Hot Issue

Achieved KRW 623.7 billion in 1Q sales, up 13.8% year-on-year

Signed an MOU for water purifier business in China with Haier

- 350 thousand units, a record high, in rental sales for 1Q

- KRW 123.6 billion in operating profit and KRW 95.2 billion in net profit on a consolidated basis

- Up 23.2% and 22.7% in operating profit and net profit, respectively, year-on-year

Coway signed an MOU with Haier which is recognized as the world's

top white goods brand and acquired the home appliance business of

GE in the Haier Industrial Complex located in Qingdao, China, on

May 26. The agreement has been promoted to enhance strategic

cooperation for targeting the Chinese water purifier market. …

IR WEBZINE2016. May

New Product

Launched the "My Hanppyeom Water Purifier IoCare," the first my collection product

- Offering water purifier functions and design tailored to individual lifestyle

- Building a special lineup by launching more than 10 relevant products this year

- The first product with innovative functions despite ultra slim size

- 3-step self-sterilization and IoT-based operation

IR WEBZINE2016. May

Market ReviewStock Market

The KOSPI decreased 0.54% from the previous month to 1,983.40 points at the end of May 2016. The KOSPI has fluctuated between 1,950 points and 2,20 points since March, continuing to periodic level off after a rally. In the aspect of technical analysis, the KOSPI is tangled with short-, mid-, and long-term moving average lines, which makes it difficult to accurately predict the direction of future stock prices. Meanwhile, trading volume which has increased since mid May develops a potential of another growth.

In May, uncertainty of the US interest rate increase has been an obstacle to a rally, followed by extended volatility in the global foreign exchange market and selling of foreign investors. As economy-sensitive stocks which had led a rally in March and April also began to level off since the 1Q earnings release, there was no momentum for another takeoff of the KOSPI. Fortunately, it was positive that the KOSPI made an attempt on rebound at the end of the month after confirming the introspection on the uncertainty of the US interest rate increase. In May, pharmaceuticals, machinery, and electricity & electronics sectors were strong while insurance, textile & clothing, and iron & steel sectors were weak relatively.

In June 2016, it is expected that the domestic stock market will recover its strength after holding on many internal and external events such as FOMC meeting, MSCI changes, and Brexit, and eliminating uncertainties. If a tedious market trend continues, there may be just attempts on sporadic increase of individual stocks which are expected to realize better operating performances.

IR WEBZINE2016. May

Market ReviewStock Price

The stock price of Coway closed at KRW 103,000, an increase of 4.46% compared with the previous month, at the end of May 2016, continuing uptrend for two months in a row. In the aspect of technical analysis, all of short-, mid-, and long-term moving average lines have held up the stock price, which raises investors' expectations on additional growth. Continued purchasing of foreign investors for the past two months also have positive effect on future stock price.Thanks to launching new premium rental products, market dominance of Coway has been enhanced and sales proportion of premium product lineups has been on the rise. This positive change resulted in achieving excellent operating performances meeting expectations of the market and investors. In addition, Coway is developing products targeting Chinese market and securing a bridgehead for local sales, acquiring positive response from investors.

During May, the number of shares held by foreigners increased 200,567 shares, or 0.5%, compared with the prior month. As of the end of May, they maintained 53.83% ownership. Domestic institutional investors marked net selling of 54,014 shares during the same period.

Classification% change of COWAY %change of

KOSPI%change of

KOSPI200Stock Price vs. KOSPI vs. KOSPI200

5 Days 3.62 1.26 1.11 2.36 2.52

20 Days 4.46 5.00 5.10 -0.54 -0.64

60 Days 3.94 2.65 2.46 1.29 1.47

IR WEBZINE2016. May

41,517,863 shares

(53.83%)

(as of May. 30, 2016)

Changes in Stock Price in May

Changes in Shares Held by Foreigners in May

Net Changes in Shares Held by Institutional Investors in May

+200,567Shares(+0.5%)

-54,014Shares+4.46%

Market ReviewStock Price

• Strong Buy

• Buy

• Hold

• Underperform

• Sell

0

8

0

0

0

Average Ratings Average Target Price = \127,125

Sell StrongBuy Low :\110,000

High :\140,000

2016-05-31 | Samsung Securities | Target Price : 135,000 | BUY

Haier tie-up seen as optimal China strategy ...Local media yesterday reported that Coway signed an MOU with Haier Electronics (China) after having sought alocal partner in that nation since last year. The deal should allow the …

FULL REPORT VIEW

2016-05-30 | Mirae Asset Securities | Target Price : 121,000 | BUY

Stronger premium rental market presenceFollowing solid 1Q16, we expect Coway’s consolidated operating profit to reach KRW126.8bn (+14.8% YoY) in 2Q16, which should meet our and the consensus estimates. The continued healthy YoY operating …

