Docstoc

Hyundai Securities - Handset _ Components

Document Sample
Hyundai Securities - Handset _ Components Powered By Docstoc
					   KOREA


                                                                                                                          March 12, 2012 Industry Analysis




                                                 Handset & Components
                                                                                                           Overweight (maintain)

                                                 Strengthening Smartphone Competitiveness
                                                 of Korean Players
                                                 Global handset and smartphone market projection for 1Q12
                                                 Global handset shipments are forecast to grow 8%YoY to 393mn units in 1Q12 and smartphone
Jongsuk Baek Analyst / Handsets, Home
Appliances                                       shipments to jump 38%YoY to 141mn units. Smartphones are anticipated to account for 36% of total
82-2-2003-2929 jongsuk.baek@hdsrc.com            handset shipments in 1Q12. Growth led by smartphones continues.
Keunjong Kim RA
82-2-2003-2912 keunjong.kim@hdsrc.com
                                                 LTE to be led by Korea and OS by Android
                                                 In 2012, global LTE smartphone shipments are forecast to skyrocket a whopping 635%YoY to 65.31mn
                                                 units. In 2011, Korean handset makers accounted for 60% of the global LTE smartphone market. Given
                                                 their new LTE smartphone lineups slated for launch in 2012, the dominant global standings of Korean
                                                 handset makers should continue for some time. Meanwhile, Android OS is forecast to account for 52% of
                                                 the global smartphone market in 2012 to maintain its lead.


                                                 SEC competing fiercely with Apple
                                                 Samsung Electronics (SEC) and Apple competed fiercely in the global smartphone market in 4Q11. Apple
                                                 and SEC have secured half of the market between them, with Apple holding a 24% share and SEC 23%.
                                                 Given their predominantly strong competitiveness compared to other players, the smartphone market will
                                                 primarily be the stage for a battle between the big two for some time.


                                                 Boom time for smartphone/parts makers; Top picks are LGE, LG Innotek, and
                                                 Interflex
                                                 SEC has pioneered the market for 5-inch smartphones with its Galaxy Note, and LG Electronics (LGE) has
                                                 displayed upgraded competitiveness by launching a quad-core AP smartphone. We believe Korean
                                                 handset makers are embracing a boom time, and advise investors to actively increase positions in
                                                 handset/component stocks. We present LGE (066570, BUY), LG Innotek (011070, BUY), and Interflex
                                                 (051370, BUY) as top picks and SEMCO (009150, BUY) as a stock of interest.

Sector components and their valuations
                                        Rating      Current price       Fair value          Market cap            PER (x)              PBR (x)    ROE (%)
                                                  (Mar 9, KRW)             (KRW)              (USDbn)         FY12F       FY13F         FY12F      FY12F
LG Electronics (066570)                 BUY             90,600            110,000                  13.3         27.0          17.2         1.3         4.9
LG Innotek (011070)                     BUY            103,500            114,000                   1.9         38.2          13.3         1.5         4.1
Interflex (051370)                      BUY             49,750             63,000                   0.6         11.3           9.7         2.8        28.0
SEMCO (009150)                          BUY             97,600            110,000                   6.5         19.2          15.4         1.6         9.1
Source: Hyundai Securities



 For explanations of equity research ratings and disclosures,
 please refer to the compliance section at the end of this report.
                                                                                                                      >> Handset & Components




                                           Global Handset Shipments to Reach 393mn units in 1Q12 and
                                           Smartphone Shipments 141mn Units

Global handset shipments                   Global handset shipments are forecast to grow 8%YoY to 393mn units in 1Q12 and smartphone
to grow 8%YoY in 1Q12                      shipments to jump 38%YoY to 141mn units. Feature phone shipments are projected to edge
and smartphone                             down 4%YoY to 252mn units. As a result, the share of smartphones out of overall handset
shipments to jump                          shipments is expected to reach 36% in 1Q12 and 39% in 2012.
38%YoY

Asia to account for 40%                    Smartphone shipments are estimated to surge 34%YoY to 660mn units in 2012. By region, Asia
of smartphone shipments                    is expected to account for 40% of total smartphone shipments to become the largest smartphone
in 2012                                    market. North America is projected to account for 23%, Western Europe 17%, Latin America 8%,
                                           and MEA (Middle East and Africa) 6%. Therefore, smartphone makers will likely accelerate the
                                           launch of mass-market smartphone models to target the Asian market to increase their market
                                           share over the long term.

Fig 1: Global handset shipment trend
                                              2010                            2011                              2012F                 2009 2010 2011 2012F 2013F
(mn units)                          1Q      2Q   3Q         4Q         1Q    2Q    3Q          4Q      1Q      2Q   3Q         4Q
Overall handset shipments           311     329    349     403      363      361      395      435     393     398    427     462 1,172 1,391 1,554 1,681 1,801
%YoY                               24.9    16.9   15.9    18.3     16.7      9.8     13.1      8.1     8.2    10.4    8.2     6.2 (1.5) 18.7 11.7     8.2   7.2
%QoQ                               (8.7)    5.7    6.2    15.4     (9.9)    (0.5)     9.4     10.3    (9.8)    1.5    7.3     8.2     -     -     -     -     -
Smartphone shipments                 55      64     83     102      102      108      124      161 141         147     177     195      173      305   494      660    801
% of smartphones                   17.8    19.6   23.7    25.3     28.0     30.0     31.3     36.9 35.8       36.8    41.4    42.3     14.8     21.9   31.8     39.3   44.5
%YoY                               59.0    53.6   93.4    89.6     83.5     68.1     49.2     57.4 38.3       35.6    43.2    21.7     15.0     75.7   62.2     33.5   21.4
%QoQ                                3.0    16.2   28.6    23.2     (0.4)     6.5     14.1     30.0 (12.5)      4.4    20.6    10.4        -        -      -        -      -
Feature phone shipments             256     264    266     301 261           253        271    275     252     252     250     267      998 1,087 1,060 1,021 1,000
%YoY                               19.3    10.5    3.1     4.9   2.2        (4.4)       1.9   (8.6)   (3.5)   (0.4)   (7.7)   (2.9)    (3.9)  8.8 (2.5) (3.7) (2.0)
%QoQ                              (10.9)    3.4    0.7    13.0 (13.1)       (3.3)       7.4    1.3    (8.3)   (0.2)   (0.5)    6.6         -    -     -     -     -
Source: IDC, Hyundai Securities



                                           Fig 2: Smartphone shipments by region

                                                                        Asia                          North America                   Western Europe
                                                    %                   Latin America                 MEA                             Eastern Europe
                                                   100
                                                                 7.4                 6.7              6.3              6.1                6.0             5.9
                                                                 6.1                 6.6              8.3              9.7               10.8            11.5
                                                    80
                                                                 23.5               19.1              17.4            16.8                               16.8
                                                                                                                                         16.8
                                                    60
                                                                                    23.4              23.2            21.8               19.9            18.4
                                                                 24.6
                                                    40

                                                    20                              39.8              40.4            41.4               42.5            43.4
                                                                 33.8

                                                      0
                                                                 10                 11                12F             13F                14F             15F
                                           Note: MEA refers to Middle East and Africa
                                           Source: IDC, Hyundai Securities




                                                                                                                                                HYUNDAI Research         2
                                                                                                                      >> Handset & Components




                                                      Korea to Lead LTE; Android to Lead OS

4G smartphone market to                               In 2012, the global 4G smartphone market is forecast to surge 290%YoY to 69.2mn units, with
grow 290%YoY to 69.2mn                                LTE smartphones accounting for 94% (65.31mn units). The forecast of 65.31mn units
units in 2012                                         corresponds to a mere 10% of global smartphone shipments in 2012. Yet, since the LTE
                                                      smartphone market is forecast to expand vigorously ahead, handset makers are expected to roll
                                                      out new LTE smartphones in earnest from 2012 in order to secure the lead in the strategically
                                                      important market.

Korean handset makers                                 Korean handset makers are now dominating the global LTE smartphone market. They accounted
accounted for 68% of                                  for 68% of the LTE smartphone market in 4Q11 and 60% for the full year. Since they are set to
global LTE smartphone                                 release new LTE smartphones continuously, their market leadership should continue for some
market in 4Q11                                        time.

Android to account for                                In 2012, Android OS is expected to lead the smartphone OS market and take up a 52% market
52% of OS market share                                share, followed by iOS (20%), Blackberry OS (10%), and Windows Phone OS (9%). Since the
in 2012                                               competitiveness of Windows Phone OS still lags far behind that of the Android OS, Android OS
                                                      is forecast to maintain its predominance for some time.

Fig 3: 4G smartphone market outlook                                                 Fig 4: Share of global LTE smartphone market by maker

 mn units                                                                               %         SEC        HTC        LGE          Motorola   Pantech     Fujitsu
                            LTE              TD-LTE         WiMAX
  300                                                                                 100
                                                                       261                                                           15
   250                                                                                  80
                                     2011-15                                                                                                     13
                                                             199                                                                                             20
   200                              CAGR: 96%
                                                                                        60                         80                50
                                                  141
   150                                                                                             100                                           33          17
                                                                       243              40
   100                                  69                    189
                                                  137                                                                                                        41
      50                  18                                                            20                                           35          33
               8                        65                                                                         20
       0                    9
                                                                                          0
               10          11           12F       13F        14F      15F                         4Q10           1Q11            2Q11           3Q11        4Q11

Source: IDC, Hyundai Securities                                                     Source: Strategy Analytics, Hyundai Securities



Fig 5: Smartphone OS market share trend by quarter                                  Fig 6: Smartphone OS market share trend and outlook

(%)                         1Q11        2Q11     3Q11       4Q11    2010     2011      %                      Android                           iOS
                                                                                       60                     Windows Phone                     BlackBerry OS
Android                         36.0    47.1      57.3      50.6    23.3     48.5                             Symbian
                                                                                       50
Apple iOS                       18.3    18.8      13.8      23.5    15.6     19.0      40

Symbian                         26.0    16.9      14.7      12.3    36.4     16.7      30

Blackberry OS                   13.5    11.5          9.6    8.3    16.0     10.4      20

                                                                                       10
Windows Phone                     2.7    2.1          1.3    2.2     4.9      2.0
                                                                                         0
Others                            3.4    3.6          3.3    3.2     3.8      3.4
                                                                                                 08           09            10            11          12F    13F
Source: IDC, Hyundai Securities                                                     Source: IDC, Hyundai Securities




                                                                                                                                                HYUNDAI Research      3
                                                                                                  >> Handset & Components




                                            SEC Competing Fiercely with Apple

Apple reclaimed No. 1                       SEC and Apple competed fiercely in the global smartphone market in 4Q11. Apple and SEC have
position in smartphone                      secured half of the market between them, with Apple holding a 23.1% share and SEC 22.5%.
market                                      Following the two companies, Nokia, RIM, and HTC acquired market shares of 12%, 8%, and
                                            6%, respectively. Given that they are losing smartphone competitiveness, however, the
                                            smartphone market will primarily be a battle between the two larger players, Apple and SEC, for
                                            some time.

Nokia and SEC dominated                     Nokia captured the largest share at 26% in the overall handset market in 4Q11, followed by SEC
overall handset market                      (23%), Apple (9%), ZTE (5%), and LG Electronics (LGE: 4%). Although Nokia is faltering in the
                                            smartphone market, it still remains competitive in the overall handset market. SEC also stands
                                            firm thanks to increasing smartphone shipments. Apple’s share in the overall handset market
                                            picked up sharply QoQ driven by brisk sales of the iPhone 4S.

