 28.8 26.4Profitability (%) Operating margin 20.0 20.5 20.1 21.1 21.0Net margin 14.7 15.1 15.5 17.1 17.1ROE 39.1 40.2 38.8 21.5 16.7Source: Company data, March 2007

Fig 3 Credu: SWOT analysis

Strengths Weaknesses- Specialty in professional online job training - High dependence on Samsung Group (around

36% as of 3Q06)- Good relationship w ith large corporates and government institutions

- Relatively high content development costs- Demand valuations

Opportunities Threats- Increasing government support for online job training (Approved online course tuition refund policy etc)- Ample room for penetration into small-to-med enterprises / non-Samsung companies

- Grow ing competition in the online job training market



21 March 2007 18

Profit breakdown (Won bn) Sales breakdown (%)Yr to Dec 02 03 04 05 06 Yr to Dec 02 03 04 05 06Turnover 13.3 20.7 30.7 41.9 49.1 e-learning service 80.5 78.8 78.9 80.1

Gross profit 5.2 8.1 11.6 15.2 18.6 Content production 14.3 14.5 11.3 12.0

SG&A 2.5 4.0 5.3 6.8 8.2 System development 3.6 5.3 8.8 5.5

Labour costs 1.3 2.1 2.9 3.9 4.7 Others 1.6 1.4 1.0 2.5

Marketing exp 0.2 0.2 0.3 0.3 0.8

Others 1.0 1.6 2.1 2.5 2.7

Operating profit 2.7 4.1 6.3 8.5 10.4Non-oper gain (0.0) 0.2 0.2 0.5 1.2 Cash flow statement (Won bn) Net interest inc 0.0 0.1 0.3 0.5 1.0 Yr to Dec 02 03 04 05 06 Associates - - - - - Operating CF 1.6 3.7 7.2 5.9 10.0 Forex (0.0) 0.0 - - 0.0 Net profit 1.9 3.0 4.6 6.5 8.4 Others (0.0) 0.0 (0.0) (0.0) 0.1 Depn/amort 0.3 0.4 0.4 0.5 0.7

Exceptionals 0.0 (0.0) (0.0) (0.0) 0.0 Others 0.1 0.3 0.6 0.7 0.4

Pre-tax profit 2.7 4.3 6.5 8.9 11.5 Ch in work cap (0.7) 0.0 1.6 (1.8) 0.6

Taxation 0.8 1.3 1.9 2.4 3.2 Acc't receiv (1.7) (2.1) 1.2 (1.4) (1.7)

Net profit 1.9 3.0 4.6 6.5 8.4 Inventory - - - (0.1) 0.0

EBITDA 3.0 4.5 6.7 9.0 11.0 Acc't pay 0.4 1.1 0.0 (0.3) 0.0

Others 0.5 1.0 0.4 0.0 2.3Ratios (%)Yr to Dec 02 03 04 05 06 Investment CF 1.3 0.6 (4.3) (0.7) (2.2)Growth (%) Capex (0.8) (0.4) (0.8) (0.5) (0.7)

Sales - - 48.2 36.5 17.2 Other investment 2.1 0.9 (3.5) (0.2) (1.4)

Operating profit - - 52.1 34.2 22.7

Net profit - - 52.1 40.7 28.8 Financing CF - (0.0) (0.2) (0.4) 30.1EBITDA - - 47.2 34.7 22.8 ST debt - - - - -

Margins (%) LT debt - - - - -

Gross profit - 39.1 37.9 36.3 37.8 Cash dividend - (0.0) (0.2) (0.4) (0.6)

Operating profit - 20.0 20.5 20.1 21.1 Capital increase - - - - 30.8

Net profit - 14.7 15.1 15.5 17.0 Others - - - - (0.0)

EBITDA - 21.8 21.7 21.4 22.4

ROIC (%) - 37.4 38.7 36.7 19.3 Ch cash/(debt) 2.9 4.3 2.7 4.8 38.0Net DE (%) - N/C N/C N/C N/C Beg cash/(debt) - 2.9 7.2 9.8 14.6Int cover (x) - N/M N/M N/M N/M End cash/(debt) 2.9 7.2 9.8 14.6 52.6

Balance sheet (Won bn) Share performanceAs at Dec 02 03 04 05 06 Current 3m 6m 12mCurr assets 6.5 11.2 15.8 19.3 59.8 Price 56,600 46,900 N/A N/A


Acc't receiv 1.7 3.7 2.5 3.9 5.7 Absolute (%) 20.7 N/A N/A

Inventory - - - 0.1 0.1 Relative (%) 20.6 N/A N/A






Current liab 1.3 3.8 5.0 5.7 8.8

Acc't payable 0.4 1.6 1.6 1.3 1.3

ST debt - - - - -


Others 0.9 2.2 3.4 4.4 7.5

LT liabilities 0.1 0.0 0.0 0.0 0.4

LT debt - - - - -

Others 0.1 0.0 0.0 0.0 0.4


Paid-in capital 2.1 2.1 2.1 2.1 2.8

Capital surplus - - - - 30.0


Capital adj - - 0.0 - -



Price chart

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21 March 2007 19

Woongjin Thinkbig KOREA

21 March 2007

016880 KS Not rated

Share data Share price Won 15,500 Market cap Won bn 511.8 US$ m 543.4 Issued shares m 33.0 4-mth avg turnover Won bn 2.2 52-wk hi/low Won H20,500/L12,200 Foreign holdings % 26.5 Free float % 48.7 Major shareholders CEO and affiliates % 38.3 Mirae Asset % 12.0 Source: Company data, March 2007

