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October 18, 2012

Company Report

OCI (010060 KS)

Chemicals

Estimating the timing of a pickup
Daewoo Securities Co., Ltd.

Conditions for rebound in polysilicon prices
Polysilicon prices are falling steadily. While the top four global makers can fully
satisfy demand (as of 2012), second-tier companies are continuing to produce,
leading to an oversupply situation. Protectionism also accelerated the fall, as antidumping regulations, etc. against imported polysilicon kept import prices high and
caused demand to shrink.
Going forward, solar PV demand is anticipated to dictate polysilicon prices. If
crystalline solar PV demand exceeds 35GW, prices are expected to bounce back to
at least the mid-US$20/kg range, the average cost level of second-tier companies.
If demand stays below 25GW, prices may decline further to the mid-US$10/kg
range (the cash cost level of top- and second-tier firms), as companies are
anticipated to continue producing as long as prices remain above cash costs to
recover fixed costs. Thus, unlike third-tier companies that have already stopped
production, second-tiers are not likely to be driven out of the market anytime soon.
We forecast crystalline solar PV demand to reach 28GW in 2013 and 32GW in
2014, with the solar PV market picking up full swing after 2H13. In the past, solar
PV demand surged faster than expected when prices declined. In 2013, however,
European governments are not expected to raise subsidies significantly due to the
ongoing fiscal crisis, and spreading protectionism should slow demand growth.

3Q Review: OP fell short of estimates due to declining polysilicon prices
OCI’s 3Q operating profit fell below our estimate, coming in at W33bn. As
polysilicon prices are continuing to fall, operating profit is forecast to go down
further in 4Q. However, solar PV demand is projected to recover steadily in 2013,
and, thus, the company’s earnings should also improve towards 2H13.

Downgrade to Hold from Trading Buy
The solar PV industry is projected to remain in doldrums for the time being as
restructuring accelerates. In light of the grim industry outlook, we downgraded our
rating for OCI from Trading Buy to Hold and cut our earnings estimates. Given the
company’s strong fiscal soundness and cost competitiveness, however, estimating
the bottom level of its valuations may offer insight into when to start investing in
the stock again. Semiconductor and LCD industries have bottomed at a P/B of 0.7x.
Assuming that the polysilicon unit does not post operating losses for a prolonged
period of time, we expect that OCI will bottom at a P/B of 1x (or 0.7x if operating
losses continue).

Yeon-ju Park
+822-768-3061
yeonju.park@dwsec.com
Grace Kim
+822-768-3511
grace.kim@dwsec.com

Hold (Downgrade)
Target Price (12M, W)
Share Price (10/17/12, W)
Expected Return (%)
EPS Growth (12F, %)
Market EPS Growth (12F, %)
P/E (12F, x)
Market P/E (12F, x)
KOSPI
Market Cap (Wbn)
Shares Outstanding (mn)
Avg Trading Volume (60D, '000)
Avg Trading Value (60D, Wbn)
Dividend Yield (12F, %)
Free Float (%)
52-Week Low (W)
52-Week High (W)
Beta (12M, Daily Rate of Return)
Price Return Volatility (12M Daily, %, SD)
Foreign Ownership (%)
Major Shareholder(s)
S.H.Lee et al. (31.15%)

Price Performance
(%)
1M
Absolute
-17.8
Relative
-15.4
Key Business

Revenues
OP OP Margin
NP
EPS EBITDA FCF ROE P/E P/B EV/EBITDA
(Wbn) (Wbn)
(%) (Wbn) (Won) (Wbn) (Wbn) (%)
(x)
(x)
(x)
12/10
3,322
860
25.9
608 26,527
1,201 508 35.5 12.4
3.9
7.5
12/11
4,276 1,114
26.1
768 32,621
1,574 -389 28.8
6.7
1.6
4.1
12/12F
3,634
443
12.2
266 11,140
889 -224
7.7 14.5
1.2
5.9
12/13F
3,555
358
10.1
183
7,676
848 248
5.1 21.1
1.1
6.1
12/14F
4,130
774
18.7
536 22,486
1,266 711 13.9
7.2
1.0
3.7
Notes: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests
Source: Company data, KDB Daewoo Securities Research estimates

6M
-24.7
-23.1

12M
-29.7
-34.5

A global top-tier polysilicon manufacturer.