Fig 7: Share of global handset market by maker
(%)                         1Q10    2Q10        3Q10      4Q10       1Q11       2Q11      3Q11       4Q11       2009         2010      2011
Nokia                        34.7    33.8       31.6       30.7       29.9       24.5      27.0       26.1       36.8        32.6      26.8
SEC                          20.7    19.4       20.4       20.0       19.1       20.9      22.1       22.7       19.4        20.1      21.3
Apple                         2.8     2.6        4.0        4.0        5.1        5.7       4.3        8.5        2.1         3.4       6.0
ZTE                           3.4     3.7        3.5        3.9        4.1        4.5       4.5        4.7        2.3         3.6       4.5
LGE                           8.7     9.3        8.1        7.6        6.8        6.9       5.3        4.1       10.1         8.4       5.7
Huawei                        1.0     1.0        1.4        1.8        2.5        3.1       3.4        3.2        1.0         1.3       3.1
RIM                           3.4     3.4        3.6        3.6        3.8        3.5       3.0        3.0        2.9         3.5       3.3
Alcatel                       1.6     1.6        1.6        2.5        1.9        2.3       2.3        2.4        1.0         1.9       2.2
Motorola                      2.7     2.5        2.6        2.8        2.5        2.9       2.9        2.4        4.7         2.7       2.7
HTC                           0.9     1.4        1.7        2.2        2.6        3.3       3.2        2.4        0.7         1.6       2.9
Others                       20.1    21.4       21.4       20.8       21.6       22.5      21.9       20.7       19.0        20.9      21.6
Total                       100.0   100.0      100.0      100.0      100.0      100.0     100.0      100.0      100.0       100.0     100.0
Source: IDC, Hyundai Securities



Fig 8: Share of global smartphone market by maker
(%)                         1Q10    2Q10        3Q10      4Q10       1Q11       2Q11      3Q11       4Q11       2009         2010      2011
Apple                        15.8    13.0       17.1       15.9       18.3       18.8      13.8       23.1       14.5        15.6      18.9
SEC                           4.2     5.6        8.8        9.4       11.3       17.0      22.8       22.5        3.2         7.5      19.1
Nokia                        38.8    37.2       32.0       27.5       23.8       15.4      13.6       12.2       39.1        32.9      15.7
RIM                          19.1    17.5       15.0       14.3       13.6       11.5       9.6        8.1       19.9        16.0      10.3
HTC                           4.8     6.8        7.1        8.6        8.9       10.7      10.3        6.4        4.7         7.1       8.8
ZTE                           0.1     0.2        0.8        1.0        1.2        1.8       3.3        4.0        0.2         0.6       2.8
Sony Ericsson                 1.0     2.7        4.6        4.5        3.9        4.3       5.0        3.9        0.5         3.5       4.3
LGE                           1.1     1.7        2.0        3.8        4.1        5.7       3.7        3.5        0.4         2.4       4.2
Huawei                        0.1     0.2        0.2        1.4        2.8        2.5       4.7        3.5        0.0         0.6       3.5
Motorola                      4.7     4.3        4.6        4.8        4.0        4.1       3.9        3.3        3.3         4.6       3.8
Others                       10.4    10.8        7.9        8.7        8.1        7.9       9.3        9.6       14.3         9.2       8.8
Total                       100.0   100.0      100.0      100.0      100.0      100.0     100.0      100.0      100.0       100.0     100.0
Source: IDC, Hyundai Securities




                                                                                                                        HYUNDAI Research   4
                                                                                                       >> Handset & Components




Fig 9: Asia (excluding Japan) handset market share trend by          Fig 10: Asia (excluding Japan) smartphone market share
maker                                                                trend by maker
(%)                    1Q11       2Q11   3Q11   4Q11   2010   2011   (%)                    1Q11        2Q11    3Q11   4Q11      2010   2011
Nokia                   33.0      24.1   28.1   28.1   35.8   28.4   SEC                     12.7        20.7   25.0    25.6      8.6   21.9
SEC                     14.0      15.6   18.2   20.2   15.0   17.2   Nokia                   38.8        23.7   19.8    16.6     53.5   23.3
ZTE                      4.4       5.4    5.2    5.2    4.8    5.0   Apple                   14.1        17.8   12.1    14.2     12.7   14.4
Apple                    3.1       4.3    3.3    4.6    1.9    3.8   Huawei                   4.3         4.1    8.2     7.3      1.7    6.3
Huawei                   3.6       4.4    4.2    4.1    2.5    4.1   HTC                      5.5         7.6    7.3     6.3      3.5    6.7
Lenovo                   1.6       2.1    2.2    4.0    1.6    2.5   ZTE                      2.7         3.4    7.2     6.2      1.8    5.2
LGE                      4.0       3.3    2.7    2.4    4.3    3.1   Lenovo                   0.2         0.5    1.0     5.6      0.6    2.2
HTC                      1.2       1.8    2.0    2.0    0.6    1.8   Sony Ericsson            3.1         3.3    3.8     3.2      2.5    3.4
Sony Ericsson            1.4       1.3    1.6    1.5    1.8    1.5   Motorola                 4.3         4.9    3.6     3.2      3.5    3.8
Motorola                 1.1       1.4    1.3    1.3    1.1    1.3   RIM                      4.7         4.5    3.5     3.1      4.8    3.8
Others                  32.5      36.1   31.4   26.7   30.6   31.5   Others                   9.6         9.7    8.3     8.8      5.4    8.6
Source: IDC, Hyundai Securities                                      Source: IDC, Hyundai Securities



Fig 11: Japan handset market share trend by maker                    Fig 12: Japan smartphone market share trend by maker
(%)                    1Q11       2Q11   3Q11   4Q11   2010   2011   (%)                    1Q11        2Q11    3Q11   4Q11      2010   2011
Apple                   11.4      12.1    5.4   24.9    8.3   13.9   Apple                   16.8        17.1    7.1    31.2     15.1   18.8
FujitsuToshiba           0.0       0.0    0.0   19.3    0.0    5.7   FujitsuToshiba           0.0         0.0    0.0    20.4      0.0    6.5
Sharp                   23.0      24.7   18.4   14.7   24.6   19.7   Sharp                   22.8        24.5   18.7    15.7     19.5   19.8
Kyocera                  9.1      10.0   10.0    9.3   11.4    9.6   SEC                      9.2         6.6    7.5     9.5      1.7    8.3
Panasonic                9.1       8.1   13.4    8.2   13.9    9.8   Panasonic                7.3         7.7   15.5     9.2     18.2   10.2
SEC                      6.9       4.7    5.7    7.6    1.8    6.3   NEC                      8.7         8.9    8.3     6.8     13.9    8.0
NEC                      6.5       6.3    6.3    5.4    8.3    6.1   Sony Ericsson            3.9         8.4   19.1     2.8      3.6    8.6
Sony Ericsson            6.6       9.5   16.3    3.9    6.6    9.0   LGE                      1.0         1.7    0.3     1.7      0.0    1.2
ZTE                      0.4       0.9    2.0    2.1    0.4    1.4   Motorola                 0.0         0.0    1.0     1.2      0.0    0.6
LGE                      2.3       1.3    1.4    1.3    2.3    1.6   HTC                      1.1         2.0    0.6     0.9      0.3    1.1
Others                  24.7      22.5   21.1    3.3   22.3   17.0   Others                  29.1        23.1   21.9     0.6     27.8   16.9
Source: IDC, Hyundai Securities                                      Source: IDC, Hyundai Securities



Fig 13: North America handset market share trend by                  Fig 14: North America smartphone market share trend by
maker                                                                maker
(%)                    1Q11       2Q11   3Q11   4Q11   2010   2011   (%)                    1Q11        2Q11    3Q11   4Q11      2010   2011
Apple                   15.2      13.5   10.8   30.1    8.0   17.6   Apple                   29.9        25.3   20.5    45.4     20.8   31.4
SEC                     26.3      27.2   28.9   25.8   30.1   27.0   SEC                     10.0        14.6   18.9    18.4      9.9   15.8
LGE                     16.2      18.4   16.1   10.9   18.5   15.3   HTC                     16.0        18.1   20.9     8.5     13.0   15.3
HTC                      8.6      10.3   11.3    5.7    5.0    8.9   RIM                     14.9        10.7   11.6     7.1     29.1   10.7
Motorola                 7.6       7.2    7.5    5.4    9.1    6.9   LGE                     10.4        13.0    7.9     6.8      4.1    9.3
RIM                      7.6       5.7    6.1    4.7   11.2    6.0   Motorola                 8.3         6.6    7.3     6.0     12.5    6.9
Kyocera                  4.7       4.6    3.7    3.9    4.5    4.2   Huawei                   4.8         3.1    4.9     4.6      0.4    4.4
Huawei                   3.5       2.1    3.3    3.8    0.3    3.2   Pantech                  0.0         1.1    2.8     1.1      0.0    1.3
Pantech                  1.2       1.4    3.2    2.5    0.7    2.1   Nokia                    1.3         1.2    0.4     0.7      2.6    0.9
AT&T                     0.3       0.6    1.2    1.9    0.0    1.0   Sony Ericsson            1.3         1.3    0.9     0.5      0.9    0.9
Others                   8.8       9.0    7.9    5.3   12.5    7.7   Others                   3.1         4.9    3.9     0.9      6.8    3.0
Source: IDC, Hyundai Securities                                      Source: IDC, Hyundai Securities




                                                                                                                        HYUNDAI Research   5
                                                                                                                       >> Handset & Components




Fig 15: Latin America handset market share trend by maker                            Fig 16: Latin America smartphone market share trend by
                                                                                     maker
(%)                    1Q11        2Q11       3Q11        4Q11        2010    2011   (%)                    1Q11        2Q11    3Q11   4Q11      2010   2011
Nokia                   26.1        24.8        23.3       25.2        27.3   24.8   RIM                     47.8        35.7   25.6    28.8     42.5   33.3
SEC                     22.6        22.8        23.1       22.0        21.9   22.6   SEC                      9.9        15.5   23.4    21.0      6.8   18.1
LGE                     14.6        13.7        12.1       11.1        16.4   12.8   Nokia                   17.3        16.0   14.7    13.3     32.4   15.1
Alcatel                  8.0         7.7         9.0        8.8         7.7    8.4   Sony Ericsson            7.4         6.9    6.1     9.5      3.1    7.6
Motorola                 8.0         7.9        10.2        8.3         6.8    8.6   Motorola                 6.8         7.6   10.9     8.6      5.4    8.5
ZTE                      4.8         7.2         8.9        7.4         5.1    7.2   LGE                      2.5         6.1    8.2     6.9      2.7    6.2
RIM                      7.1         5.7         4.2        5.9         5.0    5.7   Apple                    5.1         8.0    6.7     6.3      5.2    6.6
Huawei                   2.3         3.5         4.2        3.7         2.0    3.4   HTC                      0.8         0.4    0.9     1.9      0.9    1.1
Sony Ericsson            2.8         2.9         2.5        3.1         4.1    2.8   ZTE                      0.5         1.9    1.8     1.4      0.1    1.5
Apple                    0.8         1.3         1.1        1.3         0.6    1.1   Huawei                   1.2         1.1    1.0     1.0      0.1    1.0
Others                   2.8         2.7         1.5        3.1         3.1    2.5   Others                   0.6         0.7    0.9     1.2      0.7    0.9
Source: IDC, Hyundai Securities                                                      Source: IDC, Hyundai Securities



Fig 17: Western Europe handset market share trend by                                 Fig 18: Western Europe smartphone market share trend by
maker                                                                                maker
(%)                    1Q11        2Q11       3Q11        4Q11        2010    2011   (%)                    1Q11        2Q11    3Q11   4Q11      2010   2011
SEC                     30.5        32.9        33.4       30.5        26.9   31.7   Apple                   21.5        21.1   18.5    28.1     21.7   22.9
Nokia                   28.4        21.3        21.6       24.6        34.2   24.1   SEC                     14.2        21.9   27.6    26.7      5.8   23.2
Apple                   10.0        10.9         9.8       16.6         7.9   12.1   RIM                     17.0        13.8   14.2    10.5     16.0   13.5
RIM                      7.9         7.1         7.5        6.2         5.8    7.1   Nokia                   20.2        10.6    8.5    10.5     33.1   12.1
Sony Ericsson            4.8         5.3         5.7        4.7         8.1    5.1   HTC                     12.5        14.2   11.9     6.9     10.4   10.9
HTC                      5.8         7.3         6.4        4.1         3.8    5.8   Sony Ericsson            6.1         7.4    6.6     5.8      7.1    6.4
LGE                      3.9         4.0         3.1        2.5         6.2    3.4   LGE                      3.9         3.8    3.3     2.5      2.4    3.2
Vodafone                 2.2         3.0         3.4        2.0         2.5    2.6   Vodafone                 1.0         1.4    2.5     1.9      0.8    1.7
Huawei                   0.8         1.0         1.9        1.9         0.1    1.4   Huawei                   0.4         0.7    1.9     1.8      0.1    1.3
ZTE                      2.4         2.3         2.4        1.8         1.7    2.2   ZTE                      1.3         1.6    1.6     1.7      0.4    1.6
Others                   3.3         4.8         4.7        5.1         2.8    4.5   Others                   2.0         3.3    3.5     3.7      2.1    3.2
Source: IDC, Hyundai Securities                                                      Source: IDC, Hyundai Securities



Fig 19: CEMA handset market share trend by maker                                     Fig 20: CEMA smartphone market share trend by maker
(%)                    1Q11        2Q11       3Q11        4Q11        2010    2011   (%)                    1Q11        2Q11    3Q11   4Q11      2010   2011
Nokia                   48.2        45.6        48.8       43.7        52.4   46.5   Nokia                   50.3        39.9   33.7    31.9     65.3   38.1
SEC                     17.2        20.0        21.4       23.7        19.9   20.8   SEC                      6.8         9.5   23.3    23.6      7.0   16.8
Alcatel                  3.7         4.2         4.3        4.0         3.8    4.0   RIM                     18.3        18.6   13.8    14.4      9.6   16.0
ZTE                      6.4         5.1         3.2        3.1         4.6    4.3   HTC                      5.3         7.1    7.7     7.5      3.8    7.0
Huawei                   1.2         2.8         2.8        2.8         0.2    2.4   Sony Ericsson            5.5         4.5    5.5     7.2      4.2    5.8
RIM                      3.0         3.2         2.4        2.7         1.4    2.8   Apple                    8.3        11.1    6.9     5.3      5.2    7.6
Sony Ericsson            2.4         1.3         1.6        1.9         2.6    1.8   Huawei                   0.7         2.5    2.3     2.6      0.0    2.1
HTC                      0.9         1.2         1.4        1.4         0.5    1.2   ZTE                      0.3         2.4    2.1     2.3      0.1    1.8
LGE                      3.9         3.1         1.9        1.0         6.9    2.4   LGE                      1.5         1.9    2.1     1.4      2.1    1.7
Apple                    1.4         1.9         1.2        1.0         0.7    1.3   Acer                     0.9         0.7    0.5     1.0      0.6    0.8
Others                  11.7        11.6        11.0       14.5         7.2   12.3   Others                   2.1         1.7    2.0     2.9      2.1    2.3
Note: CEMA refers to Central and Eastern Europe, Middle East, and Africa             Source: IDC, Hyundai Securities
Source: IDC, Hyundai Securities




                                                                                                                                        HYUNDAI Research   6
                                                                                                                        >> Handset & Components




                                                   4Q11 Earnings Review and Future Outlook for Global Handset Makers

SEC: Nearly unstoppable                            SEC’s communication OR and OP surged 47%YoY and 83%YoY, respectively, to KRW17.8tr and
                                                   KRW2.6tr in 4Q11 with an OP margin of 14.8%. Smartphone shipments skyrocketed 275%YoY
                                                   to 36mn units, driving the overall earnings growth. The company’s share of smartphones
                                                   ascended to 37% in 4Q12, and the handset ASP (average selling price) also jumped 25%YoY to
                                                   USD152.