Financial data Year end 31 Dec

2003A 2004A 2005A 2006A

Total revenue b 461.5 482.3 542.3 591.9 EBIT b 16.0 18.0 30.6 43.0 Reported profit b 14.5 12.7 54.9 31.4 EPS Won 403 340 1,502 926 EPS growth % -41.0 -15.5 341.5 -38.4 PER x 38.5 45.6 10.3 16.7 DPS Won 125 150 245 200 Yield % 0.8 1.0 1.6 1.3 ROE % 8.0 6.6 26.2 13.6 Price/book x 3.1 2.9 2.5 2.1 Source: Company data, March 2007

Share performance

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New business a potential swing factor Event We visited Woongjin Thinkbig, the third-largest domestic study guide provider

for elementary and pre-school kids, and left with a neutral impression of its operations.

Impact FY06 sales breakdown: study guides 59%; door-to-door sales

(encyclopaedias and children’s books) 31%; single-volume publications 5%; after-school computer programmes 5%; and others 1%.

Steady core business (study guide & door-to-door sales). Study guide and door-to-door sales (which collectively accounted for 90% of total sales and 126% of operating profit in FY06) posted stable growth of 4% YoY and 9% YoY in FY06, respectively. This was on the back of: 1) its stable presence in the pre-school study guide market (35% market share); 2) continuous product portfolio expansion (two new study guide subjects and six new titles for door-to-door sales were launched in 2006); and 3) enhanced value-added services – ie, aptitude testing programme ‘WEPS’ and customer after-service programme ‘Edu-plus’ for door-to-door sales. The company expects study guide and door-to-door sales to grow 5% YoY and 7% YoY in FY07.

Outlook Continuously seeking new business opportunities. Due to the slowdown

in overall study guide market growth (+1% YoY in 2005 and estimated to be flat in 2006), Woongjin Thinkbig has been actively seeking new business opportunities, including after-school computer classes (launched in 2004), a regional English-language centre (started in Sep 2006), toy rental (launched in Jul 2006) and a book rental business (planned to be launched in Apr 2007). New businesses accounted for 10% of sales in FY06 and the company expects this to increase to 14% in FY07.

Concerns over heightened competition in the after-school business. Woongjin Thinkbig had contracts with 392 schools to provide after-school programmes at end-2006, enjoying the No.3 position in the market (after Daekyo and Edu Box). However, its operating margins in this segment have declined, to 4.2% in FY06 from 5.1% in FY05, due to higher investment per school required (up to around Won100-110m in 2006 from about Won70-80m in 2004) and the establishment of a central education centre (around Won3bn). Management expects the after-school division’s operating margins to recover from FY07 as: 1) the company focuses on increasing the number of students per school, rather than expanding the number of schools; and 2) the fixed cost burden will fall on contract extension after the initial three years.

Toy rental business off to a rough start. The company launched a toy rental business (Toy pang-pang) in 2006, where it faced a logistics issue. Accordingly, there were only 11k subscribers for Toy pang-pang at end-2006, far below its initial target of 100k. The company narrowed its service regions to Yongin, Bundang and Incheon (vs. service to all of Kyunggi province initially) and aims to break even by end-2007 (vs. a Won5bn loss in FY06).


21 March 2007 20

Acquisition of Woongjin Passone. Woongjin Thinkbig acquired Hansung, G-cast and Serom Publishing in Nov 2006, which it merged into Woongjin Passone in Dec 2006 to enter the adult state exam preparation market. Woongjin Passone provides an offline education institute, an e-learning website and publishing for state exam preparation education. The acquisition cost was Won17.8bn for a 75% stake in Woongjin Passone.

The company forecasts equity method gains from Woongjin Passone to reach Won2.4bn in FY07, assuming continuous strong state exam market growth (estimated to be Won700bn as of 2006, after increasing 25% pa during 2003~2006) and Woongjin Passone’s market share gains (aiming to reach a 10% market share by 2010, from 4.6% in 2006).

Shift to a holding company structure. The company announced that it will de-merge into two separate entities — Woongjin Corp (the holding company) and Woongjin Thinkbig (the operating company). The share split ratio between the holding company and operating company will be 0.261519 to 0.738481 and the split will be effective from 1 May 2007. The company said the rationale for the split is to: 1) improve corporate governance; 2) remove the circular shareholding structure in Woongjin group affiliates; and 3) adopt a more attractive dividend payout policy.

Though the shift to a holding company structure should be positive for the Woongjin group as a whole, we think this transformation could weigh on Woongjin Thinkbig’s shares in the shorter term due to: 1) the possibility of a third-party placement by Woongjin Corp to SK Yoon (the chairman of the Woongjin group) to increase SK Yoon’s stake in Woongjin Corp; and 2) lack of interest by the major shareholders in boosting the share price of Woongjin Thinkbig prior to 1 May 2007 (in view of the favourable share swap ratio).