§ Earnings & Valuation Metrics
FY

162,000
0.0
-65.8
12.3
14.5
10.4
1,955.15
3,864
24
214
41
2.0
68.9
158,000
318,500
1.21
2.7
22.8

Share price
160

KOSPI

140
120
100
80
60
10/11

2/12

6/12

10/12

Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including the U.S.

000 1. Because Germany’s solar energy subsidies are passed on to consumers’ electricity bills. Italy has made a significant contribution to global demand growth in 2011.460 1.997 1. in our view. demand from Europe. Regional demand forecast 05 (MW) 06 07 08 09 10 11 12F 13F Japan 292 292 Germany 837 960 Italy 6 60 Spain 35 110 USA 105 140 China 15 20 India 16 12 World 1. the Chinese government has filed an anti-dumping complaint against US and Korean polysilicon makers. With solar PV oversupply dragging on.000 500 1.000 4.328 87 428 220 32 17 2. 2012). Although demand is growing strongly in China and the US… In 2012. putting a damper on demand.100 7.750 2.500 5.000 700 7. demand appears to have decelerated in 2H largely due to subsidy cutbacks. The Chinese government has been working to stimulate demand as part of an effort to protect its domestic industry.000 1. As such.000 5. In Germany. has been slowing in 2H.500 31. Another risk is trade disputes between the US. we see robust demand growth in China and the US. China.000 500 6. which should push up solar PV generation costs and heighten uncertainties. Solar PV demand has been affected mainly by European governments’ subsidies. We also project US demand to grow to 4GW in 2012 on the back of solar power’s improved economic viability. 30GW installed so far).685 226 1.October 18.000 500 4. demand could expand at a faster-than-expected rate over the next several years.281 350 69 32 5. after a strong 1H that saw total installed capacity reach 4GW.000 27. KDB Daewoo Securities Research 2 . aided by superior cost competitiveness.500 400 900 569 105 15. when the country’s solar PV consumption increased to 9GW. trade disputes are expected to persist. However.600 2.500 3. Since the solar PV market has a relatively low technological entry barrier. we revised down our estimates for Europe to reflect subsidy reductions in Germany and Italy. while supply has been driven by Chinese module makers.000 100 27. October 12. and Europe.531 340 2. the increase in installation is expected to drive up the country’s annual per-consumer electricity costs by an average of more than EUR50 in 2013 (Bloomberg. Meanwhile.500 4. Chinese makers have expanded market share rapidly. In contrast to solid demand from China and the US.500 9. …subsidy cuts in Germany and Italy are likely to dampen demand in 2H On the other hand.000 1. there are now forecasts that Italy’s solar power budget will be completely depleted by 1Q13 (based on an October 15th article in PV magazine).000 7.520 450 3. We expect China’s solar PV demand to climb from 2GW in 2011 to 5GW in 2012. 2012 OCI Subsidy cuts in Europe and trade disputes suggest demand will slow We modestly lower our solar PV demand forecasts to 28GW for 2012 and 32GW for 2013.808 Source: KDB Daewoo Securities 230 1. Budgetary pressures have also given rise to a proposed bill that would cap the amount of subsidies once total installment meets the government target (52GW cumulative. Table 1.496 1. As such. and the EU is also considering similar actions. the US government has imposed anti-dumping duties on Chinese solar PV modules.800 Regional trade disputes will also negatively affect solar PV demand. which had accounted for the bulk of global demand.300 450 150 500 200 50 6.