FULL REPORT VIEW

2016-05-04 | Hyundai Securities | Target Price : 110,000 | BUY

1Q16 Earnings Review1Q16 OR and OP grew 13.8%YoY and 23.2%YoY, respectively, satisfying consensus. Sound sales were achieved in all product areas including rental/lump-sum sales …

FULL REPORT VIEW

IR WEBZINE2016. May

2016-05-04 | Mirae Asset Securities | Target Price : 121,000 | BUY

Healthy operations in 1Q16After market close on 3 May, Coway reported healthy 1Q16 consolidated earnings results. The company reported sales of KRW623.7bn (+13.8% YoY), operating profit …

FULL REPORT VIEW

2016-05-04 | NH Investment & Securities | Target Price : 125,000 | BUY

Solid earnings fundamentals remain intact ...On a non-consolidated basis, Coway announced 1Q16 sales of W577.6bn (up 14%y-y) and operating profit of W126.9bn (up 28% y-y), with both figures surpassing our estimates and market projections. Of note …

FULL REPORT VIEW

Market ReviewStock Price

2016-05-04 | Shinhan Investment Corp | Target Price : 130,000 | BUY

Stable dividend growth stockCoway reported K-IFRS standalone sales of W577.6bn (+14.1% YoY) and operating profit of W126.9bn (+28.3% YoY) in 1Q16. Rental account sales came in at W378.8bn (+4.8% YoY), lump-sum …

FULL REPORT VIEW

2016-05-03 | Samsung Securities | Target Price : 135,000 | BUY

Stable and growingCoway’s 1Q sales and operating profit rose a respective 14% and 23% y-y, the latter growing in the double-digits for a fifth straight quarter. Solid growth in overseas and outright sales garnered attention, …

FULL REPORT VIEW

IR WEBZINE2016. May

2016-05-04 | Mirae Asset Daewoo | Target Price : 140,000 | BUY

Uniquely positionedFor 1Q16, Coway announced preliminary consolidated revenue of W623.7bn (+13.8% YoY), operating profit of W123.6bn (+23.2% YoY), and OP margin of 19.8%. The company delivered another strong performance …

FULL REPORT VIEW

Coway News

Signed an MOU for water purifier business in China with Haier

Coway signed an MOU with Haier which is recognized as the world's top white goods brand and acquired the home appliance business of GE in the Haier Industrial Complex located in Qingdao, China, on May 26. The agreement has been promoted to enhance strategic cooperation for targeting the Chinese water purifier market.

At the ceremony, Yong-Seong Kim, head of Coway's Overseas Business HQ, and Xie Ju Zhi, the Vice Chairman of Haier.

According to the MOU, the two companies plan to conclude a main contract to develop localized products and build strategies for the expansion of Chinese water purifier market by the end of 2016.

Coway will also give impetus to the entrance into premium water purifier market in China and broadcast the excellence of its water purifiers.

Yong-Seong Kim, head of Coway's Overseas Business HQ, said, "This strategic cooperation has been promoted on the basis that Korea's No.1 environmental home appliance maker Coway and the world's top white goods brand Haier would create a synergy in the Chinese water purifier market with growth potential. Beginning with this cooperation, we will continue to accelerate our overseas business."

IR WEBZINE2016. May

Coway News

Obtained the "GP Mark" for eco-friend packaging

IR WEBZINE2016. May

Coway obtained the "GP (Green Packaging Mark) Mark," an eco-friendly packaging certification, for the package of its air purifiers on May 12.

The GP Mark certification, sponsored by the Ministry of Environment and hosted by the Korea Eco-friendly Packaging Institute, is granted by comprehensively evaluating eco-friendliness, quality, and economic feasibility of package raw materials, manufacturing methods, and design.

The air purifier packages, which obtained the GP Mark, keep products safe even in transporting by adopting a drop impact simulation. Those also consume less raw materials by 31% compared with existing ones by being designed to use minimum materials.

Seon-yong Lee, head of the Environmental Technology Research Institute, said, "We strive to minimize impacts on environment caused in the process of production and usage of products. We will continue to conduct diverse environmental activities to satisfy consumers, the Company, and environment at the same time.“

Coway is joining the "Earth Hour" campaign to turn off lights for 60 minutes a year with the aim of protecting environment. The Company is also proactive in carrying out diverse environmental activities such as saving electricity through eco-friendly production process operation and reduction of GHG emissions.

Coway News

Launched the "My Hanppyeom Water Purifier IoCare," the first my collection product

- Offering water purifier functions and design tailored to individual lifestyle - Building a special lineup by launching more than 10 relevant products this year- The first product with innovative functions despite ultra slim size- 3-step self-sterilization and IoT-based operation

IR WEBZINE2016. May

Coway opened a new era of innovative customized water purifier by launching the "My Hanppyeom Water Purifier IoCare (CHP-480L/CHP-481L)," the first My Collection product lineup that consumers are able to select water-purifying functions and product design in line with individual lifestyle.