Fig 1 Woongjin group shareholding structure- prior to the split

CEO SK Yoon

Bearport Publishing

Woongjin E&C Woongjin FoodsLexfield

Coochen

20.0%

Platinum Media

Woongjin Passone

Woongjin Thinkbig

Woongjin Happyall

5.95%27.2%32.0%47.7%

80.0%

6.9%

5.1%

12.9%

46.2%5.2% 5.1% 19.9%

25.1%

Woongjin Coway

48.0%

48.8%

5.0%15.8%

100%75.0%


Fig 2 Woongjin group’s proposed shareholding structure – after the restructuring

Woongjin Corp (Holding

company)

Woongjin E&C Woongjin FoodsLexfield

70.1%

Platinum Media

Woongjin Passone

Woongjin Thinkbig

Woongjin Happyall

52.2%32.4%38.0%60.6%86.9%Woongjin

Coway

Bearport Publishing ( )

Coochen

48.0%69.6%

100.0%75.0%

CEO SK Yoon

more than 90%



21 March 2007 21

Earnings guidance and valuation Woongjin Thinkbig is guiding for Won653.7bn sales (+10% YoY), Won59.5bn operating profit

(+38% YoY) and Won42.7bn net profit (+39% YoY) in FY07 - assuming no de-merger. The company expects operating margins to continue to improve to 9.1% in FY07 from 7.3% in FY06, driven by tight control of labour costs and other fixed costs, including the opening of new branches.

Fig 3 FY07 company guidance vs. consensus estimates (Won bn) Company guidance Consensus estimates Diff

Sales 653.7 652.6 0.2%Operating profit 59.5 55.1 8.0%Recurring profit* 60.2 59.9 0.5%Net profit* 42.7 43.1 -0.8%Source: Company data, WiseFN, March 2007. *Note: Earnings assuming no de-merger

Based on the company’s guidance, shares are trading at an FY07E PER of 12.3x, with projected EPS growth of 36% YoY.

Fig 4 Woongjin Thinkbig -- Financial summary (Won bn) FY03 FY04 FY05 FY06P FY07E

Sales 461.5 482.3 542.3 591.9 653.7Operating Profit 16.0 18.0 30.6 43.0 59.5Recurring Profit 20.5 18.5 79.4 44.3 60.2Net Profit 14.5 12.7 54.9 31.4 42.7Growth(%) Sales -5.4 4.5 12.4 9.1 10.4Operating Profit -27.6 12.4 69.9 40.7 38.4Net profit -41.0 -15.5 341.5 -38.4 36.0Profitability (%) Operating margin 3.5 3.7 5.6 7.3 9.1Net margin 3.1 2.6 10.1 5.3 6.5ROE 8.0 6.6 26.2 13.6 16.3Source: Company data, March 2007, *Note: Earnings assuming no de-merger, FY07 estimates based on company guidance.

Fig 5 Woongjin Thinkbig: SWOT analysis

Strengths Weaknesses- Steady cash flow from study guide sales and door-to-door sales- Experience and know-how in the pre-school and elementary school study guide market (wide member base/ tutor network)

- New business risk from Toy pang-pang, book rental service

Opportunities Threats- Better corporate governance through transition to holding company structure- Entry into the adult niche market (first large-corporation to enter the market)

- Low birth rate- Matured elementary study guide market



21 March 2007 22

Profit breakdown (Won bn) Sales breakdown (%)Yr to Dec 02 03 04 05 3Q06 YTD Yr to Dec 02 03 04 05 3Q06 YTDTurnover 487.6 461.5 482.3 542.3 432.2 Study guide - 65.5 63.0 61.2 59.9

Gross profit 430.7 410.2 433.3 482.4 387.7 Door-to-door sales - 27.3 31.7 31.3 29.9

SG&A 408.6 394.2 415.4 451.9 352.5 Publishing - 2.2 1.1 2.7 4.7

Labour costs 58.3 69.9 72.1 74.6 54.8 After-school classes - - 0.3 2.0 4.8

Marketing exp 281.2 255.7 271.7 298.8 218.5 Others - 5.0 3.9 2.8 0.6

Others 69.0 68.5 71.6 78.4 79.2

Operating profit 22.1 16.0 18.0 30.6 35.2Non-oper gain 11.6 4.5 0.5 48.8 4.5 Cash flow statement (Won bn) Net interest inc 1.0 0.7 1.4 1.7 0.9 Yr to Dec 02 03 04 05 3Q06 YTD Associates 6.3 4.8 5.7 2.3 3.2 Operating CF 23.8 18.9 22.9 40.6 25.5 Forex - - - - - Net profit 24.4 14.5 12.7 54.9 27.6

Others 4.3 (1.0) (6.6) 44.9 0.4 Depn/amort 11.2 13.4 15.0 18.5 18.9

Exceptionals 0.0 0.0 (0.0) (0.0) 0.0 Others (2.4) 8.9 11.5 (37.7) 14.0

Pre-tax profit 33.7 20.5 18.5 79.4 39.7 Ch in work cap (9.5) (17.9) (16.3) 4.8 (35.0)

Taxation 9.3 6.1 5.8 24.5 12.0 Acc't receiv 16.4 0.7 (6.8) (1.3) (0.8)

Net profit 24.4 14.5 12.7 54.9 27.6 Inventory 0.8 9.7 (1.2) 5.3 (5.7)