The EU’s anti-dumping investigation will be concluded in 1Q~2Q next year.5 1. 2012 OCI Trade disputes to drive up costs and uncertainty We expect trade disputes among countries to dent solar PV demand growth. leaving inventories low in the supply chain. Polysilicon and module prices Figure 2. Figure 1. One of the reasons behind the recent plunge in polysilicon prices is that polysilicon makers have dumped inventories ahead of the EU’s anti-dumping ruling. Shipments by Trina Solar (Chinese module maker) (2012F) (US$/kg) 90 Polysilicon Module (R) (US$/watt) 2.0 3/09 9/09 3/10 9/10 3/11 Source: PV Insight KDB Daewoo Securities Research 9/11 3/12 9/12 Source: Trina Solar 3 .October 18. as: 1) Trade disputes would block imports of low-priced Chinese modules.5 0 0. it could protect US or European module makers’ profit margins but would negatively affect final demand. easing uncertainty.0 30 0. driving up overall solar power generation costs and weighing on demand. 2) Uncertainty has been mounting.0 60 1.5 2. If US or European companies use their domestically produced modules.

519 224.512 15.130 34.000 3.000 11.750 27.454 27.520 828 4.414 34. second-tier makers.400 8.tier 1 (MW) Available PV production .750 2.007 5.731 14. in order for a robust market recovery to materialize.450 1.450 1.450 1.571 5.000 59.500 11.122 4.985 48.000 67.500 13. the problem is that the combined annual capacity (28GW) of the top four polysilicon makers is sufficient to meet solar PV demand in 2012 (bulk-type demand is estimated at 25GW).000 7. Top-four makers’ combined annual capacity alone can meet solar PV demand in 2012 However.000 1.200 3.122 62.150 17.000 20. are unlikely to suspend production anytime soon.000 52.550 8 4.302 37.500 5.tier 1~2 (MW) Available PV production .036 4.871 20.450 1.500 28.000 3.250 3.000 30.800 3.400 8. which have relatively solid cost competitiveness and sound financials. solar PV demand would need to expand to more than 35GW.997 1.000 3.513 305. Those with less cost competitiveness started to suspend production.064 Tier 2 MEMC REC Tokuyama Mitsubishi Sumitomo 8.318 46. Table 2.500 35.000 22.000 22.495 1.950 29.085 137.October 18. MEMC.496 2.800 3.141 16.000 11.350 24.476 91.000 3.604 32.000 42.850 30.354 144.200 3.064 43.total (MW) PV demand (MW) PV demand: Thin film (MW) PV demand: Bulk type (MW) Oversupply (MW) Source: KDB Daewoo Securities KDB Daewoo Securities Research 50.300 8.900 8.242 9. Conditions for a market recovery In our view.200 3.300 12.3 17.150 95.890 202.000 1.2 8.964 3.300 19.850 19.502 14.000 60.815 248.000 3.500 3. Most small polysilicon makers have suspended operations.074 23.000 7.502 35.727 45.382 8.300 11.500 5.022 4.865 38.050 8.973 6 28.000 3.000 3.) should reach 35GW.000 11.800 34.163 37.000 10.000 57.173 8 1.800 26.000 16.000 8.207 4 . 2012 OCI A full-fledged market recovery unlikely until 2H13 Polysilicon makers have been reducing supply since the solar PV industry entered a down cycle in 1Q11.085 300.879 24.450 6. Although third-tier makers have suspended production.450 29. Polysilicon supply/demand outlook (MW) 08 09 10 11 12F 13F Capacity Tier 1 Hemlock Wacker OCI GCL 13.648 27.000 3.476 8.590 27.254 25.063 17.500 Tier 3 LDK Renesola Daqo Hankook Silicon Woongjin Polysilicon Samsung Fine Chemicals-MEMC Hanwha Chemical Other Total Tier 1 capacity Tier 2 capacity usage per watt (g/W) For semiconductor Available PV production .350 33.000 52. The combined capacity of the top four plus second-tier makers (REC.500 8.000 6.300 8.500 8.692 -570 6.500 3.500 3.300 8.500 27.200 3.648 31.000 2.000 14. or second-tier makers would have to reduce production sharply.350 31.985 43.000 19.450 1. and first-tier makers have recently lowered capacity utilization amid a plunge in prices.450 1. etc.413 48.844 40.8 32.