                                                   SEC’s smartphone shipments shot up 311%YoY to 94.2mn units, winning the company the No.
                                                   1 smartphone market share (19%) in 2011. SEC’s achievement is astonishing in that its
                                                   smartphone market share was a mere 7.5% only one year ago. Since SEC boasts strong
                                                   smartphone brand power (Galaxy) and continues to launch various lineups, the company is
                                                   forecast to maintain its No. 1 smartphone market position for some time.
Fig 21: SEC’s handset earnings
(KRWtr)                                    1Q09    2Q09    3Q09    4Q09     1Q10    2Q10    3Q10     4Q10     1Q11      2Q11      3Q11       4Q11   2009    2010       2011
Telecom revenues                            8.8      9.1     9.6    10.2      9.2    8.8     11.1     12.1      10.6      12.2     14.9      17.8   37.6    41.2       55.5
   Mobile revenues                          7.9      8.5     9.0     9.3      8.6    8.1     10.4     11.2      10.1      11.7     14.4      17.2   34.7    38.2       53.4
Telecom OP                                  1.1      1.0     1.0     1.1      1.1    0.6      1.1      1.4       1.4       1.7      2.5       2.6    4.1     4.3        8.3
OP margin (%)                              12.8     10.8     9.9    10.3     12.0    7.2     10.2     11.9      13.4      13.7     16.9      14.8   10.9    10.4       14.9
Shipments (mn units)                       45.9     52.3    60.2    68.8     64.3   63.8     71.4     80.7      69.3      75.4     87.2      98.7 227.2 280.2 330.7
Shipment growth (%YoY)                     (0.9)    14.5    16.3    30.1     40.2   21.9     18.5     17.3       7.8      18.1     22.2      22.4 15.5 23.3 18.0
Market share (%)                           18.4     18.6    20.0    20.2     20.7   19.4     20.4     20.0      19.1      20.9     22.1      22.7 19.4 20.1 21.3
ASP (KRW'000)                               173     162     150     136      133    126      145      138       146       155      165       174   153   136   162
ASP (USD)                                   122     125     121     116      116    108      123      122       131       143      153       152   119   118   146
Smartphone shipments (mn units)             1.4   1.1    1.3         1.8      2.4   3.6   7.3   9.6 11.5 18.4 28.1 36.1                               5.5 22.9 94.2
Shipment growth (%YoY)                     34.3 (21.4) (16.9)       18.9     71.0 226.8 470.9 445.7 387.1 410.0 285.7 275.2                           1.3 314.3 311.3
% of Smartphone                             3.0      2.1     2.1     2.6      3.7    5.7     10.2     11.9      16.5      24.5     32.3      36.6     2.4    8.2       28.5
Smartphone M/S (%)                          4.0      2.6     3.0     3.3      4.2    5.6      8.8      9.4      11.3      17.0     22.8      22.5     3.2    7.5       19.1
Domestic shipments (mn units)               2.5      3.9     3.2     2.4      3.1    2.9      4.1      2.5       3.0       3.6      3.4       3.2   12.0    12.6       13.3
Domestic market share (%)                  48.9     50.1    54.2    51.3     55.9   52.1     55.0     44.3      48.3      54.4     57.3      52.0   51.1    52.0       53.0
Source: Company data, Hyundai Securities



Fig 22: SEC’s handset shipments by region                                             Fig 23: SEC’s smartphone shipments by region

    %                       2009           2010            2011                            %                  2009               2010          2011
    40                                                                                     50
                                  33                                                                                    41
    30                                                                                     40

                                                            20                             30
                                              18                                                                                        24
    20             17
                                                                                                         19
                                                                       13                  20
    10                                                                                                                                              10
                                                                                           10                                                                      6

     0                                                                                      0
            North            Asia      Western        CEMA          South                         North            Asia          Western        CEMA         South
           America                     Europe                      America                       America                         Europe                     America

Source: IDC, Hyundai Securities                                                       Source: IDC, Hyundai Securities




                                                                                                                                                HYUNDAI Research         7
                                                                                                                           >> Handset & Components




LGE: Earnest turnaround                               In 4Q11, LGE finally succeeded in turning its handset business around after seven quarters since
on horizon                                            1Q10. Its 4Q11 handset OR and OP came in at KRW2.7tr and KRW9.9bn, respectively. With a
                                                      substantial reduction in low-margin feature phone shipments, total handset shipments plunged
                                                      42%YoY to 17.7mn units. However, smartphone shipments surged 46%YoY to 5.7mn units and
                                                      thus, led LGE’s margin improvement. Given the company’s increased proportion of smartphone
                                                      shipments, the ASP also increased to USD133.

                                                      LGE is forecast to maintain an uptrend in handset earnings, bolstered by: 1) sound sales of the
                                                      North American version of the Optimus LTE; 2) rising Prada Phone sales; and 3) launches of
                                                      various smartphones in 1H12, including the Optimus 4X HD (quad-core smartphone), Optimus
                                                      View (5-inch smartphone), Optimus 3D Max, and Optimus L Series (L3, L5, L7). Of course,
                                                      LGE’s smartphones have yet to achieve top-level brand power across the globe. Still, LGE’s various
                                                      strategic smartphone launches and improving smartphone competitiveness are being recognized
                                                      in the market, and its strengthening brand power should continue to boost LGE’s earnings growth
                                                      going forward.

Fig 24: LGE’s handset earnings
(KRWtr)                                   1Q09        2Q09    3Q09    4Q09     1Q10    2Q10     3Q10       4Q10    1Q11    2Q11        3Q11     4Q11   2009   2010         2011
Handset revenues                                3.9     4.9    4.4      3.9      3.1    3.4          3.0    3.3     2.9         3.2      2.7     2.7   17.1   12.8          11.4
Handset OP (KRWbn)                          249         620    460       9       28    (120)    (304)      (262)   (101)     (55)      (140)      10 1,338    (658)        (286)
OP margin (%)                                   6.4    12.7   10.5      0.2      0.9   (3.5)    (10.2)     (7.9)   (3.5)     (1.7)      (5.2)    0.4    7.8    (5.1)        (2.5)
Shipments (mn units)                       22.6        29.8   31.6     33.9     27.1   30.6      28.4      30.6    24.5     24.8        21.1     17.7 117.9 116.7           88.1
Shipment growth (%YoY)                     (7.4)        7.5   37.4     31.7     19.8    2.6     (10.0)     (9.8)   (9.6)   (18.8)      (25.9)   (42.1) 16.9  (1.0)         (24.5)
Market share (%)                             9.1       10.6   10.5      9.9      8.7    9.3        8.1       7.6     6.8      6.9         5.3      4.1 10.1    8.4            5.7
ASP (KRW'000)                               173        164    138      116      116    110        104       109     116      129         128      152  145    110            130
ASP (USD)                                   122        127    111       99      101     95         88        96     104      119         118      133  113     95            117
Smartphone shipments (mn units)             0.1         0.1    0.2    0.3   0.6   1.1   1.6     3.9   4.1   6.2   4.6                            5.7    0.8   7.2 20.6
Shipment growth (%YoY)                    209.0         3.7   (8.6) 225.0 516.1 652.1 889.3 1,016.9 587.4 455.6 182.3                           45.7   64.4 853.6 184.6
% of Smartphone                             0.4         0.5    0.5      1.0      2.2    3.7          5.7   12.8    16.9      25.0       21.7    32.1    0.6     6.2         23.4
Smartphone M/S (%)                          0.3         0.4    0.4      0.6      1.1    1.7          2.0    3.8     4.1       5.7        3.7     3.5    0.4     2.4          4.2
Domestic shipments (mn units)               1.5         2.4    1.8      1.0      1.2    1.2          1.4    1.1     1.1       1.1        1.0     1.0    6.7    4.9           4.3
Domestic market share (%)                  29.5        31.3   29.4     21.9     21.4   21.3         19.0   19.0    17.8      16.3       17.3    16.7   28.5   20.1          17.0
Source: Company data, IDC, Hyundai Securities



Fig 25: LGE’s handset shipments by region                                                Fig 26: LGE’s smartphone shipments by region

    %                             2009           2010          2011                            %
                                                                                                                    2009               2010         2011
    40                                                                                         60
                   35
                                                                                                             50
                                                                                               50
    30                                                                    27
                                   22                                                          40

    20                                                                                         30
                                                                                                                           22
                                                                                               20                                          15
                                                  7           9
    10                                                                                                                                                                 9
                                                                                               10                                                       5

     0                                                                                          0
            North            Asia        Western         CEMA          South                            North         Asia            Western      CEMA        South
           America                       Europe                       America                          America                        Europe                  America

Source: IDC, Hyundai Securities                                                          Source: IDC, Hyundai Securities




                                                                                                                                                   HYUNDAI Research            8
                                                                                                                                  >> Handset & Components




Apple: No limits for Apple                           Apple delivered impressive results once again. iPhone OR and OP spiked 133%YoY and
                                                     195%YoY, respectively, to USD24.4bn and USD9.8bn in 4Q11 with an OP margin of over 40%.
                                                     According to Strategy Analytics, iPhone OP of USD9.8bn corresponds to 75% of the total
                                                     combined OP posted by global handset makers in 4Q11.

                                                     When the iPhone 4S was launched, the market was disappointed since Apple rolled out the
                                                     iPhone 4S instead of the iPhone 5 and very few people expected Apple’s 4Q11 earnings to be this
                                                     strong. However, with Steve Jobs passing away just a day after the launch of the iPhone 4S, the
                                                     iPhone 4S became his last creation and drew much attention. Moreover, with the launch of the
                                                     iPhone 4S, Apple offered iPhone 3GS at no charge and the iPhone 4 at USD100, pushing its drive
                                                     into the mass market. As a result, Apple shipped 37mn smartphones in 4Q11, achieving record-
                                                     high earnings. Given the scheduled launch of the iPhone 5 in 2012, Apple’s dominant position in
                                                     the smartphone market will likely persist for some time.