EBITDA 33.4 29.4 33.0 49.1 54.1 Acc't pay (2.8) 0.4 0.3 1.0 (0.2)

Others (24.0) (28.7) (8.7) (0.2) (28.3)Ratios (%)Yr to Dec 02 03 04 05 3Q06 YTD Investment CF 1.4 (5.8) (21.4) (3.3) (44.7)Growth (%) Capex (9.9) (15.1) (6.6) (19.0) (27.0)

Sales 7.4 -5.4 4.5 12.4 9.1 Other investment 11.3 9.3 (14.8) 15.7 (17.7)

Operating profit -41.7 -27.6 12.4 69.9 63.9

Net profit 21.5 -40.7 -12.3 332.1 -45.8 Financing CF (8.4) (7.0) (7.0) (17.7) (24.6)EBITDA -31.4 -11.8 12.1 48.9 56.7 ST debt (18.3) - - - 6.5

Margins (%) LT debt (32.0) 12.0 (12.0) - 20.0

Gross profit 88.3 88.9 89.8 89.0 89.7 Cash dividend (3.6) (4.4) (4.6) (5.5) (8.6)

Operating profit 4.5 3.5 3.7 5.6 8.1 Capital increase - 3.7 - 0.4 0.3

Net profit 5.0 3.1 2.6 10.1 6.4 Others 45.6 (18.3) 9.6 (12.6) (42.8)

EBITDA 6.8 6.4 6.8 9.1 12.5

ROIC (%) 9.3 6.0 6.2 10.1 11.1 Ch cash/(debt) 16.9 6.1 (5.6) 19.6 (43.8)Net DE (%) N/C N/C N/C N/C 2.4 Beg cash/(debt) 28.6 45.5 51.5 45.9 65.6Int cover (x) N/M N/M N/M N/M N/M End cash/(debt) 45.5 51.5 45.9 65.6 21.8

Balance sheet (Won bn) Share performanceAs at Dec 02 03 04 05 3Q06 YTD Current 3m 6m 12mCurr assets 137.8 130.3 132.7 158.4 128.1 Price 15,500 19,100 18,400 12,350


Acc't receiv 40.4 39.7 46.5 47.8 48.5 Absolute (%) -18.8 -15.8 25.5

Inventory 32.6 23.0 24.2 18.9 24.6 Relative (%) -19.0 -21.5 18.3






Current liab 83.4 75.5 87.3 107.0 107.6

Acc't payable 3.5 3.9 4.2 5.2 4.9

ST debt - - - - 6.5


Others 79.9 71.6 83.1 101.8 96.2

LT liabilities 16.2 33.0 25.6 33.0 55.2

LT debt - 12.0 - - 20.0

Others 16.2 21.0 25.6 33.0 35.2


Paid-in capital 17.9 18.7 18.7 18.7 18.8

Capital surplus 49.9 51.2 51.5 52.8 53.7


Capital adj 13.4 9.8 17.6 (3.2) (1.6)



Price chart

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21 March 2007 23

Daekyo KOREA

21 March 2007

019680 KS Not rated

Share data Share price Won 79,900 Market cap Won bn 756.4 US$ m 803.2 Issued shares m 10.4 4-mth avg turnover Won bn 1.1 52-wk hi/low Won H95,400/L65,400 Foreign holdings % 21.7 Free float % 49.0 Major shareholders Daekyo Holdings % 44.3 CEO and affiliates % 6.6 Source: Company data, March 2007

Financial data Year end 31 Dec 2003A 2004A 2005A 2006A Total revenue b 805.4 839.3 815.5 835.0 EBIT b 70.7 90.0 68.9 61.6 Reported profit b 61.0 65.1 60.6 51.5 EPS Won 6,699 6,306 5,824 4,941 EPS growth % 121.4 -5.9 -7.6 -15.2 PER x 11.9 12.7 13.7 16.2 DPS (Common) Won 1,250 1,500 1,650 1,850 Yield % 1.6 1.9 2.1 2.3 ROE % 23.3 18.0 12.4 8.8 Price/book x 2.4 2.0 1.5 1.4 Source: Company data, March 2007 Share price performance

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Wait for concrete evidence of restructuring Event We visited Daekyo, the largest study guide provider for elementary and pre-

school kids in Korea with a market share of around 38% in 2006, and came away with a neutral impression of its operations.

Impact Study guide sales (under the brand name Noonnoppi) accounted for 88% of

total sales in FY06, SOBICs (educational products for infants through door-to-door sales) 7%, after-school computer classes 3%, and others 2%.

Study guide price hike. Daekyo has around 1.1m study guide subscribers and its study guide sales translate to around 38% of the total study guide market in Korea (Won1.9tr). In January 2007, Daekyo implemented a price hike of around 10% for its Korean, English and Math guides (collectively about 60% of Daekyo’s study guide sales). Assuming around 6~7% churn rate (vs. the 6.6% churn rate incurred after a previous price hike in Dec 2004), the company expects 5~6% sales growth from study guides in FY07.

Enhancing Noonnoppi competitiveness through a reshuffle. Amid a slowdown in Noonnoppi sales growth (+1% YoY in FY06 and -4% YoY in FY05) and market share loss (38% in 2006 from 42% in 2004), the company implemented a reshuffle in 2007 to enhance the competitiveness of Noonnoppi (84% of sales and 127% of operating profit in FY06). SOBICs’ study guides (for pre-school kids) will be transferred to the existing Noonnoppi division to implement a tighter membership management, while all other businesses of the former SOBICs (including premium study guides Soluni and Caihong) will be placed under the new business division.