Polysilicon cash cost curve and demand forecast Cost (US$/kg) 35 25GW 30GW 35GW 40GW 20GW 25GW 30GW 35GW 40GW PV demand (GW) 30 30 25 25 20 20 15 15 10 0 50 100 150 200 250 300 0 50 100 150 Cumulative capacity (k MT) Source: KDB Daewoo Securities Source: KDB Daewoo Securities Figure 5. If demand stays below 25GW. easing the supply glut in a short period of time. insufficient funds flowing through the supply chain.October 18. Compared to the semiconductor and LCD industries. But prices to fall to cash cost levels if solar PV demand stays below 25GW If solar PV demand exceeds 35GW (based on crystalline-type. top-tier firms may continue to report losses until the second-tiers are driven out of the market (as was witnessed in the past in the semiconductor and LCD markets). as companies are anticipated to continue producing as long as the prices remain above the cash cost level to recover fixed costs. 2012 OCI Polysilicon price outlook in 2013 Polysilicon prices have fallen below OCI’s cost estimates recently. Going forward. and high levels of inventories all appear to have contributed to the fall. we expect polysilicon prices to be dictated by solar PV demand. However. Once economic feasibility is secured. 38GW if thin-film type is included). in light of the Euro zone fiscal crisis and the spread of protectionism. prices may decline further to the mid-US$10/kg range (the cash cost level of top and second-tier firms). Polysilicon prices to rebound if crystalline solar PV demand exceeds 35GW. we forecast crystalline solar PV demand at only 28GW in 2013 and 32GW in 2014. trade disputes. REC’s polysilicon cost estimates based on FBR Figure 6. the average cost level of second-tier companies. the solar PV industry is subject to high demand volatility. Polysilicon all-in cost curve and demand forecast Cost (US$/kg) 35 PV demand (GW) 20GW Figure 4. Figure 3. 5/2012 Source: GT Solar. If this trend continues for a prolonged period of time. polysilicon prices are expected to bounce back to at least the mid-US$20/kg range. solar PV demand tends to grow faster than expected. Tepid demand from Europe. 2Q12 KDB Daewoo Securities Research 200 250 300 Cumulative capacity (k MT) 5 . Cost estimates of GT Solar Source: REC.

assuming that the polysilicon unit does not post operating losses for a prolonged period of time (if operating losses continue). Figure 7. Thus. ROE-P/B chart of SK Hynix LG Display (%) 4 P/B (L) 40 (x) Hynix 3 (%) 80 P/B (L) ROE (R) ROE (R) 50 3 20 2 20 -10 2 0 1 -40 1 -70 0 -20 04 06 08 10 12 0 -100 00 02 04 06 08 Source: QuantiWise. As less competitive makers are forced to shut down their businesses. we calculated the company’s enterprise value by adding the value of the polysilicon unit (W2tr. Restructuring is anticipated to continue for the time being due to severe oversupply.4tr). there are up cycles and down cycles in any business. KDB Daewoo Securities Figure 9. As the solar PV industry has higher growth potential than the semiconductor or LCD industries. Moreover. export-driven companies (such as Korean makers) suffer due to global trade protectionism. 2012 OCI Forecasting a valuation bottom Solar PV industry faces short-term risks Short-term risks to the solar PV industry appear to be looming. LG Display and SK Hynix (representative cyclical stocks) bottomed at a P/B of 0.October 18.7x. below-cost sales and receivables-related losses may disrupt the market. estimating the bottom of valuations should offer a useful insight to investors. Semiconductor and LCD industries bottom at a P/B of 1x However. a 30% discount to tangible assets). KDB Daewoo Securities Source: QuantiWise. Those who survive a downcycle will eventually reap the fruits of the growing industry. ROE-P/B chart of LG Display (x) Figure 8.1tr). In deriving our estimate. and deducted net borrowings (W1. Solar system cost and cost structure in Germany Figure 10. Regional grid parity estimates Source: REC Source: REC KDB Daewoo Securities Research 10 12 14 6 . to the value of other businesses (W2. we estimate that OCI will bottom at a P/B of 1x.