Fig 27: Apple’s handset earnings
(USDbn)                                    1Q09      2Q09     3Q09       4Q09        1Q10   2Q10   3Q10     4Q10     1Q11         2Q11        3Q11       4Q11        2009       2010        2011
iPhone OR                                     2.4       3.1      4.6       5.6        5.4    5.3      8.8     10.5     12.3        13.3       11.0       24.4        15.7       30.1        61.0
iPhone OP                                     0.7       0.9      1.6       1.8        1.8    1.5      2.8      3.3      4.2         4.6        3.4        9.8         5.0        9.4        21.9
OP margin (%)                                29.6     30.6      34.3      32.2       33.0   27.7    31.3      31.7     34.0        34.2       31.1       40.1        32.1       31.1        36.0
Shipments (mn units)                         3.8   5.2           7.4   8.7   8.7             8.4    14.1      16.2 18.6 20.4                  17.1 37.0              25.1       47.5        93.2
Shipment growth (%YoY)                     122.4 586.3           7.0 100.0 130.7            60.8    91.2      86.6 113.2 143.1                20.8 128.1             82.9       89.2        96.1
Market share (%)                              1.5      1.9       2.5       2.6        2.8    2.6     4.0       4.0      5.1         5.7        4.3        8.5         2.1        3.4         6.0
Smartphone M/S (%)                           10.9     12.4      17.3      16.2       15.8   13.0    17.1      15.9     18.3        18.8       13.8       23.1        14.5       15.6        18.9
ASP (USD)                                    640       586      623       641         623    635     624      645      659          652        643        659         624        633         655
Note: Based on Apple’s iPhone OP figure provided by Strategy Analytics
Source: Apple, IDC, Strategy Analytics, Hyundai Securities



Fig 28: Apple’s handset shipments by region                                                   Fig 29: Apple’s OR trend by product

   %                                                                                          USDbn     PC OR              iPhone OR             iPad OR               iPod OR
   50                             2009           2010                2011                      45                                                                                      43
                  38                                                                           40
   40                                                                                                                                                                                  9
                                   31
                                                                                               35
   30                                                                                          30
                                                24                                                                                                          26          25
                                                                                               25                                     24
                                                                                                                                                 22
   20                                                                                                                      18                                   6           7
                                                                                               20                                         5          3                                 24
                                                                                               15          13                 3
                                                                                                     11
   10                                                           5                                                                     10         12             13      11
                                                                                 2             10          2                  9
                                                                                                      5    5
     0                                                                                          5                                                                           6          7
                                                                                                      4    4                  5           5          5          5
            North            Asia        Western          CEMA            South                 0
           America                       Europe                          America                    1Q10                  3Q10                  1Q11                   3Q11

Source: IDC, Hyundai Securities                                                               Source: Company data, Hyundai Securities




                                                                                                                                                            HYUNDAI Research                  9
                                                                                                                          >> Handset & Components




Nokia: Still has a long way                           Nokia’s smartphone shipments rose for two consecutive quarters, but the company still has a long
to go                                                 ways to go. Nokia’s handset OR and OP declined 29%YoY to EUR6bn and 80%YoY to
                                                      EUR200mn, respectively, in 4Q11. Its handset OP margin, which stood at -4.5% in 2Q11, climbed
                                                      for two consecutive quarters, but was still only 3.4% in 4Q11. As such, Nokia’s annual handset OP
                                                      margin stood at 3.2% in 2011, which is strikingly low compared to the more than 10% margin
                                                      recorded in the past.

                                                      However, there was some good news as well. Nokia’s handset and smartphone shipments both
                                                      trended up for two straight months after bottoming out in 2Q11. Of course, the solid results might
                                                      have been helped by the year-end shopping season. Still, it appears evident that Nokia’s
                                                      smartphone business is emerging out of the worst trough. Meanwhile, Nokia’s Windows Phone
                                                      OS is being well received in the market. Yet, its relative lack of applications, which is a fatal
                                                      drawback, is casting a shadow over Nokia’s earnings outlook. The Lumia Series slated for launch
                                                      in 1H12 warrants attention because its sales record will determine Nokia’s revival.

Fig 30: Nokia’s handset earnings
(EURbn)                                   1Q09        2Q09    3Q09   4Q09     1Q10    2Q10    3Q10       4Q10   1Q11        2Q11      3Q11     4Q11     2009    2010       2011
Handset revenues                                6.2     6.6    6.9     8.2      6.7    6.8         7.2    8.5      7.1        5.5       5.4      6.0    27.9    29.1        23.9
Handset OP                                      0.5     0.8    0.8     1.2      0.8    0.6         0.8    1.0      0.7       (0.2)      0.1      0.2     3.3     3.3         0.8
OP margin (%)                                   8.9    11.6   11.4    14.9     12.5    9.5        11.3   12.0      9.7       (4.5)      2.4      3.4    11.9    11.3         3.2
Shipments (mn unit)                        93.2 103.2 108.5 126.8 107.8 111.1 110.4 123.7 108.5 88.5 106.6 113.5 431.8 453.0 417.1
Shipment growth (%YoY)                    (19.3) (15.4) (7.9) 12.2 15.6   7.7   1.8  (2.5)  0.6 (20.3) (3.4) (8.3) (7.8) 4.9  (7.9)
Market share (%)                           37.4        36.7   36.0    37.2     34.7   33.8        31.6   30.7     29.9       24.5      27.0     26.1    36.8    32.6        26.8
ASP (EUR)                                   66          64     64      64       62     61          65     69       65         62        51       53      65      64          57
ASP (USD)                                   86          87     91      95       86     78          84     93       89         89        72       71      90      85          80
Smartphone shipments (mn unit)             13.7        16.9   16.4    20.8     21.5   24.0        26.5   28.1     24.2       16.7      16.8     19.6    67.7 100.1          77.3
Shipment growth (%YoY)                     (6.7)       10.3    5.9    37.7     57.4   42.2        61.5   35.2     12.7      (30.4)    (36.4)   (30.3)   11.9 47.8          (22.7)
% of Smartphone                            14.7        16.4   15.1    16.4     19.9   21.6        24.0   22.7     22.3       18.9      15.8     17.3    15.7 22.1           18.5
Smartphone M/S (%)                         39.2        40.2   38.3    38.6     38.8   37.2        32.0   27.5     23.8       15.4      13.6     12.2    39.1    32.9        15.7
Source: Company data, IDC, Hyundai Securities



Fig 31: Nokia’s handset shipments by region                                             Fig 32: Nokia’s smartphone shipments by region

   %                          2009              2010          2011                           %                        2009               2010           2011
   50                                                                                        60
                                  42                                                                                      50
                                                              35
                                                                                             50
   40
                                                                                             40
   30
                                                                                                                                                        28
                                                                                             30
   20
                                                                         11                  20                                           15
                                                 11
   10                                                                                        10                                                                        6
                   1                                                                                       1
     0                                                                                        0
            North           Asia        Western          CEMA         South                           North          Asia            Western      CEMA          South
           America                      Europe                       America                         America                         Europe                    America

Source: IDC, Hyundai Securities                                                         Source: IDC, Hyundai Securities




                                                                                                                                                  HYUNDAI Research           10
                                                                                                                                  >> Handset & Components




RIM: Time to forget about                             RIM’s OR and OP dipped 6%YoY and 74%YoY, respectively, to USD5.2bn and USD300mn in
past glory                                            4Q11 with its OP margin sliding to 6.3%. Smartphone shipments grew 10%QoQ thanks to high
                                                      seasonal year-end demand for handsets, but diminished 11%YoY. The company’s share of the
                                                      smartphone market reached 8.1%, declining for eight straight quarters since 4Q09.

                                                      With the aim of countering lackluster earnings, RIM appointed Thorsten Heins as the new CEO
                                                      to replace its co-CEOs. With the news of the replacement, however, the company’s share price
                                                      dropped 8.5% from a day earlier. This was also due to reports that Mike Lazaridis, former co-
                                                      CEO, had become the vice chair of RIM’s board, and Jim Balsillie, another former co-CEO, would
                                                      remain as a member of the board and major shareholder in order to continue advising
                                                      management. Thorsten Heins, the new CEO, stated as well that he would stick to the management
                                                      policy of the former co-CEOs and sought no radical changes. Despite the new CEO appointment,
                                                      RIM’s management policy is unlikely to change dramatically. Significant earnings improvement
                                                      is difficult to expect for RIM.

Fig 33: RIM’s earnings
(USDbn)                                   1Q09        2Q09    3Q09   4Q09            1Q10   2Q10    3Q10       4Q10   1Q11        2Q11    3Q11    4Q11     2009    2010    2011
OR                                              3.5     3.4    3.5        3.9         4.1    4.2         4.6    5.5         5.6     4.9    4.6      5.2     14.3   18.4        20.3
OP                                              0.7     0.7    0.8        0.9         1.0    1.1         1.1    1.3         1.2     0.9    0.4      0.3      3.1    4.4         2.9
OP margin (%)                              21.2        20.2   23.1    22.5           24.8   25.0     23.4      22.9        22.3    18.3    8.8      6.3     21.8   23.9        14.2
Shipments (mn units)                        7.3         8.0    8.5    10.7           10.6   11.2     12.4      14.6        13.8    12.5   11.8     13.0     34.5   48.8        51.1
Shipment growth (%YoY)                     69.3        41.7   40.5    41.2           44.7   40.8     45.8      36.1        30.8    11.0   (4.6)   (10.8)    46.3   41.4         4.8
Market share (%)                            2.9         2.8    2.8     3.1            3.4    3.4      3.6       3.6         3.8     3.5     3.0     3.0      2.9    3.5         3.3
Smartphone M/S (%)                         21.0        19.0   19.9    19.9           19.1   17.5     15.0      14.3        13.6    11.5     9.6     8.1     19.9   16.0        10.3
ASP (USD)                                  474         429    415     367            386    377      373       377         402     393     390     398      416    378         396
Source: Company data, IDC, Hyundai Securities



Fig 34: RIM’s handset shipments by region                                                     Fig 35: RIM’s price performance

   %                         2009                2010              2011                            USD                                     RIM share price
   80                                                                                              150
   70
   60                                                                                              120
   50
                                                                                                   90
   40
   30             24                             26
                                                                                21                 60
                                                              18
   20                             12
   10                                                                                              30
    0
            North            Asia       Western          CEMA         South                          0
           America                      Europe                       America                             08                09             10               11             12

Source: IDC, Hyundai Securities                                                               Source: Hyundai Securities




                                                                                                                                                     HYUNDAI Research          11
                                                                                                                               >> Handset & Components




HTC: Taking downturn                                  HTC is falling into a slump as quickly as it had achieved success. HTC’s 4Q11 OR and OP declined
after rapid success                                   2%YoY to TWD101.4bn and 23%YoY to TWD12.9bn, respectively. Smartphone shipments rose
                                                      17%YoY, but declined 20% to 10.3mn units on a QoQ basis. HTC presented the following
                                                      guidance for 1Q11: OR of TWD65bn-70bn and an OP margin of 7.5%. The management targets
                                                      signify that HTC’s downturn is steeper than expected.

                                                      HTC’s smartphones gained currency based on an optimized Android OS and user-friendly UI
                                                      (user interface). With the overall smartphone industry expanding, however, competitors’
                                                      smartphone competitiveness also improved significantly. Traditional handset makers (SEC, LGE,
                                                      Motorola, Sonny Ericsson, etc.) also succeeded in optimizing the Android OS and securing
                                                      competitive UI. In other words, HTC’s unique strength vanished, which led to dips in its
                                                      smartphone shipments and sales.

                                                      At the Mobile World Congress (MWC) 2012, HTC unveiled a new smartphone lineup, which
                                                      included the One X (quad-core smartphone), One S, and One V. HTC adopted a single brand
                                                      name for the new lineup in response to consumer complaints that HTC’s various smartphone
                                                      lineups are confusing. Given that HTC is a direct rival to Korean handset makers, we should
                                                      monitor how quickly HTC is able to overcome the downturn.

Fig 36: HTC’s handset earnings
(TWDbn)                                   1Q09        2Q09     3Q09    4Q09         1Q10   2Q10    3Q10     4Q10     1Q11      2Q11    3Q11   4Q11    2009   2010     1H11
OR                                         31.4        38.1    33.9    41.1         37.9   61.0     75.8 104.0 104.2 124.4 135.8 101.4 144.5 278.8 465.8
OP                                          5.0         6.9     6.4     6.3          5.7    9.4     12.4 16.7 16.5 19.2 20.2 12.9 24.6 44.1 68.8
OP margin (%)                              16.0        18.0    19.0    15.3         14.9   15.3     16.3     16.1      15.8     15.5   14.9   12.7    17.0   15.8     14.8
Shipments (mn units)                            1.5     2.1     2.1     2.4          2.7   4.5   6.0   8.8   9.3 11.9 12.8                    10.3     8.1 21.9 44.3
Shipment growth (%YoY)                          3.8    20.8    (0.5)   22.8         80.4 116.9 182.9 259.4 247.9 166.3 114.5                  17.1    11.8 170.4 102.3
Market share (%)                                0.6      0.7    0.7       0.7        0.9    1.4      1.7       2.2      2.6      3.3    3.2    2.4     0.7    1.6      2.9
Smartphone M/S (%)                              4.3      4.9    4.9       4.5        4.8    6.8      7.1       8.6      8.9     10.7   10.3    6.4     4.7    7.1      8.8
ASP (TWD'000)                                21         18       16        17         14     14       13       12        11       10     11     10      18     13       11
ASP (USD)                                   691        588      511       520        444    428      398      390       381      361    360    326     567    404      357
Source: Company data, IDC, Hyundai Securities



Fig 37: HTC’s smartphone shipments by region                                                 Fig 38: HTC’s share price trend

   %                              2009            2010             2011                           TWD                              HTC share price
   50                                                                                             1,400
                   40                                                                             1,200
   40
                                                                                                  1,000
   30                              26            24
                                                                                                   800
   20                                                                                              600
                                                               9
   10                                                                                              400
                                                                                1
                                                                                                   200
     0
            North            Asia        Western          CEMA          South                         0
           America                       Europe                        America                        2/08              2/09           2/10          2/11           2/12

Source: IDC, Hyundai Securities                                                              Source: IDC, Hyundai Securities




                                                                                                                                                HYUNDAI Research       12
                                                                                                                                 >> Handset & Components




Motorola: Full-fledged                                Motorola failed to turn its handset business around again in 4Q11. Its handset OR came in at
effects of takeover by                                USD2.5bn and OP at -USD70mn in 4Q11. With continued operating losses for four consecutive
Google to emerge from                                 quarters, the company posted an OP margin of -3% in 2011. Driven by shipments of 5.3mn
2012                                                  smartphones, handset ASP climbed to USD246, but the higher ASP failed to offset increased
                                                      marketing expenses stemming from intensified competition in the market.