Outlook Daekyo expects new business to turn around in FY07. Management

expects Soluny and Caihong to break even by mid-2007, with the number of subscribers reaching 50k (Soluny) and 60k (Caihong) vs. the current 23k (Soluny) and 47k (Caihong) at end-2006. Once Daekyo reaches breakeven in terms of subscribers, it expects margins to improve rapidly thanks to scalability – guiding for long-term operating margins of around 10% for both Soluny and Caihong. Soluny (reading and writing course designed for young children aged 7-12, launched in 1Q05) and Caihong (Chinese-language course, launched in 3Q05) collectively accounted for 5% of study guide sales in FY06 vs. 1% in FY05.

The company also expects SOBICs and the after-school business to turn to the black in FY07 on a lower fixed cost burden and tighter marketing cost control. It aims to increase the average number of students per school (for the after-school business) to 250 from the current 220.

Finally, Daekyo hinted at restructuring some unprofitable businesses in 2007, including SOBICs’ education material.


21 March 2007 24

Acquisition of Fermat Edu. In July 2006, Daekyo acquired a 51% stake (Won26.5bn cost) in Fermat Edu, a renowned private education institute specialising in preparation for special purpose high schools. Fermat Edu has more than 60 learning centres in Korea, including 10 that are directly-owned. Management expects Fermat Edu to post sales of around Won35bn with an operating margin of 15% in FY07. Based on the company’s projections, it acquired a stake in Fermat Edu at an FY07E PER multiple of around 13.6x, similar to Daekyo’s shares, which are trading at an FY07E PER of 13.9x (based on the company’s guidance).

Despite minor earnings contribution through equity method gains from Fermat Edu (due to annual amortisation expense of Won3.5bn), the company gained effective access to the middle school education market through Fermat Edu. Of note, around 75% of Daekyo’s study guide subscribers are elementary school students and 25% pre-school kids. The company launched a middle school online education website in December 2006, www.gongbuwarac.com.

Company guidance vs. consensus estimates. Driven by a 10% price hike for major study guide subjects in Jan 2007, the company is guiding for Won900bn sales (+8% YoY), Won81bn operating profit (+32% YoY), and Won60bn net profit (+16% YoY) in FY07.

Fig 1 FY07 company guidance vs. consensus estimates (Won bn) Company guidance Consensus estimates Diff

Sales 900.0 888.5 1.3%Operating profit 81.0 80.3 0.9%Recurring profit 84.2 96.6 -12.9%Net profit 59.9 68.6 -12.7%Source: Company data, March 2007

Valuation The shares are trading at an FY07E PER of 13.9x with projected EPS growth of 16% YoY and an

FY07E P/BV of 1.3x with projected ROE of 9.5% based on the company’s guidance.

Fig 2 Daekyo: Financial summary (Won bn) FY03 FY04 FY05 FY06 FY07E

Sales 805.4 839.3 815.5 835.0 900.0Operating profit 70.7 90.0 68.9 61.6 81.0Recurring profit 85.9 101.3 87.2 72.3 84.2Net profit 61.0 65.1 60.6 51.5 59.9Growth(%) Sales 5.4 4.2 -2.8 2.4 7.8Operating profit 26.4 27.3 -23.5 -10.5 31.5EPS 121.4 6.8 -6.8 -15.2 16.4Profitability (%) Operating margin 8.8 10.7 8.4 7.4 9.0Net margin 7.6 7.8 7.4 6.2 6.7ROE 23.3 18.0 12.4 8.8 9.5Source: Company data, March 2007 * Note: FY07 estimates based on company guidance.


21 March 2007 25

Fig 3 Daekyo: SWOT analysis

Strengths Weaknesses- Strong position in the study guide business (over 38% market share), particularly in elementary school market

- Slow er-than-expected grow th of new businesses

Opportunities Threats-Entry into the middle school market through acquisition of Fermat Edu- Possible opening of after-school class market (besides computer) to private institutions

- Slow dow n of study guide market grow th- Stiff market competition



21 March 2007 26

Profit breakdown (Won bn) Sales breakdown (%)Yr to Dec 02 03 04 05 06 Yr to Dec 02 03 04 05 06Turnover 764.5 805.4 839.3 815.5 835.0 Study guide 92.1 90.1 88.9 88.0

Gross profit 154.7 173.3 201.0 183.7 176.2 SOBICS 5.1 5.5 6.7 6.8

SG&A 98.7 102.5 110.9 114.8 114.6 After-school class / G-camp 1.2 1.8 3.7 3.9

Labour costs 30.5 29.2 25.1 24.7 25.0 Others 1.6 2.7 0.8 1.3

Marketing exp 44.3 49.4 64.8 68.4 66.3

Others 23.9 24.0 21.1 21.8 23.3

Operating profit 56.0 70.7 90.0 68.9 61.6Non-oper gain (10.7) 15.2 11.3 18.3 10.7 Cash flow statement (Won bn) Net interest inc 5.0 5.4 8.7 7.0 7.5 Yr to Dec 02 03 04 05 06 Associates (0.6) (0.8) (0.9) 1.1 (0.9) Operating CF 58.8 78.8 58.3 53.6 74.5 Forex (0.0) (0.2) 0.2 (0.1) (0.1) Net profit 27.5 61.0 65.1 60.6 51.5