850.00 1.9 94 33 23.8 17.4 21.5 38 14 25 -1.8 19.2 22.4 -529.375.60 OCI 644. Green Energy Technology Inc.October 18.8 25 91.4 711.8 4.9 10.100.00 1.837.6 16.00 7.348.80 761.00 12.3 2.5 19 1.8 618.706.202.4 3.750. Deutsche Solar AG Wuxi Suntech Power Co. Ltd.140.6 5.8 1 -31.8 24 14.1 918 958.275.2 37 19.8 15 17 -15.7 203.00 1..3 179..50 257.950.069.1 18.1 631.2 3.4 20.10 3.2 14.6 -2.4 43 67 109.7 -105 Polysilicon cost Sales volume US$/W 20.8 699.1 -8.100.650.5 Polysilicon Non-polysilicon OCI Materials Others 53.008.555.7 800.70 -25.7 21.5 -36.00 30 24 22 18 18 20 22 24 23.3 10.2 81.3 13.2 177.8 8.1 10 10.4 22 14.2 177. Wuxi Suntech Power Co.60 1.00 9.5 45.8 559.60 1.90 226.8 -15.9 -32.00 20.9 371.2 12.00 20.60 1.511.8 365.7 458.00 1.1 10.7 504.50 45.6 17.8 10.8 -6.3 251.6 14.442. Nexolon Co.4 23.4 10.9 126.00 1.6 149.4 Polysilicon Total Table 5.3 6 10 23.336.8 21.1 773.6 16 24.6 38 16.1 19.8 2.5 16 31.135.90 1.4 23.00 1.2 177.2 13.9 177.5 215.850.1 3.6 53.5 10.6 40.2 -18.00 1.7 3.3 100.6 8.00 35.1 3 5.7 14.8 531 165.2 22.9 22.2 28.1 18.2 100 585.9 280.3 16.2 2.5 45.513.. Quarterly earnings and forecasts of OCI Revenues 2Q12 3Q12P 4Q12F 1Q13F 2Q13F 3Q13F 4Q13F 2012F 2013F 2014F Total 890.9 147.00 1.100.8 87.5 751.00 10.100.5 889.448. Wbn.30 5.8 138.2 81.4 364.50 302 711.7 OCI Polysilicon Non-Polysilicon OCI Materials Others 8.70 509.4 177.00 1.2 26.025.1 368 81.3 362 81.5 790. %) 1Q12 Major assumption 9.129.087.2 334 365.10 479 31.00 1.100.958.3 7.00 1.8 7.3 10.5 45.8 177.8 594 226.00 1. %) Polysilicon price 30 25 20 15 10 Revenues Operating profit OP margin 1. Sino-American Silicon Products Inc.4 608.00 Sales Operating profit OP margin Source: KDB Daewoo Securities 3.5 45.5 13.00 872.Ltd.2 177.100.2 711.6 19.00 20.454.4 577.1 10.7 853.7 36 18 25 96.1 13.275.40 4.8 32.3 7.30 332.9 71. Nexolon Co.2 -38.850.3 3.4 19.7 9.131.9 800.8 100 Total 11.100.6 24.2 81.00 20.8 81.4 7.6 25.4 9.50 -277.2 177.1 0. Earnings estimate sensitivity analysis (2013F) (US$/kg. Ltd.6 866.5 45.2 -17.5 756.1 Polysilicon Non-polysilicon OCI Materials Others Operating profit Total OCI OP margin (Wbn.00 12. 2012 OCI Table 3.4 73.Ltd.5 58.2 25 66.8 30..70 7 .7 1.100.6 14.00 1.5 10.1 3.850.9 61 98.00 10.8 24 20.031.00 54.80 1.850.463.100.850.100.052.850.30 365.50 1.Ltd.8 659 306.9 35.4 508.1 -0.1 352.00 Source: KDB Daewoo Securities Table 4.4 23.5 67.3 -2.9 18 1.9 12 14..100.9 0.126.2 3.3 358.9 -55.4 3.2 14.8 541. Deutsche Solar AG. Major long-term supply contracts of OCI Contract counterparts Nexolon Co.8 246.4 17.6 -53.6 334.260.2 25 22.650.1 818.9 -6. Comtec Solar (Hong Kong) Limited Total Source: OCI KDB Daewoo Securities Research (US$mn) Contract period Contract price 2008~2014 2009~2015 2009~2016 2009~2015 2010~2016 2010~2016 2010~2016 2010~2016 2011~2015 2012~2018 404.4 184.4 356.1 20.50 8.8 36.604.3 10.4 19.10 -247.4 1.6 38.100.