                                                      According to CNET (US IT magazine), Dennis Woodside, Google’s former head of ad sales in the
                                                      Americas and overseer of the Google-Motorola merger, is close to replacing Motorola CEO Sanjay
                                                      Jha. Google and Motorola did not have specific comments about this news, but we surmise that
                                                      collaboration between the two companies is gaining steam. There is a strong chance that
                                                      Motorola, based on its ties with Google, will manufacture new reference phones with the latest
                                                      Android OS, a job which is currently being undertaken by SEC. Accordingly, Motorola could pose
                                                      the biggest threat to Korean players ahead among Android smartphone manufacturers.

Fig 39: Motorola’s handset earnings
(USDbn)                                   1Q09        2Q09     3Q09     4Q09      1Q10     2Q10      3Q10        4Q10    1Q11     2Q11       3Q11     4Q11    2009     2010          1H11
Handset revenues                             1.8         1.8      1.7     1.8        1.6     1.7           2.0    2.4      2.1      2.4         2.4     2.5     7.1       7.8          9.5
Handset OP (USDmn)                         (545)       (287)    (216)   (166)      (192)      87          (43)    72      (89)     (85)        (41)    (70) (1,214)      (76)        (285)
OP margin (%)                             (30.3)      (15.7)   (12.8)    (9.1)    (11.7)     5.0         (2.1)    3.0    (4.2)    (3.5)       (1.7)   (2.8) (17.0)      (1.0)         (3.0)
Shipments (mn units)                       14.6        14.8     13.6     12.0        8.5      8.3       9.1      11.3      9.1    10.6        11.5    10.3     55.0     37.2         41.5
Shipment growth (%YoY)                    (46.7)      (47.5)   (46.3)   (37.6)    (41.8)   (43.6)    (33.0)      (5.7)    6.8     27.3        25.9    (8.5)   (45.1)   (32.3)        11.4
Market share (%)                             5.9         5.3      4.5      3.5       2.7      2.5       2.6        2.8     2.5      2.9         2.9     2.4      4.7      2.7         2.7
ASP (USD)                                   123         124      124      152       193      207       223        215     234      229         212     246      130      210         230
Smartphone shipments (mn units)                 1.2     1.0      1.0      2.6       2.6      2.7          3.8     4.9     4.1         4.4      4.8     5.3      5.8     14.1         18.7
Shipment growth (%YoY)                    (37.1)      (64.0)   (60.5)    69.5 111.7 178.2 303.3                  88.0    58.4     61.9        26.4     6.5    (33.0) 143.7           32.2
% of Smartphone                             8.4         6.7      7.0     22.0 30.5 32.9 42.0                     43.9    45.2     41.9        42.1    51.1     10.5 37.9             45.0
Smartphone M/S (%)                          3.5         2.4      2.2      4.9   4.7   4.3   4.6                   4.8     4.0      4.1         3.9     3.3      3.3    4.6            3.8
Source: Company data, IDC, Hyundai Securities



Fig 40: Motorola’s handset shipments by region                                                Fig 41: Motorola’s smartphone shipments by region

   %                       2009             2010               2011                                  %                    2009                2010            2011
   60                                                                                               70

   50                                                                                               60
                                                                             39                     50            42
   40             34
                                                                                                    40                           35
   30
                                  19                                                                30
   20                                                                                               20                                                                          14

   10                                                                                                                                             7
                                                  4             4                                   10                                                         2
     0                                                                                               0
            North           Asia        Western           CEMA           South                                North        Asia             Western      CEMA           South
           America                      Europe                          America                              America                        Europe                     America

Source: IDC, Hyundai Securities                                                               Source: IDC, Hyundai Securities




                                                                                                                                                        HYUNDAI Research              13
                                                                                                                                   >> Handset & Components




Sony Ericsson: Off to New                          Sony Ericsson’s OR and OP came in at EUR1.3bn and -EUR2.3bn, respectively, in 4Q11, posting
Start as Sony Mobile                               the worst-ever results since 2009. However, what carries greater significance is that the company
Communications                                     is now a wholly-owned subsidiary of Sony.

                                                   Sony announced on Oct 27, 2011 that it will acquire the other half of Sony Ericsson from Ericsson
                                                   and stated on Feb 15 that it completed its acquisition. Sony Ericsson is now a wholly-owned
                                                   subsidiary of Sony and sets out anew as Sony Mobile Communications.

                                                   Sony Mobile Communications introduced the Xperia NXT series of next-generation
                                                   smartphones at CES 2012, including the Xperia S as well as the Xperia ion, the Xperia acro HD,
                                                   and the Xperia NX that target the US and Japan. The company additionally introduced the Xperia
                                                   P and the Xperia U at MWC 2012 and stated that it would reinforce connectivity among Sony-
                                                   branded smartphones, tablets, TVs, and PCs so that users can share Sony’s contents anywhere,
                                                   anytime. If Sony manages to pull out of the downtrend in the handset business and enhances its
                                                   competitiveness by one notch, competition in the future smartphone market will heighten
                                                   further.

Fig 42: Sony Mobile Communications’s earnings
(EURbn)                                   1Q09        2Q09     3Q09     4Q09           1Q10    2Q10     3Q10       4Q10    1Q11      2Q11     3Q11     4Q11    2009     2010         2011
OR                                           1.7         1.7      1.6      1.8          1.4     1.8         1.6     1.5     1.1        1.2      1.6       1.3     6.8     6.3          5.2
OP (EURmn)                                 (369)       (274)    (193)    (181)          20      36          63      39      19        (37)      38      (227) (1,017)    158         (207)
OP margin (%)                             (21.3)      (16.3)   (11.9)   (10.3)          1.4     2.0         3.9     2.6     1.7      (3.1)      2.4    (17.6) (15.0)      2.5         (4.0)
Shipments (mn units)                       14.5        13.8 14.2 14.6 10.5 11.0 10.4 11.2                8.1    7.6                             9.5    9.0 57.1 43.1 34.3
Shipment growth (%YoY)                    (35.1)      (43.4) (44.7) (39.7) (27.5) (20.3) (26.8) (23.1) (22.5) (30.9)                           (8.5) (19.5) (40.9) (24.5) (20.5)
Market share (%)                             5.8        4.9      4.7        4.3          3.4     3.3         3.0     2.8     2.2       2.1      2.4      2.1      4.9     3.1          2.2
ASP (EUR)                                   120        122      114        120          134     160         154     136     141       157      167      143      119     146          152
ASP (USD)                                   156        166      163        177          185     203         199     185     192       226      236      192      166     194          212
Smartphone shipments (mn units)             0.3         0.2      0.2      0.2    0.5   1.7     3.8     4.6   3.9   4.6                          6.2      6.3     0.8 10.6            21.0
Shipment growth (%YoY)                    (63.0)      (79.7)   (81.5)   (37.4) 110.6 879.6 2,010.9 1,834.8 643.4 167.2                         64.4     37.0   (70.9) 1,157.4        98.3
% of smartphone                             1.7         1.3      1.3      1.6    5.0 15.8 36.3 40.7 48.4 61.1                                  65.2     69.3     1.5 24.6            61.4
Smartphone M/S (%)                          0.7         0.4      0.4      0.4    1.0   2.7     4.6     4.5   3.9   4.3                          5.0      3.9     0.5      3.5         4.3
Source: Company data, IDC, Hyundai Securities



Fig 43: Sony Mobile Communications’s handset shipments                                           Fig 44: Sony Mobile Communications’s smartphone
by region                                                                                        shipments by region

   %                         2009               2010                2011                               %                     2009                2010             2011
   40                             37                                                                   60

                                                                                                       50
   30                                            27                                                                                38
                                                                                                       40
                                                                                                                                                 30
   20                                                          17                                      30
                                                                                  15
                                                                                                       20                                                       16
   10                                                                                                                                                                           12
                   4                                                                                   10            5

     0                                                                                                  0
            North            Asia       Western           CEMA           South                                  North         Asia           Western       CEMA          South
           America                      Europe                          America                                America                       Europe                     America

Source: IDC, Hyundai Securities                                                                  Source: IDC, Hyundai Securities




                                                                                                                                                          HYUNDAI Research            14
                                                                                                                                 >> Handset & Components




ZTE: Smartphones also                                 ZTE’s handset shipments jumped 31%YoY to KRW20.6mn units in 4Q11, with the proportion of
pose threat now                                       smartphones skyrocketing 536%QoQ to 31% (6.4mn units). As a result, ZTE secured a 4.7%
                                                      share of the global handset market (ranking No. 4) and 4.0% of the smartphone market (No. 6)
                                                      within the quarter.

                                                      ZTE showcased various strategic smartphones at MWC 2012 in a bid to shed its image as a low-
                                                      end handset maker. While the company’s products are still not fit to compete with the high-end
                                                      smartphones of global handset makers, it is clear that ZTE’s smartphone competitiveness is
                                                      strengthening rapidly. ZTE rose to prominence over a short period of time by mass-supplying
                                                      feature phones that boasted moderate prices and practical functionality to emerging markets. The
                                                      company has also greatly enhanced its brand power and cooperative ties with wireless carriers. If
                                                      ZTE goes on to encroach upon the smartphone market as well, competition will intensify in the
                                                      market going forward.

Fig 45: ZTE’s handset earnings
(CNYbn)                                   1Q09        2Q09    3Q09    4Q09         1Q10     2Q10     3Q10        4Q10     1Q11    2Q11       3Q11     4Q11    2009       2010     2011
Handset revenues                                        5.6             7.5                   7.8                 10.1              11.2                       13.1       17.9    11.2
Shipments (mn units)                            4.7     5.8     6.7     9.5         10.4     12.2     12.1        15.7    15.0      16.2      17.6    20.6     26.7       50.5    69.4
Shipment growth (%YoY)                    123.8       222.8   156.2   396.9        120.6    111.6     81.4        65.2    43.8      33.0      45.5    30.6    217.0       89.1    37.5
Market share (%)                            1.9         2.1     2.2     2.8          3.4      3.7      3.5         3.9     4.1       4.5       4.5     4.7      2.3        3.6     4.5
Smartphone shipments (mn units)                 0.1     0.1     0.1     0.1          0.1      0.1      0.6     1.0     1.2     2.0              4.1     6.4     0.3        1.8     13.7
Shipment growth (%YoY)                          0.0 5,440.3    53.3    47.1        (19.2)    50.8    717.2 1,114.3 2,248.9 1,896.3            526.9   535.5   166.1      520.9    655.5
% of smartphones                                1.3     1.2     1.2     0.9          0.5      0.8      5.4     6.4     7.9    12.3             23.1    31.3     1.1        3.6     19.7
Smartphone M/S (%)                              0.2     0.2     0.2     0.2          0.1      0.2         0.8      1.0     1.2        1.8      3.3     4.0        0.2      0.6     2.8
Source: Company data, IDC, Hyundai Securities




Fig 46: ZTE’s handset shipments by region                                                     Fig 47: ZTE’s smartphone shipments by region

   %                       2009             2010              2011                                   %                      2009               2010           2011
   60                                                                                               100
                                  48
   50                                                                                                80                          73
   40
                                                                                                     60
   30
                                                              21              20                     40
   20
                                                                                                     20                                          13
   10              5                              6                                                                                                           9
                                                                                                                     2                                                       4
     0                                                                                                0
            North            Asia       Western           CEMA         South                                     North       Asia           Western     CEMA             South
           America                      Europe                        America                                   America                     Europe                      America

Source: IDC, Hyundai Securities                                                               Source: IDC, Hyundai Securities




                                                                                                                                                        HYUNDAI Research           15
                                                                                                                           >> Handset & Components




Fig 48: Handset revenues by manufacturer

        USDbn                     1Q10             2Q10            3Q10           4Q10             1Q11           2Q11           3Q11         4Q11
         25                                                                              24.4

          20
                               15.6
          15

          10                                                            8.1
                                                                                                           5.2
            5                                                                                                              3.4
                                                   2.4                                                                                     2.5                 1.7

            0
                       SEC                 LGE                  Nokia            Apple              RIM             HTC            Motorola         Sony Ericsson

Source: Company data, Hyundai Securities




Fig 49: Handset OP by manufacturer
        USDmn                            1Q10             2Q10            3Q10           4Q10        1Q11           2Q11           3Q11             4Q11
        10,000
                                                                                           9,795
          8,000