Others (15.0) 10.7 3.3 10.3 4.2 Depn/amort 16.2 19.0 24.6 31.7 38.5

Exceptionals 0.0 0.0 - (0.0) (0.0) Others 29.3 21.6 (3.0) 4.3 13.9

Pre-tax profit 45.2 85.9 101.3 87.2 72.3 Ch in work cap (14.2) (22.8) (28.3) (43.0) (29.4)

Taxation 17.7 25.0 36.2 26.5 20.8 Acc't receiv (6.6) (2.3) (7.3) 2.8 (2.6)

Net profit 27.5 61.0 65.1 60.6 51.5 Inventory 0.5 (6.3) 1.9 (1.6) (3.5)

EBITDA 72.1 89.7 114.6 100.5 100.2 Acc't pay 0.7 (1.0) (0.2) (0.3) 6.5

Others (8.8) (13.2) (22.6) (44.0) (29.8)Ratios (%)Yr to Dec 02 03 04 05 06 Investment CF (53.6) (33.9) (52.8) (84.2) (62.9)Growth (%) Capex (27.1) (15.4) (28.3) (12.8) (43.6)

Sales 12.3 5.4 4.2 -2.8 2.4 Other investment (26.5) (18.5) (24.5) (71.4) (19.4)

Operating profit 19.0 26.4 27.3 -23.5 -10.5

Net profit -8.5 121.4 6.8 -6.8 -15.2 Financing CF (4.6) (9.0) 62.4 (15.8) (20.4)EBITDA 12.1 24.4 27.8 -12.3 -0.4 ST debt - - - - -

Margins (%) LT debt 2.2 0.2 (2.5) - -

Gross profit 20.2 21.5 23.9 22.5 21.1 Cash dividend (4.3) (8.5) (17.4) (15.8) (17.9)

Operating profit 7.3 8.8 10.7 8.4 7.4 Capital increase - - 53.3 - -

Net profit 3.6 7.6 7.8 7.4 6.2 Others (2.5) (0.7) 29.0 - (2.5)

EBITDA 9.4 11.1 13.7 12.3 12.0

ROIC (%) 15.4 19.0 15.9 9.8 7.5 Ch cash/(debt) 0.7 35.9 67.9 (46.5) (8.8)Net DE (%) N/C N/C N/C N/C N/C Beg cash/(debt) 52.8 53.4 89.3 157.2 110.7Int cover (x) N/M N/M N/M N/M N/M End cash/(debt) 53.4 89.3 157.2 110.7 101.9



Acc't receiv 17.8 20.1 27.4 24.7 27.2 Absolute (%) -8.6 6.0 13.0

Inventory 12.2 18.5 16.7 18.2 21.7 Relative (%) -8.7 0.3 5.8



Other assets 155.4 163.6 211.8 222.1 258.7 Mkt cap (US$m) 803.2 52-wk hi/lo (Won)95,400/65,400



Current liab 115.8 144.7 144.0 116.3 122.9

Acc't payable 8.9 7.8 7.6 7.3 13.8

ST debt - - - - -

LT debt-curr - 0.6 - - -

Others 106.9 136.3 136.4 109.0 109.1

LT liabilities 84.8 70.6 72.0 108.2 106.6

LT debt 2.3 2.0 - - -

Others 82.5 68.7 72.0 108.2 106.6


Paid-in capital 45.5 45.5 52.1 52.1 52.1

Capital surplus 8.6 8.6 71.7 71.7 71.7


Capital adj 6.7 34.0 36.9 125.5 146.5



Price chart

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21 March 2007 27

Important disclosures: Recommendation definitions Macquarie Australia/New Zealand Outperform – return >5% in excess of benchmark return (>2.5% in excess for listed property trusts) Neutral – return within 5% of benchmark return (within 2.5% for listed property trusts) Underperform – return >5% below benchmark return (>2.5% below for listed property trusts) Macquarie Asia Outperform – expected return >+10% Neutral – expected return from -10% to +10% Underperform – expected return <-10% Recommendations – 12 months Note: Quant recommendations may differ from Fundamental Analyst recommendations

Recommendation proportions Macquarie Australia/New Zealand Outperform 42.81% Neutral 44.60% Underperform 12.59% Macquarie Asia Outperform 57.12% Neutral 26.36% Underperform 16.52% For quarter ending 30 September 2006

Volatility index definition* This is calculated from the volatility of historic price movements. Very high–highest risk – Stock should be expected to move up or down 60–100% in a year – investors should be aware this stock is highly speculative. High – stock should be expected to move up or down at least 40–60% in a year – investors should be aware this stock could be speculative. Medium – stock should be expected to move up or down at least 30–40% in a year. Low–medium – stock should be expected to move up or down at least 25–30% in a year. Low – stock should be expected to move up or down at least 15–25% in a year. * Applicable to Australian/NZ stocks only