Starting with this product, Coway plans to establish a new product platform by continuously launching more than 10 My Collection products this year.

The "My Hanppyeom Water Purifier IoCare" is a premium water purifier equipped with recently innovative functions such as enhanced self-sterilization and offering of IoT-based water-drinking habits. Even though it has RO membrane filtering system, the product size is mere 18.5 centimeters thanks to innovative technologies.

This product boasts circular self-sterilizing system that sterilizes water tanks, all water pipes, and faucet by generating electrolyzed oxidizing water. It also provides customers with systematic care service that can automatically control the sterilization cycle by analyzing water use patterns.

Sophisticated customer care services are also offered. This product cares individual water-drinking habits of maximum 3 persons and automatically calls the Call Center when detecting unusual situations, ensuring customer convenience and safety....

Coway News

IR WEBZINE2016. May

It also offers hot water of three different temperatures suitable for mixing powered milk, enjoying tea, and cooking meals. Instantaneous water-heating system and inverter cooling system minimize the consumption of electricity.

The RO membrane filtering system ensures clean water by eliminating harmful substances as well as residual chlorine, heavy metals, and microorganism.

Yong-Joo Park, head of Marketing HQ, said, "This product makes it possible for customers to select water purifying functions and design in line with their preference and needs. Equipped with innovative functions and ultra slim size, it will create a new horizon in the water purifier market."

Coway News

Achieved KRW 623.7 billion in 1Q sales, up 13.8% year-on-year

- 350 thousand units, a record high, in rental sales for 1Q- KRW 123.6 billion in operating profit and KRW 95.2 billion in net profit on a consolidated basis- Up 23.2% and 22.7% in operating profit and net profit, respectively, year-on-year

IR WEBZINE2016. May

1Q consolidated sales of Coway increased 13.8% year-on-year to KRW 623.7 billion. Operating profit and net profit also rose by 23.2% and 22.7% to KRW 123.6 billion and KRW 95.2 billion, respectively.

The remarkable performances resulted mainly from achieving a record high in quarterly rental sales, managing cancellation rate stably, maintaining growth of major overseas subsidiaries, and boosting sales and accounts in the home care business.

▲ Achieving a record high in quarterly rental salesRental sales increased 2.9% year-on-year to 350 thousand units, a record high on a quarterly basis, triggered by sales increases of water purifiers, bidets, air purifiers, and mattresses. In particular, sales growth of premium brands such as the IoCare lineup and upgraded competitiveness in sales channels contributed to this outstanding performances. This trend is expected to continue in the second quarter and our plan to sell 1.47 million units in the rental business this year seems to be achieved without setbacks.

The number of accounts in rental sales reached 5.79 million. As a result, environmental appliances sales grew by 12.3% from the previous year to KRW 499.3 billion in the first quarter.

▲ Managing cancellation rate stablyCoway has been maintaining the monthly average of cancellation rate of rental products under 1% by focusing on enhancing the quality of products and services. As a result, rental asset disposal expense was KRW 9.7 billion, 2.6% of rental sales. The figure decreased 0.1%p from 2.7% of last year's average.

▲ Maintaining growth of major overseas subsidiariesOverseas subsidiaries in Malaysia and the US realized remarkable growth. Malaysia subsidiary attained KRW 29.4 billion, up 26% year-on-year, in sales and its number of accounts also grew by 52.4% to 300 thousands. Sales of Malaysia subsidiary based on local currency recorded 102.6 million ringgits, an increase of 33.7%. The US subsidiary also accomplished sales of KRW 16.5 billion, an increase of 23.5% from the previous year....

Coway News

IR WEBZINE2016. May

▲ Boosting sales and accounts in the home care businessIn the first quarter, sales of the home care business soared 113.8% year-on-year backed by the increase of mattress business accounts. The number of accounts reached 276 thousands, an increase of 19% from the previous year.Jae-Ho Lee, the CFO, said, "We plan to continue to enhance our product competitiveness by expanding the lineups of IoT-based products in the next quarter. To continue this favorable trend, we will also focus on strengthening door-to-door and market sales channels."

IR Activities

EVENT

DATE

LOCATION

NOTE

Corporate day

2016-05-24

Marriott Building in Yoi-do

Mirae Asset Securities

EVENT

DATE

LOCATION

NOTE

Overseas NDR

2016-05-25 ~ 05-27

Singgapore

Mirae Asset Daewoo

EVENT

DATE

LOCATION

NOTE

Overseas NDR

2016-05-17 ~ 05-19

HongKong

Mirae Asset Daewoo

IR WEBZINE2016. May

EVENT

DATE

LOCATION

NOTE

Overseas NDR

2016-05-09 ~ 05-13

USA

NH Investment & Securities

EVENT

DATE

LOCATION

NOTE

IR Conference_Earning Release for 1Q 2016

2016-05-03

Korea Exchange, Seoul

-