7 172.060 3.636 1.9 136.330 7.5 49.114 -71 37 11 1.2 1.032 861 1.640 137.1 25.823 12/13F 2.2 23.593 2.7 18.798 1.1 18.600 802 3.574 -389 36.7 Statement of Financial Condition (Summarized) 12/14F 4.403 1.984 12/14F 2.2 3.5 2.6 13.6 1.7 21.549 3.0 32.2 16.787 572 475 345 69 5.742 1.870 -802 -483 -475 Chg in PP&E -1.348 2.5 28.2 7.0 28.1 6.720 12/12F 1.250 3.003 1.557 42.6 28.7 38.754 594 353 241 252 -72 29 4 222 38 183 0 183 103 80 174 95 79 698 -523 20.9 1.585 85 5.0 12/12F 3.5 10. Plant and Equipment Intangible Assets Total Assets Current Liabilities AP & Other Payables Short-Term Financial Liabilities Other Current Liabilities Non-Current Liabilities Long-Term Financial Liabilities Other Non-Current Liabilities Total Liabilities Controlling Interests Capital Stock Capital Surplus Retained Earnings Non-Controlling Interests Stockholders' Equity 12/11 1.250 6.2 1.368 133. KDB Daewoo Securities Research estimates KDB Daewoo Securities Research (Wbn) Current Assets Cash and Cash Equivalents AR & Other Receivables Inventories Other Current Assets Non-Current Assets Investments in Associates Property.335 127 824 2.198 203 8.2 8 .8 75.555 2.946 605 4.043 179 865 0 865 768 97 869 772 97 1.372 1.7 6.724 1.0 2.3 8.478 360 1.1 4.660 85 5.621 4.0 -86.5 3.4 29.October 18.1 -55.6 4.0 2.7 86.012 3.5 -77.1 7.219 89 4.181 185 7.9 15.986 390 606 441 88 5.485 3. 2012 OCI OCI (010060 KS/Hold) Comprehensive Income Statement (Summarized) (Wbn) Revenues Cost of Sales Gross Profit SG&A Expenses Operating Profit (Adj) Operating Profit Non-Operating Profit Net Financial Income Net Gain from Inv in Associates Pretax Profit Income Tax Profit from Continuing Operations Profit from Discontinued Operations Net Profit Controlling Interests Non-Controlling Interests Total Comprehensive Profit Controlling Interests Non-Controlling Interests EBITDA FCF (Free Cash Flow) EBITDA Margin (%) Operating Profit Margin (%) Net Profit Margin (%) 12/11 4.8 10.0 10.807 145 7.3 93.1 13.250 3.1 6.8 91.276 2.1 4.4 28.8 8.453 