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March 07

Research Automobiles/Auto Parts Kurt Sanger (Japan, Asia) (813) 3512 7859 Deepak Jain (India) (9122) 6653 3157 Liny Halim (Indonesia) (6221) 515 7343 Toshisuke Hayami (Japan) (813) 3512 7873 Eunsook Kwak (Korea) (822) 3705 8644

Banks and Non-Bank Financials Ismael Pili (Asia) (65) 6231 2840 Nick Lord (Asia) (852) 2823 4774 Christina Fok (China) (852) 2823 3584 Chris Esson (Hong Kong) (852) 2823 3567 Seshadri Sen (India) (9122) 6653 3053 Liny Halim (Indonesia) (6221) 515 7343 Kentaro Kogi (Japan) (813) 3512 7865 Hwashin Lee (Korea) (822) 3705 4994 Mark Barclay (Korea) (822) 3705 8658 Young Chung Mok (Korea) (822) 3705 8668 Chin Seng Tay (Malaysia, S’pore) (65) 6231 2837 Gilbert Lopez (Philippines) (632) 857 0898 Chris Hunt (Taiwan) (8862) 2734 7526 Matthew Smith (Taiwan) (8862) 2734 7514 Alastair Macdonald (Thailand) (662) 694 7741

Chemicals/Textiles Scott Weaver (China, Taiwan) (8862) 2734 7512 Jal Irani (India) (9122) 6653 3040 Kitti Nathisuwan (Thailand) (662) 694 7724

Conglomerates Gary Pinge (Asia) (852) 2823 3557 Gilbert Lopez (Philippines) (632) 857 0898

Consumer Ramiz Chelat (Asia) (852) 2823 3587 Xiaopo Wei (China) (852) 2823 4741 Unmesh Sharma (India) (9122) 6653 3042 Sarina Lesmina (Indonesia) (6221) 515 7339 Duane Sandberg (Japan) (813) 3512 7867 Christina Lee (Korea) (822) 3705 8670 Paul Hwang (Korea) (822) 3705 8678 Woochang Chung (Korea) (822) 3705 8667 Edward Ong (Malaysia) (603) 2059 8982 Nadine Javellana (Philippines) (632) 857 0890 Chris Clayton (Thailand) (662) 694 7829

Emerging Leaders Paul Quah (Hong Kong) (852) 2823 4627 Saurabh Jain (India) (9122) 6653 3046 Oliver Cox (Japan) (813) 3512 7871 Robert Burghart (Japan) (813) 3512 7853 Paul Hwang (Korea) (822) 3705 8678 Woochang Chung (Korea) (822) 3705 8667 Nadine Javellana (Philippines) (632) 857 0890 Jeremy Chen (Taiwan) (8862) 2734 7521 Scott Weaver (Taiwan) (8862) 2734 7512

Insurance Chris Esson (China, Taiwan) (852) 2823 3567

Media Ramiz Chelat (Asia) (852) 2823 3587 Prem Jearajasingam (Malaysia) (603) 2059 8989

Metals and Mining Simon Francis (Asia) (852) 2823 3590 Felix Lam (China, HK, Taiwan) (852) 2823 3575 Rakesh Arora (India) (9122) 6653 3054 Adam Worthington (Indonesia) (6221) 515 7338 Christina Lee (Korea) (822) 3705 8670 Amornrat Cheevavichawalkul (Thai) (662) 694 7829

Oil and Gas David Johnson (Asia) (852) 2823 4691 Scott Weaver (China, Taiwan) (8862) 2734 7512 Jal Irani (India) (9122) 6653 3040 Mark Barclay (Korea) (822) 3705 8658 Edward Ong (Malaysia) (603) 2059 8982 Kitti Nathisuwan (Thailand) (662) 694 7724

Pharmaceuticals Shubham Majumder (India) (9122) 6653 3049

Property Matt Nacard (Asia) (852) 2823 4731 Eva Lee (Hong Kong, China) (852) 2823 3573 Siddhartha Gupta (India) (9122) 6653 3048 Gilbert Lopez (Philippines) (632) 857 0898 Tuck Yin Soong (Singapore) (65) 6231 2838 Corinne Jian (Taiwan) (8862) 2734 7529 Monchai Jaturanpinyo (Thailand) (662) 694 7727

Technology Warren Lau (Asia) (852) 2823 3592 Suveer Chainani (India) (9122) 6653 3045 Damian Thong (Japan) (813) 3512 7877 David Gibson (Japan) (813) 3512 7880 George Chang (Japan) (813) 3512 7854 Yoshihiro Shimada (Japan) (813) 3512 7862 Alex Jun (Korea) (822) 3705 8653 Do Hoon Lee (Korea) (822) 3705 8641 Michael Bang (Korea) (822) 3705 8659 Patrick Yau (Singapore) (65) 6231 2835 Cheryl Hsu (Taiwan) (8862) 2734 7522 Daniel Chang (Taiwan) (8862) 2734 7516 Dominic Grant (Taiwan) (8862) 2734 7528 Jessica Chang (Taiwan) (8862) 2734 7518 Nicholas Teo (Taiwan) (8862) 2734 7523