          6,000

          4,000
                                  2,306
          2,000
                                                          9               274                               328             426
                 0
                                                                                                                                               -70             -306
         -2,000
                           SEC                 LGE                Nokia            Apple             RIM             HTC            Motorola         Sony Ericsson
Note: Apple’s iPhone OP figure provided by Strategy Analytics
Source: Company data, Strategy Analytics, Hyundai Securities



Fig 50: Handset OP margin by manufacturer
            %                         1Q10            2Q10              3Q10         4Q10            1Q11           2Q11           3Q11              4Q11
           40                                                                              40

           30

           20                    15
                                                                                                                            13
           10                                                                                               6
                                                                          3
                                                      0
             0
                                                                                                                                               -3
          -10

          -20                                                                                                                                                  -18
                         SEC                 LGE                Nokia            Apple              RIM              HTC            Motorola         Sony Ericsson
Note: Apple’s iPhone OP figure provided by Strategy Analytics
Source: Company data, Strategy Analytics, Hyundai Securities




                                                                                                                                                HYUNDAI Research      16
                                                                                              >> Handset & Components




Fig 51: Global handset makers’ valuations
(USDmn)                                       Nokia    Motorola      Apple        RIM        HTC        ZTE          SEC           LGE
Ticker                                     NOK1V.FI     MMI.US     AAPL.US    RIMM.US     2498.TW 000063.CN 005930.KR 066570.KR
Country                                      Finland       USA         USA     Canada       Taiwan     China   S.Korea   S.Korea
Current price (USD)                              5.0       39.8       545.2       13.6        21.0        2.7  1,095.6      80.7
Market cap                                   18,860      12,005     508,300      7,118      17,879     7,684  175,715     13,638
OR                                2010       55,819      11,460     65,225      19,907      9,450     11,136     137,731     49,660
                                  2011       50,836      13,064    108,249      18,847     15,790     13,792     146,969     48,327
                                  2012F      47,495      12,934    157,312      17,617     15,091     17,097     179,626     51,494
OP                                2010        4,213         74      18,385       4,636      1,496        410      15,406           157
                                  2011        2,400        206      33,790       2,731      2,332        450      14,474           250
                                  2012F       1,299        252      52,875       1,941      1,707        602      21,814           759
OP margin (%)                     2010           7.5        0.6        28.2       23.3       15.8        3.7         11.2           0.3
                                  2011           4.7        1.6        31.2       14.5       14.8        3.3          9.8           0.5
                                  2012F          2.7        1.9        33.6       11.0       11.3        3.5         12.1           1.5
NP                                2010        2,974        (83)     14,013       3,411      1,340        515      14,072      1,093
                                  2011        1,417         97      25,922       2,171      2,101        527      11,924       (418)
                                  2012F         408        182      40,614       1,515      1,559        686      18,326        539
EPS (USD)                         2010         0.80       (0.28)      15.15       6.34       1.55       0.15       94.41           6.62
                                  2011         0.38        0.33       27.68       4.16       2.44       0.15       79.34          (2.56)
                                  2012F        0.17        0.61       42.86       2.88       1.89       0.20      121.69           2.99
EPS growth (%)                    2010        103.3       (99.4)       66.9       44.7       75.4       27.8         61.9         (40.2)
                                  2011        (52.5)         NA        82.7      (34.3)      57.7        0.5        (16.0)           NA
                                  2012F       (54.6)       86.2        54.8      (30.9)     (22.5)      29.9         53.4            NA
PER (x)                           2010          6.3         NA         36.0        2.1       13.6       18.0          9.0          15.5
                                  2011         13.2       120.5        19.7        3.3        8.6       17.9         11.9           NA
                                  2012F        29.1        64.7        12.7        4.7       11.1       13.8          9.0          27.0
PBR (x)                           2010           1.0        6.7        10.4        0.8        7.1        2.6          1.7           1.5
                                  2011           1.2        2.4         6.5        0.7        5.2        2.3          1.6           1.1
                                  2012F          1.3        2.4         4.5        0.6        4.6        2.0          1.5           1.3
ROE (%)                           2010         16.5        (4.5)       35.3       41.2       56.3       16.3         18.5           9.7
                                  2011          8.2         1.9        41.7       21.0       70.4       12.8         14.5          (3.8)
                                  2012F         0.2         1.7        39.2       14.2       44.8       14.9         18.9           4.9
EV/EBITDA (x)                     2010           1.8       39.5        23.6        0.9        9.9        6.5          5.2          16.8
                                  2011           3.4       23.2        13.5        1.3        6.0        9.8          5.4           8.0
                                  2012F          6.6       19.3         7.1        1.1        8.4        8.0          4.3           8.4
Source: Thomson IBES, Hyundai Securities




                                                                                                               HYUNDAI Research     17
                                                                                                      >> Handset & Components




Fig 52: SEC’s major smartphones
                           Galaxy Note 10.1             Galaxy Beam                   Galaxy Ace 2                 Galaxy mini 2




OS                         Android OS, v4.0             Android OS, v2.3              Android OS, v2.3             Android OS, v2.3
CPU                        Dual-core 1.4 GHz            Dual-core 1 GHz               Dual-core 800 MHz            Single-core 800 MHz
RAM                        1 GB RAM                     768 MB RAM                    768 MB RAM                   512 MB RAM
Storage                    8/16/32 GB storage           8 GB storage                  4 GB storage                 4 GB storage
Display                    LCD, 10.1 inches             Super AMOLED, 4.0 inches      LCD, 3.8 inches              LCD, 3.27 inches
Display resolution         800 x 1280 pixels, 149 ppi   480 x 800 pixels, 233 ppi     480 x 800 pixels, 246 ppi    320 x 480 pixels, 176 ppi
Size                       256.7 x 175.3 x 8.9 mm       124 x 64.2 x 12.5 mm          118.3 x 62.2 x 10.5 mm       109.4 x 58.6 x 11.6 mm
Weight                     583 g                        145.3 g                       122 g                        105.3 g
Battery                    Li-Ion 7000 mAh              Li-Ion 2000 mAh               Li-Ion 1500 mAh              Li-Ion 1300 mAh
Camera                     3.15 MP, 2048x1536 pixels    5 MP, 2592x1944 pixels        5 MP, 2592x1944 pixels       3.15 MP, 2048x1536 pixels
Network speed              HSDPA 21 Mbps                HSDPA 14.4 Mbps               HSDPA 14.4 Mbps              HSDPA 7.2 Mbps
Source: GSMArena, Phone Arena, Hyundai Securities


Fig 53: LGE’s major smartphones
                           Optimus 4X HD                Optimus 3D Max                Optimus Vu                   Optimus L3




OS                         Android OS, v4.0             Android OS, v2.3              Android OS, v2.3             Android OS, v2.3
CPU                        Quad-core 1.5 GHz            Dual-core 1.2 GHz             Dual-core 1.5 GHz            Single-core 800 MHz
RAM                        1 GB RAM                     1 GB RAM                      1 GB RAM                     512MB RAM
Storage                    16 GB storage                16 GB storage                 16 GB storage                8GB storage
Display                    IPS LCD, 4.7 inches          3D IPS LCD, 4.3 inches        IPS LCD, 5.0 inches          LCD, 3.2 inches
Display resolution         720 x 1280 pixels, 312 ppi   480 x 800 pixels, 217 ppi     768 x 1024 pixels, 256 ppi   240 x 320 pixels, 125 ppi
Size                       -                            126.8 x 67.4 x 9.6 mm         139.6 x 90.4 x 8.5 mm        101.2 x 59.9 x -
Weight                     -                            148 g                         168 g                        -
Battery                    Li-Ion 2140 mAh              Li-Ion 1520 mAh               Li-Ion 2080 mAh              Li-Ion 1500 mAh
Camera                     8 MP, 3264x2448 pixels       Dual 5 MP, 2592x1944 pixels   8 MP, 3264x2448 pixels       3.15 MP, 2048x1536 pixels
Network speed              HSDPA 21 Mbps                HSDPA 21 Mbps                 HSDPA (unspecified), LTE     HSDPA 3.6 Mbps
Source: GSMArena, Phone Arena, Hyundai Securities




                                                                                                                       HYUNDAI Research     18
                                                                                                      >> Handset & Components




Fig 54: Apple’s major smartphones
                           iPhone 4S                             iPhone 4                                    iPhone 3GS




OS                         iOS 5                                 iOS 4                                       iOS 3
CPU                        Dual-core 1 GHz                       Single-core 1 GHz                           Single-core 600 MHz
RAM                        512 MB RAM                            512 MB RAM                                  256 MB RAM
Storage                    16/32/64 GB storage                   16/32/64 GB storage                         8/16/32 GB storage
Display                    IPS LCD, 3.5 inches                   IPS LCD, 3.5 inches                         LCD, 3.5 inches
Display resolution         640 x 960 pixels, 330 ppi             640 x 960 pixels, 330 ppi                   320 x 480 pixels, 165 ppi
Size                       115.2 x 58.6 x 9.3 mm                 115.2 x 58.6 x 9.3 mm                       115.5 x 62.1 x 12.3 mm
Weight                     140 g                                 137 g                                       135 g
Battery                    Li-Po 1432 mAh                        Li-Po 1420 mAh                              Li-Po 1219 mAh
Camera                     8 MP, 3264x2448 pixels                5 MP, 2592x1944 pixels                      3.15 MP, 2048x1536 pixels
Network speed              HSDPA 14.4 Mbps                       HSDPA 7.2 Mbps                              HSDPA 7.2 Mbps
Source: GSMArena, Phone Arena, Hyundai Securities


Fig 55: Nokia’s major smartphones
                           Lumia 900                   Lumia 800                       Lumia 710                      808 PureView




OS                         Windows Phone 7.5 Mango     Windows Phone 7.5 Mango         Windows Phone 7.5 Mango        Nokia Belle OS
CPU                        Single-core 1.4 GHz         Single-core 1.4 GHz             Single-core 1.4 GHz            Single-core 1.3 GHz
RAM                        512 MB RAM                  512 MB RAM                      512 MB RAM                     512 MB RAM
Storage                    16 GB storage               16 GB storage                   8 GB storage                   16 GB storage
Display                    AMOLED, 4.3 inches          AMOLED, 3.7 inches              LCD, 3.7 inches                AMOLED, 4.0 inches
Display resolution         480 x 800 pixels, 217 ppi   480 x 800 pixels, 252 ppi       480 x 800 pixels, 252 ppi      360 x 640 pixels, 184 ppi
Size                       127.8 x 68.5 x 11.5 mm      116.5 x 61.2 x 12.1 mm          119 x 62.4 x 12.5 mm           123.9 x 60.2 x 13.9 mm
Weight                     160 g                       142 g                           125.5 g                        169 g
Battery                    Li-Ion 1830 mAh             Li-Ion 1450 mAh                 Li-Ion 1300 mAh                Li-Ion 1400 mAh
Camera                     8 MP, 3264x2448 pixels      8 MP, 3264x2448 pixels          5 MP, 2592x1944 pixels         41 MP, 7152x5368 pixels
Network speed              HSDPA 21 Mbps               HSDPA 14.4 Mbps                 HSDPA 14.4 Mbps                HSDPA 14.4 Mbps
Source: GSMArena, Phone Arena, Hyundai Securities




                                                                                                                         HYUNDAI Research      19
                                                                                                   >> Handset & Components




Fig 56: RIM’s major smartphones
                           Bold 9790                    Curve 9380                  Curve 9360                  Porsche Design P’9981




OS                         BlackBerry OS 7.0            BlackBerry OS 7.0           BlackBerry OS 7.0           BlackBerry OS 7.0
CPU                        1 GHz                        806 MHz                     800MHz processor            1.2GHz processor
RAM                        768 MB RAM                   512MB RAM                   512MB RAM                   768MB RAM
Storage                    8 GB storage                 512MB                       512MB                       8GB
Display                    LCD, 2.45 inches             LCD, 3.2 inches             LCD, 2.44 inches            LCD, 2.8 inches
Display resolution         480 x 360 pixels, 245 ppi    360 x 480 pixels, 188 ppi   480 x 360 pixels, 246 ppi   640 x 480 pixels, 286 ppi
Size                       110 x 60 x 11.4 mm           109 x 60 x 11.2 mm          109 x 60 x 11 mm            115 x 67 x 11.3 mm
Weight                     107 g                        98 g                        99 g                        155 g
Battery                    Li-Ion 1230 mAh              Li-Ion 1230 mAh             Li-Ion 1000 mAh             Li-Ion 1230 mAh
Camera                     5 MP, 2592x1944 pixels       5 MP, 2592x1944 pixels      5 MP, 2592x1944 pixels      5 MP, 2592x1944 pixels
Network speed              HSDPA 7.2 Mbps               HSDPA 7.2 Mbps              HSDPA 7.2 Mbps              HSDPA 14.4Mbps
Source: GSMArena, Phone Arena, Hyundai Securities