588 644 220 2.163 165 7.415 447 3.320 Source: Company data.247 154.725 51.200 3.224 Net Profit 865 183 248 598 Non-Cash Income and Expense 743 535 600 668 Depreciation 451 451 482 483 Amortization 5 6 8 9 Others -119 -34 0 0 Chg in Working Capital -20 67 30 84 Chg in AR & Other Receivables -166 118 -29 -81 Chg in Inventories -139 128 -21 -59 Chg in AP & Other Payables 40 126 29 79 Income Tax Paid -181 -151 -52 -126 Cash Flows from Inv Activities -1.890 127 823 2.266 688 30.2 231.458 127 823 2.7 12.5 7.9 14.5 3.0 23.8 3.624 85 5.1 8.4 27.127 353 774 774 -50 42 0 724 126 598 0 598 518 80 589 510 79 1.075 489 403 183 2.6 11.7 23.130 3.8 7.5 4.993 23.2 15.600 1.577 1.513 1.036 461 403 173 2.5 7.118 1.4 28.1 8.478 27.907 3.1 4.8 26.1 46.4 42.0 1.4 6.0 3.495 Forecasts/Valuations (Summarized) P/E (x) P/CF (x) P/B (x) EV/EBITDA (x) EPS (W) CFPS (W) BPS (W) DPS (W) Payout ratio (%) Dividend Yield (%) Revenue Growth (%) EBITDA Growth (%) Operating Profit Growth (%) EPS Growth (%) Accounts Receivable Turnover (x) Inventory Turnover (x) Accounts Payable Turnover (x) ROA (%) ROE (%) ROIC (%) Liability to Equity Ratio (%) Current Ratio (%) Net Debt to Equity Ratio (%) Interest Coverage Ratio (x) 12/11 12/12F 12/13F 12/14F 6.7 92.0 2.7 9.376 127 823 2.205 1.013 742 504 367 74 5.3 7.7 -21.2 31.1 4.5 208.364 386 3.7 62.844 712 353 358 358 -58 50 0 300 52 248 0 248 168 80 239 160 79 848 288 23.6 Cash Flows (Summarized) (Wbn) 12/11 12/12F 12/13F 12/14F Cash Flows from Op Activities 1.5 3.407 635 826 1.9 23.505 526 3.5 187.184 568 403 213 2.6 8.652 3.731 134.600 866 3.037 21.3 116.320 585 426 85 5.7 17.1 12/13F 3.622 -959 -500 -500 Chg in Intangible Assets -28 -28 -28 -28 Chg in Financial Assets -256 134 0 0 Others 36 50 44 53 Cash Flows from Fin Activities 432 351 -172 -172 Chg in Financial Liabilities -85 476 0 0 Chg in Equity 696 2 0 0 Dividends Paid -106 -53 -78 -78 Others -73 -79 -95 -95 Increase (Decrease) in Cash -31 182 170 577 Beginning Balance 421 390 572 742 Ending Balance 390 572 742 1.