Telecoms Tim Smart (Asia) (852) 2823 3565 Jake Lynch (China, Hong Kong) (852) 2823 3583 Shubham Majumder (India) (9122) 6653 3049 Richard Moe (Indonesia) (662) 694 7753 Nathan Ramler (Japan) (813) 3512 7875 Joel Kim (Korea) (822) 3705 8677 Prem Jearajasingam (Malaysia) (603) 2059 8989 Ramakrishna Maruvada (Philippines, Singapore) (65) 6231 2842 Dominic Grant (Taiwan) (8862) 2734 7528 Richard Moe (Thailand) (662) 694 7753

Transport & Logistics Paul Huxford (Asia) (65) 6231 2841 Michael Chan (Asia) (852) 2823 3595 Anderson Chow (China, Hong Kong) (852) 2823 4773 Eunsook Kwak (Korea) (822) 3705 8644

Utilities Sylvia Chan (Asia) (852) 2823 3579 Gopal Ritolia (India) (9122) 6653 3055 Adam Worthington (Indonesia) (6221) 515 7338 Prem Jearajasingam (Malaysia) (603) 2059 8989

Commodities Jim Lennon (4420) 7065 2014 Adam Rowley (4420) 7065 2013 Max Layton (4420) 7065 2000 Bonnie Liu (4420) 7065 2014 Henry Liu (4420) 7065 2014

Data Services Liz Dinh (Asia) (852) 2823 4762 Brent Borger (Japan) (813) 3512 7852

Economics Roland Randall (Asean) (852) 2823 3572 Bill Belchere (Asia) (852) 2823 4636 Eli Polatinsky (Asia) (852) 2823 4074 Richard Gibbs (Australia) (612) 8232 3935 Paul Cavey (China) (852) 2823 3570 Richard Jerram (Japan) (813) 3512 7855

Quantitative Martin Emery (Asia) (852) 2823 3582 Viking Kwok (Asia) (852) 2823 4735 George Platt (Australia) (612) 8232 6539

Strategy/Country Tim Rocks (Asia) (852) 2823 3585 Daniel McCormack (Asia) (852) 2823 4073 Desh Peramunetilleke (Asia) (852) 2823 3564 Jake Lynch (China) (852) 2823 3583 Seshadri Sen (India) (9122) 6653 3053 Peter Eadon-Clarke (Japan) (813) 3512 7850 Eugene Ha (Korea) (822) 3705 8643 Uday Jayaram (Malaysia) (603) 2059 8988 Gilbert Lopez (Philippines) (632) 857 0898 Tuck Yin Soong (Singapore) (65) 6231 2838 Chris Hunt (Taiwan) (8862) 2734 7526 Kitti Nathisuwan (Thailand) (662) 694 7724 Find our research at Macquarie: www.macquarie.com.au/research Thomson: www.thomson.com/financial Reuters: www.rbr.reuters.com Bloomberg: MAC GO Email [email protected] for access

Sales Regional Heads of Sales Greg Gordon (Asia) (852) 2823 3509 Peter Slater (Boston) (1 617) 217 2103 Michelle Paisley (China, Hong Kong) (852) 2823 3516 Ulrike Pollak-Tsutsumi (Frankfurt) (49) 69 7593 8747 Daniel Fust (Geneva) (41) 22 818 7710 Thomas Renz (Geneva) (41) 22 818 7712 Ajay Bhatia (India) (9122) 6653 3200 Stuart Smythe (India) (9122) 6653 3200 Eugene Ha (Korea) (822) 3705 8643 K.Y. Nam (Korea) (822) 3705 8607 Derek Wilson (London)(N Asia) (44) 20 7065 5856 Julien Roux (London) (44) 20 7065 5887 Lena Yong (Malaysia) (603) 2059 8888 Ismael Pili (Philippines) (65) 6231 2840 Greg Norton-Kidd (New York) (1 212) 231 2527

Regional Heads of Sales cont’d Luke Sullivan (New York) (1 212) 231 2507 Mark Lawrence (New York) (1 212) 231 2516 Sheila Schroeder (San Francisco) (1 415) 835 1235 Giles Heyring (Singapore) (65) 6231 2888 Mark Duncan (Taiwan) (8862) 2734 7510 Angus Kent (Thailand) (662) 694 7601 Dominic Henderson (Tokyo) (813) 3512 7820 Nick Cant (Tokyo) (813) 3512 7821 Charles Nelson (UK/Europe) (44) 20 7065 2032 Rob Fabbro (UK/Europe) (44) 20 7065 2031

Sales Trading Anthony Wilson (Asia) (852) 2823 3511 Mona Lee (Hong Kong) (852) 2823 3519 Stuart Goddard (Europe) (44) 20 7065 2033 Brendan Rake (India) (9122) 6653 3204

Sales Trading cont’d Howard Yoon (Korea) (822) 3705 8601 Ed Robinson (London) (44) 20 7065 5883 Robert Risman (New York) (1 212) 231 2555 Isaac Huang (Taiwan) (8862) 2734 7582 Kenichi Ohtaka (Tokyo) (813) 3512 7830

Index Sales Margaret Hartmann (612) 8232 9834

Alternative Strategies Convertibles - Roland Sharman (852) 2823 4628 Depository Receipts - Robert Ansell (852) 2823 4688 Derivatives - Vipul Shah (852) 2823 3523 Futures - Tim Smith (852) 2823 4637 Hedge Fund Sales - Darin Lester (852) 2823 4736 Structured Products - Andrew Terlich (852) 2249 3225

A41909/ASIA.MA

korea consumer scope

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