Fig 57: HTC’s major smartphones
                           One X                        One S                       One V                       Titan II




OS                         Android OS, v4.0             Android OS, v4.0            Android OS, v4.0            Windows Phone 7.5 Mango
CPU                        Quad-core 1.5 GHz            Dual-core 1.5 GHz           Single-core 1 GHz           Single-core 1.5 GHz
RAM                        1 GB RAM                     1 GB RAM                    512MB RAM                   512MB RAM
Storage                    32 GB storage                16 GB storage               4 GB storage                16 GB storage
Display                    Super IPS LCD2, 4.7 inches   Super AMOLED, 4.3 inches    LCD, 3.7 inches             LCD, 4.7 inches
Display resolution         720 x 1280 pixels, 312 ppi   540 x 960 pixels, 256 ppi   480 x 800 pixels, 252 ppi   480 x 800 pixels, 199 ppi
Size                       134.4 x 69.9 x 9.3 mm        130.9 x 65 x 7.8 mm         120.3 x 59.7 x 9.2 mm       132 x 69 x 13 mm
Weight                     130 g                        119.5 g                     115 g                       147 g
Battery                    Li-Po 1800 mAh               Li-Po 1650 mAh              Li-Ion 1500 mAh             Li-Ion 1730 mAh
Camera                     8 MP, 3264x2448 pixels       8 MP, 3264x2448 pixels      5 MP, 2592x1944 pixels      16 MP, 4640x3480 pixels
Network speed              HSDPA 21 Mbps                HSDPA 42 Mbps               HSDPA (unspecified)         HSDPA (unspecified)
Source: GSMArena, Phone Arena, Hyundai Securities




                                                                                                                  HYUNDAI Research       20
                                                                                                       >> Handset & Components




Fig 58: Motorola’s major smartphones
                           DROID 4                       DROID RAZR MAXX               Motoluxe                     Defy Mini




OS                         Android OS, v2.3              Android OS, v2.3              Android OS, v2.3             Android OS, v2.3
CPU                        Dual-core 1.2 GHz             Dual-core 1.2 GHz             Single-core 800 MHz          Single-core 600 MHz
RAM                        1 GB RAM                      1 GB RAM                      512 MB RAM                   512 MB RAM
Storage                    16 GB storage                 8 GB storage                  1 GB storage                 512 MB storage
Display                    LCD, 4.0 inches               Super AMOLED, 4.3 inches      LCD, 4.0 inches              LCD, 3.2 inches
Display resolution         540 x 960 pixels, 275 ppi     540 x 960 pixels, 256 ppi     480 x 854 pixels, 245 ppi    320 x 480 pixels, 180 ppi
Size                       127 x 67.3 x 12.7 mm          130.7 x 68.9 x 9 mm           117.7 x 60.5 x 9.9 mm        109 x 58.5 x 12.6 mm
Weight                     178.9 g                       145 g                         123.6 g                      107 g
Battery                    Li-Ion 1785 mAh               Li-Ion 3300 mAh               Li-Ion 1400 mAh              Li-Ion 1650 mAh
Camera                     8 MP, 3264x2448 pixels        8 MP, 3264x2448 pixels        8 MP, 3264x2448 pixels       3.15 MP, 2048x1536 pixels
Network speed              Rev. A, up to 3.1 Mbps, LTE   Rev. A, up to 3.1 Mbps, LTE   HSDPA 7.2 Mbps               HSDPA
Source: GSMArena, Phone Arena, Hyundai Securities


Fig 59: Sony Mobile Communications’s major smartphones
                           Xperia S                      Xperia ion                    Xperia P                     Xperia U




OS                         Android OS, v2.3              Android OS, v2.3              Android OS, v2.3             Android OS, v2.3
CPU                        Dual-core 1.5 GHz             Dual-core 1.5 GHz             Dual-core 1 GHz              Dual-core 1 GHz
RAM                        1 GB RAM                      1 GB RAM                      1 GB RAM                     512 MB RAM
Storage                    32 GB storage                 16 GB storage                 16 GB storage                4 GB storage
Display                    LCD, 4.3 inches               LCD, 4.55 inches              LCD, 4.0 inches              LCD, 3.5 inches
Display resolution         720 x 1280 pixels, 342 ppi    720 x 1280 pixels, 323 ppi    540 x 960 pixels, 275 ppi    480 x 854 pixels, 280 ppi
Size                       128 x 64 x 10.6 mm            133 x 68 x 10.8 mm            122 x 59.5 x 10.5 mm         112 x 54 x 12 mm
Weight                     144 g                         144 g                         120 g                        110 g
Battery                    Li-Ion 1750 mAh               Li-Ion 1900 mAh               Li-Ion 1305 mAh              Li-Ion 1320 mAh
Camera                     12 MP, 4000x3000 pixels       12 MP, 4000x3000 pixels       8 MP, 3264x2448 pixels       5 MP, 2592x1944 pixels
Network speed              HSDPA 14.4 Mbps               HSDPA 21.1 Mbps, LTE          HSDPA 14.4 Mbps              HSDPA 14.4 Mbps
Source: GSMArena, Phone Arena, Hyundai Securities




                                                                                                                      HYUNDAI Research       21
                                                                                                    >> Handset & Components




Fig 60: ZTE’s major smartphones
                           Era                          Mimosa X                     PF112 HD                     Blade II




OS                         Android OS, v4.0             Android OS, v4.0             Android OS, v4.0             Android OS, v4.0
CPU                        Quad-core 1.3 GHz            Dual-core 1.2 GHz            -                            Single-core 1 GHz
RAM                        1 GB RAM                     1 GB RAM                     1 GB RAM                     512 MB RAM
Storage                    8 GB storage                 4 GB storage                 8 GB storage                 200 MB storage
Display                    LCD, 4.3 inches              LCD, 4.3 inches              IPS LCD, 4.5 inches          LCD, 3.5 inches
Display resolution         540 x 960 pixels, 256 ppi    540 x 960 pixels, 256 ppi    720 x 1280 pixels, 326 ppi   480 x 800 pixels, 267 ppi
Size                       -                            127 x 65 x 9.9 mm            130 x 66 x 8.5 mm            115.1 x 57.9 x 10.9 mm
Weight                     -                            110 g                        -                            117.4 g
Battery                    -                            -                            Li-Ion 1650 mAh              -
Camera                     8 MP, 3264x2448 pixels       8 MP, 3264x2448 pixels       8 MP, 3264x2448 pixels       5 MP, 2592x1944 pixels
Network speed              HSDPA 21 Mbps                HSDPA 21 Mbps                HSDPA 21 Mbps                HSDPA 7.2 Mbps
Source: GSMArena, Phone Arena, Hyundai Securities


Fig 61: Huawei’s major smartphones
                           Ascend D quad                Ascend D1                    Ascend P1                    Ascend G300




OS                         Android OS, v4.0             Android OS, v4.0             Android OS, v4.0             Android OS, v2.3
CPU                        Quad-core 1.2 GHz            Dual-core 1.5 GHz            Dual-core 1.5 GHz            -
RAM                        1 GB RAM                     1 GB RAM                     1 GB RAM                     -
Storage                    8 GB storage                 8 GB storage                 4 GB storage                 -
Display                    IPS LCD, 4.5 inches          IPS LCD, 4.5 inches          Super AMOLED, 4.3 inches     LCD, 4.0 inches
Display resolution         720 x 1280 pixels, 326 ppi   720 x 1280 pixels, 326 ppi   540 x 960 pixels, 256 ppi    480 x 800 pixels, 233 ppi
Size                       129 x 64 x 8.9 mm            129 x 64 x 8.9 mm            127.4 x 64.8 x 7.7 mm        122.5 x 63 x 10.5 mm
Weight                     130 g                        -                            110 g                        140 g
Battery                    Li-Ion 1800 mAh              Li-Ion 1670 mAh              Li-Ion 1670 mAh              -
Camera                     8 MP, 3264x2448 pixels       8 MP, 3264x2448 pixels       8 MP, 3264x2448 pixels       5 MP, 2592x1944 pixels
Network speed              HSDPA 21 Mbps                HSDPA 21 Mbps                HSDPA (unspecified)          HSDPA 7.2 Mbps
Source: GSMArena, Phone Arena, Hyundai Securities




                                                                                                                      HYUNDAI Research     22
                                                                                                  >> Handset & Components




                                    Investment Strategy: Focus on Earnings Improvement and
                                    Turnaround Visibility

Korean smartphone/                  Handset/component makers are expected to post higher-than-average earnings in 1Q12. Based on
component makers                    significantly improved competitiveness, smartphone makers in Korea are increasing shipments
undergoing re-rating                (smartphones, LTE phones, etc.) steadily, and related component vendors should see
                                    improvements in their earnings as well. What is encouraging is that Korean handset
                                    manufacturers are leading the way in the global industry: SEC pioneered the 5-inch smartphone
                                    with its Galaxy Note, and LGE is the first in the world to launch a quad-core AP smartphone.
                                    SEC’s smartphone shipments are projected to jump 11%QoQ to 40mn units in 1Q12 and LGE’s
                                    to hold steady QoQ at 5.5mn units.

Present LGE, LG Innotek,            We therefore believe that competitive handset/component makers in Korea are highly appealing
and Interflex as top picks;         investment targets. In consideration of the improving earnings and turnaround visibility, we
SEMCO as stock of                   present LGE (066570; BUY, fair value at KRW110,000), LG Innotek (011070; BUY, fair value at
interest                            KRW114,000), and Interflex (051370, BUY, fair value at KRW63,000) as top picks and SEMCO
                                    (009150; BUY, fair value at KRW110,000) as a stock of interest.

Fig 62: Investment points of handset industry top picks and stock of interest
Stock                         Investment points
LGE                           1) 1Q12 results likely to surpass estimates (OR of KRW13.31tr, OP of KRW182.1bn projected)
                              2) Visibility high for 1H12 results; Smartphone competitiveness recovering; TVs strengthening further
                              3) 2012 OP to soar 204%YoY to KRW852.1bn
LG Innotek                    1) 1Q12 results likely to surpass estimates (OR of KRW1.29tr, OP of -KRW2.9bn projected)
                              2) Camera module and package substrate earnings brisk
                              3) Buy in advance given the increased visibility of turnaround in company-wide OP in 2Q12
Interflex                     1) 1Q12 earnings to be brisk (OR of KRW141.5bn, OP of KRW12.1bn projected)
                              2) Earnings growth to continue given customers’ strategic new products set to be released in 2Q12
                              3) 2012 OR projected to jump 50%YoY to KRW777.1bn and OP 64%YoY to KRW66bn
SEMCO                         1) Earnings to grow every quarter after bottoming out in 1Q12; MLCC market poised to recover from 2Q12
                              2) Stands to benefit continuously from SEC’s smartphone and AP business expansion
Source: Hyundai Securities



                                    Fig 63: Investment appeal of handset industry top picks and stock of interest
                                                                 Earnings        Valuation            Issue                 Downward rigidity
                                                                 momentum        merit                momentum              of share price
                                    LGE
                                    LG Innotek
                                    Interflex
                                    SEMCO
                                    Source: Hyundai Securities




                                                                                                                     HYUNDAI Research     23
                                                                                                                         >> Handset & Components




LG Electronics (066570)                                                                                                                   BUY ( maintain)
Current price (Mar 9)                  KRW90,600            Avg T/O Vol (60d)                     1,490,423shrs          52wk high/low                           KRW112,875
Fair value                           KRW110,000             Avg T/O Val (60d)                      USD107.3mn                                                     KRW53,359
Market cap                              USD13.7bn           Foreign ownership                            29.5%           Beta (12M, daily return)                           0.8
Ordinary shares issued             163,647,814shrs          3yr CAGR of adj EPS (11~13)                 -10.9%           Major shareholders                 LG Corp etc. 33.7%
Free float                                  59.2%           Market's 3yr CAGR of adj. EPS                 8.6%