Ltd. Buy (▲). Past performance is not a guide to future performance. Ltd. the original Korean language report may have been made available to investors in advance of this report. in each case either as principals or agents. Information and opinions contained herein are subject to change without notice and no part of this document may be copied or reproduced in any manner or form or redistributed or published. employees and agents may have long or short positions in any of the subject securities at any time and may make a purchase or sale. Analyst Certification The research analysts who prepared this report (the “Analysts”) are registered with the Korea Financial Investment Association and are subject to Korean securities regulations. Daewoo Securities has no other special interests in the covered companies. among other business units. or offer to make a purchase or sale. Ltd. Daewoo. its common practices. (“Daewoo”).. Information and opinions contained herein have been compiled from sources believed to be reliable and in good faith. Daewoo Securities Co. KDB Daewoo Securities Research 9 . but with volatility 800. in part based on the analyst’s estimate of future earnings. express or implied. Target price (----). as well as general market and economic conditions.000 Neutral Fundamentals are steady without any material changes 0 Underweight Fundamentals are unfavorable or worsening 10/10 OCI 4/11 10/11 4/12 10/12 * Ratings and Target Price History (Share price (----). the Analysts receive compensation that is impacted by overall firm profitability.. business relationships with the subject companies to provide investment banking. or will be directly or indirectly related to the specific recommendations or views contained in this report but. laws and accounting principles and no person whose receipt or use of this report would violate any laws and regulations or subject Daewoo and its affiliates to registration or licensing requirements in any jurisdiction should receive or make any use hereof. Daewoo Securities Co. This report is for general information purposes only and it is not and should not be construed as an offer or a solicitation of an offer to effect transactions in any securities or other financial instruments. the Analysts have not received any compensation or any other benefits from the subject companies in the past 12 months and have not been promised the same in connection with this report.000 Hold Relative performance of -10% and 10% 600. the Analysts do not know or have reason to know of any actual. investment banking. and a loss of original capital may occur. Future returns are not guaranteed.000 Sell Relative performance of -10% 400. They are neither registered as research analysts in any other jurisdiction nor subject to the laws and regulations thereof. No part of the compensation of the Analysts was. Stock Ratings Industry Ratings Buy Relative performance of 20% or greater (W) Trading Buy Relative performance of 10% or greater. a broker-dealer registered in the Republic of Korea and a member of the Korea Exchange. its affiliates and their directors. without the prior written consent of Daewoo. Opinions expressed in this publication about the subject securities and companies accurately reflect the personal views of the Analysts primarily responsible for this report. has acted as a liquidity provider for equity-linked warrants backed by shares of OCI as an underlying asset. Daewoo and its affiliates may have had. material conflict of interest of the Analyst or Daewoo Securities Co. its affiliates and their directors. As of the publication date. which includes revenues from. issued equity-linked warrants with OCI as an underlying asset. the institutional equities. Disclaimers This report is published by Daewoo Securities Co. and other than this.. Ltd. proprietary trading and private client division. officers. Daewoo.000 Overweight Fundamentals are favorable or improving 200. and the Analysts do not serve as an officer. * The target price was determined by the research analyst through valuation methods discussed in this report. Trading Buy (■). director or advisory board member of the subject companies. The price and value of the investments referred to in this report and the income from them may go down as well as up. employees and agents do not accept any liability for any loss arising from the use hereof. in whole or in part. At the time of publication of this report. The intended recipients of this report are sophisticated institutional investors who have substantial knowledge of the local business environment. Sell (◆)) * Our investment rating is a guide to the relative return of the stock versus the market over the next 12 months. 2012 OCI Important Disclosures & Disclaimers Disclosures As of the publication date. market-making or other financial services as are permitted under applicable laws and regulations. representation or warranty. Not covered (■). is. except as otherwise stated herein. of any such securities or other financial instruments from time to time in the open market or otherwise. like all employees of Daewoo Securities. and investors may realize losses on any investments. we may call a trading opportunity in case there is a technical or short-term material development. * Although it is not part of the official ratings at Daewoo Securities. The achievement of the target price may be impeded by risks related to the subject securities and companies. officers. policy prohibits its Analysts and members of their households from owning securities of any company in the Analyst’s area of coverage. Daewoo Securities Co. completeness or correctness of the information and opinions contained herein or of any translation into English from the Korean language. Ltd.. Hold (●)..October 18. Except as otherwise specified herein. Daewoo Securities has no other special interests in the covered companies. or may be expecting to enter into. accuracy. and other than this. but such information has not been independently verified and Daewoo makes no guarantee. as to the fairness. If this report is an English translation of a report prepared in the Korean language.

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