FY-end                                     12/09A        12/10A         12/11P        12/12F            12/13F           Price performance            1M          3M         6M
(Reporting standard)                   (GAAP-P)          (IFRS-C)      (IFRS-C)       (IFRS-C)         (IFRS-C)          Absolute                   0.2% 27.6% 49.5%
OR (KRWbn)                              30,513.4        55,753.8      54,256.6       57,812.5         60,701.1           Relative                   0.0% 18.5% 34.3%
                                                                                                                                            Relative performance (LHS)
OP (KRWbn)                               1,614.8            176.5         280.3          852.1          1,080.7                             Stock price (RHS)
NP (KRWbn)                               2,052.8          1,282.1        (432.8)         630.0            986.0            %            Relative performance (LHS)         KRW
Parent NP (KRWbn)                        2,052.8          1,227.0        (469.7)         604.8            946.6                         Stock price (RHS)
                                                                                                                           10                                            120,000
EPS (KRW)                                12,429             7,429        (2,876)         3,360            5,259              0                                           100,000
Adj. EPS (KRW)                           12,429             7,429        (2,876)         3,360            5,259            -10                                           80,000
PER* (x)                               11.8 - 5.3     17.1 - 12.0            NA           27.0             17.2            -20                                         60,000
PBR (x)                                       1.9              1.5           1.1            1.3              1.2   140     -30                                    120,000
                                                                                                                                                                       40,000
EV/EBITDA (x)                                 8.9            16.8            8.0            8.4              7.6   120
                                                                                                                           -40                                    100,000
                                                                                                                                                                       20,000
Div. Yield (%)                                1.4              0.2           0.3            0.6              0.8   100
                                                                                                                                                                80,000
                                                                                                                           -50                                       0
ROE (%)                                     22.1               9.7          (3.8)           4.9              7.3   80
                                                                                                                                 3/11 5/11 7/11   9/11 11/11 1/12
                                                                                                                                                                60,000
ROIC (%)                                    45.2            (14.6)           1.6            6.3              8.0   60
                                                                                                                                                                  40,000
                                                                                                                   40
Source: Company data, Hyundai Securities
                                                                                                                   20                                             20,000
                                                                                                                    0                                              0
                                                                                                                    6/10    8/10 10/10 12/10 2/11      4/11     6/11




LG Innotek (011070)                                                                                                                       BUY ( maintain)
Current price (Mar 9)                  KRW103,500           Avg T/O Vol (60d)                      175,335shrs           52wk high/low                             KRW119,000
Fair value                             KRW114,000           Avg T/O Val (60d)                      USD13.6mn                                                        KRW56,200
Market cap                               USD1.9bn           Foreign ownership                           15.7%            Beta (12M, daily return)                          1.1
Ordinary shares issued               20,159,043shrs         3yr CAGR of adj EPS (11~13)                  -8.8%           Major shareholders LG Electronics INC. etc. 47.9%
Free float                                   49.7%          Market's 3yr CAGR of adj. EPS                 8.6%

FY-end                                     12/09A        12/10A         12/11P        12/12F            12/13F           Price performance            1M          3M         6M
(Reporting standard)                   (GAAP-P)         (IFRS-C)       (IFRS-C)      (IFRS-C)          (IFRS-C)          Absolute                   12.4%       52.0%      70.2%
OR (KRWbn)                               2,229.8         4,103.5        4,553.0       5,700.8           6,547.8          Relative                   12.2%       41.2%      52.9%
OP (KRWbn)                                  45.6           156.5           (66.8)       129.6             247.3                             Relative performance (LHS)
                                                                                                                                            Stock price (RHS)
NP (KRWbn)                                  78.2           195.8         (145.4)         54.7             157.5                         Relative performance (LHS)
Parent NP (KRWbn)                           78.2           195.6         (145.4)         54.6             157.4            %                                               KRW
                                                                                                                                        Stock price (RHS)
                                                                                                                             0                                    140,000
EPS (KRW)                                  5,200          10,292         (7,213)        2,709             7,806
                                                                                                                                                                  120,000
Adj. EPS (KRW)                             5,200          10,292         (7,213)        2,709             7,806            -10
                                                                                                                                                                  100,000
PER* (x)                               30.2 - 7.0      19.0 - 7.6             NA         38.2              13.3            -20                                    80,000
PBR (x)                                       1.9             1.8             1.0          1.5               1.4   140     -30                                    60,000
                                                                                                                                                             120,000
                                                                                                                   120                                            40,000
EV/EBITDA (x)                               15.5              9.3             9.1          7.0               6.2           -40                               100,000
                                                                                                                   100                                            20,000
Div. Yield (%)                                0.4             0.3             0.3          0.4               0.6           -50                               80,000
                                                                                                                                                                  0
                                                                                                                   80
ROE (%)                                     11.2            13.3           (10.5)          4.1             11.1                3/11 5/11 7/11 9/11 11/11 1/1260,000
                                                                                                                   60
ROIC (%)                                      2.9             3.4            (3.0)         3.0               5.8                                                  40,000
                                                                                                                   40
Source: Company data, Hyundai Securities                                                                                                                          20,000
                                                                                                                   20
                                                                                                                    0                                              0
                                                                                                                    6/10    8/10 10/10 12/10 2/11      4/11     6/11




                                                                                                                                                  HYUNDAI Research           24
                                                                                                                      >> Handset & Components




KOSDAQ

Interflex (051370)                                                                                                                       BUY ( maintain)
Current price (Mar 9)                   KRW49,750           Avg T/O Vol (60d)                    135,000shrs          52wk high/low                                  KRW49,750
Fair value                              KRW63,000           Avg T/O Val (60d)                     USD4.8mn                                                           KRW17,700
Market cap                             USD622.2mn           Foreign ownership                          5.3%           Beta (12M, daily return)                              1.4
Ordinary shares issued               13,980,672shrs         3yr CAGR of adj EPS (11~13)               25.8%           Major shareholders
Free float                                   46.0%          Market's 3yr CAGR of adj. EPS              8.6%                         KOREA CIRCUIT Co.,Ltd etc. 54.0%

FY-end                                     12/09A        12/10A         12/11P        12/12F         12/13F           Price performance              1M          3M              6M
(Reporting standard)                   (GAAP-P)        (GAAP-P)        (IFRS-P)      (IFRS-P)       (IFRS-P)          Absolute                    36.3%       29.6% 136.9%
OR (KRWbn)                                 279.5           419.2          517.7         777.1          935.0          Relative                    32.4%       21.9% 106.8%
                                                                                                                                            Relative performance (LHS)
OP (KRWbn)                                  16.1            31.0           40.4          66.0           77.8
                                                                                                                                            Stock price (RHS)
NP (KRWbn)                                  22.4            31.7           37.1          61.5           71.7                            Relative performance (LHS)
                                                                                                                         %                                                KRW
Parent NP (KRWbn)                           22.4            31.7           37.1          61.5           71.7                            Stock price (RHS)
                                                                                                                         60                                              60,000
EPS (KRW)                                  1,818           2,574          2,727         4,396          5,126
                                                                                                                         40                                              50,000
Adj. EPS (KRW)                             1,818           2,574          2,727         4,396          5,126
                                                                                                                         20                                              40,000
PER* (x)                                4.7 - 1.0      13.0 - 3.2     14.9 - 5.9         11.3             9.7             0                                           30,000
PBR (x)                                       0.8             2.6            2.7           2.8            2.2   140      -20                                     120,000
                                                                                                                                                                      20,000
EV/EBITDA (x)                                 2.9             8.7            8.1           6.4            5.3   120      -40                                     100,000
                                                                                                                                                                      10,000
Div. Yield (%)                                1.8             0.5            0.4           0.3            0.4   100      -60                                     0
                                                                                                                                                            80,000
ROE (%)                                     19.9            22.8           19.6          28.0           25.2    80             3/11 5/11 7/11 9/11 11/11 1/12
                                                                                                                                                            60,000
ROIC (%)                                    21.3            33.2           26.3          37.2           39.3    60
                                                                                                                                                                 40,000
                                                                                                                40
Source: Company data, Hyundai Securities
                                                                                                                20                                               20,000
                                                                                                                 0                                               0
                                                                                                                 6/10    8/10 10/10 12/10 2/11         4/11   6/11




SEMCO (009150)                                                                                                                           BUY ( maintain)
Current price (Mar 9)                   KRW97,600           Avg T/O Vol (60d)                    721,124shrs          52wk high/low                              KRW122,000
Fair value                             KRW110,000           Avg T/O Val (60d)                    USD57.0mn                                                        KRW59,500
Market cap                               USD6.6bn           Foreign ownership                         18.3%           Beta (12M, daily return)                           0.9
Ordinary shares issued               74,693,696shrs         3yr CAGR of adj EPS (11~13)               -4.0%           Major shareholders
Free float                                   73.2%          Market's 3yr CAGR of adj. EPS              8.6%                     Samsung Electronics Co,.Ltd etc. 23.7%

FY-end                                     12/09A        12/10A          12/11F       12/12F         12/13F           Price performance              1M          3M              6M
(Reporting standard)                   (GAAP-P)          (IFRS-C)       (IFRS-C)     (IFRS-C)       (IFRS-C)          Absolute                     2.4%       14.8%           60.8%
OR (KRWbn)                               3,192.0          6,968.9        6,988.0      6,786.0        7,596.2          Relative                     2.2%        6.7%           44.4%
OP (KRWbn)                                 216.0            778.1          347.1        418.9          595.6
NP (KRWbn)                                 278.5            666.7          368.0        401.8          501.8             %              Relative performance (LHS)       KRW
Parent NP (KRWbn)                          278.5            554.7          349.4        393.1          492.3              10            Stock price (RHS)               140,000
EPS (KRW)                                  3,615            7,170          4,509        5,071          6,350                 0                                          120,000
Adj. EPS (KRW)                             3,615            7,170          4,509        5,071          6,350             -10
                                                                                                                                                                        100,000
PER* (x)                               31.4 - 9.2     22.3 - 12.7    30.6 - 13.1         19.2           15.4                                                            80,000
                                                                                                                         -20
                                                                                                                                                                        60,000
PBR (x)                                       3.2              2.8            1.5          1.6            1.4   140
                                                                                                                         -30
                                                                                                                                                                     120,000
                                                                                                                120                                                     40,000
EV/EBITDA (x)                               19.5               8.5            8.5          8.6            6.6            -40
                                                                                                                                                                     100,000
                                                                                                                                                                        20,000
Div. Yield (%)                                0.7              0.8            1.0          0.9            1.1   100
                                                                                                                         -50                                         80,000
                                                                                                                                                                        0
ROE (%)                                     12.3             16.0             9.4          9.1            9.9    80
                                                                                                                                 3/11 5/11 7/11 9/11 11/11 1/12 60,000
                                                                                                                 60
ROIC (%)                                    21.6             22.1             9.0          9.8          13.1                                                         40,000
                                                                                                                 40
Source: Company data, Hyundai Securities                                                                                                                             20,000
                                                                                                                 20
                                                                                                                  0                                              0
                                                                                                                  6/10   8/10 10/10 12/10 2/11         4/11   6/11




                                                                                                                                                 HYUNDAI Research                25
                                                                                                                                                                       >> Handset & Components




                                                                                        This page left blank intentionally.




 LG Electronics: Hyundai Securities issued equity-linked warrants (ELWs) and served as a liquidity provider (LP). SEMCO: Hyundai Securities issued equity-linked warrants (ELWs) and served as a liquidity provider (LP). Hyundai
 Securities has not disclosed the material contained in this report to any institutional investor or third party prior to its publication. The author(s) confirms that the material contained herein correctly represents his/her/their opinion
 and that it has been prepared without any undue influences or interventions. Hyundai Securities Co., Ltd. or any of its affiliates has not taken part in public offerings of the company(ies) covered in this report for the past 12
 months. The author(s) of this report does not have any interest in the company(ies) covered herein.
 Rating: Sector: Overweight (+10% or more), Neutral (-10 - +10%), Underweight (-10% or more) / Company: Strong BUY (+30% or more), BUY (+10 - +30%), Marketperform (-10 - +10%), Underperform (-10% or more)
         Strong BUY = 4, BUY = 3, Marketperform = 2, Underperform = 1, Blackout/Universe Exclusion = 0 (Share price —, Fair value , Rating —)
 All Hyundai Securities Research is available via the following electronic databases: Bloomberg, Thomson Reuters, FactSet. Contact your Hyundai Securities sales representative for access.
 This report has been prepared for informational purposes only, and does not constitute an offer or solicitation of a contract for trading. Opinions in this report reflect professional judgment at this date based on information and
 data obtained from sources we consider reliable. However, we do not guarantee that the information and data are accurate or complete, and, therefore, this report is subject to change without prior notice. Individual investment
 should be made based on each client’s own judgment, and we expressly disclaim all liability for any investment decisions and any results thereof. This report is a copyrighted material of Hyundai Securities Co. and, thus, it may
 not be reproduced, distributed, or modified without the prior consent of Hyundai Securities Co. This report is not prepared for academic purposes, and any third party wishing to quote from it for academic publications should
 receive the prior consent of Hyundai Securities Co.

                               Rating                                 Rating                                    Rating    KRW           SEMCO          Rating
  KRW                                    KRW          LG Innotek                KRW
             LG Electronics                                                                     Interflex
160,000                           4     250,000                           4    70,000                              4     200,000                           4

140,000                                                                        60,000
                                  3     200,000                           3                                        3     160,000                           3
120,000                                                                        50,000

100,000                           2     150,000                           2    40,000                              2     120,000                           2

80,000                                                                         30,000
                                  1     100,000                           1                                        1     80,000                            1
60,000                                                                         20,000
40,000                            0     50,000                           0     10,000                              0     40,000                           0
      10/3         11/3        12/3           10/3        11/3        12/3           10/3          11/3         12/3           10/3        11/3        12/3




                                                                                                                                                                                                      HYUNDAI Research                     26

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:30
posted:3/25/2012
language:English
pages:26