Regional Company Focus

Yuhan Corporation
Bloomberg: 000100 KS Equity | Reuters: 000100.KS

Refer to important disclosures at the end of this report

DBS Group Research . Equity 7 Nov 2018

BUY, KRW250,000 KOSPI: 2,089.6 Licensing of new lung cancer drug

(Closing price as of 06/11/18)
Price Target 12-mth: KRW290,000 (prev. KRW230,000) boosts prospects
Reason for Report: Licensing of YH25448 (Lazertinib) to Janssen • Development milestones expected from 2019 upon
Potential catalyst: Global commercialisation of YH25448 initiation of global Ph3 trial for YH25448
Where we differ: We are more conservative than the market for FY19F
and FY20F earnings forecasts
• Despite subdued earnings, R&D momentum to
Analyst
underpin share price
Regional Research Team • Retain BUY, TP raised to KRW290,000
equityresearch@dbs.com
EGFR inhibitor YH25448 (Lazertinib) licensed to Janssen. YH25448 is a
rd
3 -generation epidermal growth factor receptor (EGFR) inhibitor. During
Price Relative a Phase 2 clinical study in Korea for non-small cell lung cancer (NSCLC)
350,000 220 patients with EGFR gene mutation, it was licensed out to Janssen
200
300,000
180
Biotech for US$1.26bn with an upfront payment of US$50m (to be
250,000
200,000
160 reflected in 4Q18). YH25448 was originally licensed in from Oscotec’s
140 US subsidiary Genosco in 2015 and 40% of the licensing profits from
150,000
120
100,000 100 Janssen will be paid to Oscotec and Genosco. While the upfront
50,000 80 payment only makes up 4% of the deal, development milestones
0 60
Nov-14 May-15 Nov-15 May-16 Nov-16 May-17 Nov-17 May-18 account for a larger portion than sales milestones, which should result in
Stock price(LHS,KRW) Rel. to KOSPI(RHS,pts)
a high initial cash inflow. Yuhan is likely to receive development
Forecasts and Valuation milestone payments upon Phase 3 study in 2019.
FY Dec (KRW bn)
2017A 2018F 2019F 2020F Commercialisation by 2022, with plans for co-administration study.
Revenue 1,452.0 1,546.0 1,581.2 1,672.4 After the domestic Phase 2 study in 2018, a global Phase 3 study for
EBITDA 106.1 124.5 88.6 93.2
Operating profit 80.4 89.8 50.6 54.1 YH25448 led by Janssen should commence in 2Q19, with
Pre-tax Profit 145.7 149.0 106.9 111.2 commercialisation expected in 2022. In tandem with the drug’s
Net Profit 110.7 117.6 79.5 82.6 single administration study, a co-administration clinical trial for
Net Pft (Pre Ex.) 110.7 117.6 79.5 82.6 YH25448 and Janssen’s JNJ-61186372 will be conducted. JNJ-
Net Pft Attributable to 61186372 is an EGFR (F405L)-cMET (K409R) bispecific antibody to
Controlling Interest 110.7 117.6 79.5 82.6
treat cancer, and is under a global Phase 1 trial.
EPS (KRW) 9,096 9,590 6,469 6,727
EPS Pre Ex. (KRW) 9,096 9,590 6,469 6,727 Global co-administration trial is key to YH25448’s value. In EGFR-
EPS Gth (%) -9.7 5.4 -32.5 4.0 mutant, NSCLC-resistant xenograft models, JNJ-61186372 has proven
EPS Gth Pre Ex (%) -9.7 5.4 -32.5 4.0 rd
to be more effective when used with Tagrisso (a well-known 3 -
Diluted EPS (KRW) 9,096 9,590 6,469 6,727
Net DPS (KRW) 2,000 2,000 2,000 2,000 generation EGFR inhibitor) rather than on its own. Given YH25448’s low
BV Per Share (KRW) 118,186 124,956 129,523 134,326 toxicity, we believe that Janssen views the strong likelihood of success in
PE (X) 24.1 26.1 38.6 37.2 JNJ-61186372 and YH25448’s co-administration.
PE Pre Ex. (X) 24.1 26.1 38.6 37.2
P/Cash Flow (X) 23.3 29.0 31.9 30.9 Higher TP on new drug’s value. Given the strong chances of
EV/EBITDA (X) 21.3 20.9 29.2 27.5 YH25448’s commercialisation, we reflect 60% of the drug’s adjusted
Net Div Yield (%) 0.9 0.8 0.8 0.8 net present value (KRW600bn) assuming the drug’s Ph.3 trial success
P/Book Value (X) 1.9 2.0 1.9 1.9 probability at 33%, and raise our SOTP-based TP to KRW290,000.
Net Debt/Equity (X) CASH CASH CASH CASH
ROE (%) 7.7 7.7 4.9 4.9
Although sluggish earnings may continue until 1H19, R&D
momentum from the initiation of YH25448’s global Phase 3 trial
Earnings Rev (%): 31.3 0.0 0.1 should support the company’s share price.
Consensus EPS (KRW): 6,133 10,202 10,700
Other Broker Recs: B : 17 S:0 H:4 At A Glance
ICB Industry: Biotech & Pharma Issued Capital (m shrs) 12.21
ICB Sector: Health Care Mkt. Cap (KRWbn/US$m) 3,052/2,714
Principal Business: Yuhan Corporation manufactures and markets Major Shareholders
various pharmaceutical products on its own and through joint Yuhan Foundation and 2 others (%) 15.6
ventures with other global pharmaceutical companies. The Free Float (%) 56.67
Company also produces personal care products, dietary
supplements, and veterinary medicines. Avg. Daily Vol.(‘000) 2,275
Source of all data: Company, DBS Bank, Bloomberg Finance L.P

ed-KK/ sa- CS / LEY

Company Focus
Yuhan Corporation

Earnings forecasts
Unit: KRW bn, %
2016 2017 2018F 2019F 2020F 2021F 2022F
Revenue 1,312 1,452 1,546 1,581 1,672 1,762 1,849
OP 72 80 90 51 54 57 61
EBITDA 93 106 125 89 93 96 100
NP 122 111 118 79 83 85 89
Total assets 1,698 1,810 1,960 2,034 2,111 2,191 2,275
Total equity 1,391 1,488 1,582 1,639 1,699 1,762 1,828
Net debt (453) (455) (516) (530) (548) (576) (606)
Revenue growth 17.0 10.7 6.5 2.3 5.8 5.3 5.0
OP margin 5.5 5.5 5.8 3.2 3.2 3.2 3.3
Net margin 9.3 7.6 7.6 5.0 4.9 4.9 4.8
EPS growth 13.9 (9.7) 5.4 (32.5) 4.0 3.5 4.0
ROE 9.1 7.7 7.7 4.9 4.9 4.9 4.9
Note: Based on parent K-IFRS
Source: DBS Bank

Page 2
Company Focus
Yuhan Corporation

Yohan Corp: SOTP valuation (previous)

Value Per-share
Proportion Valuation method
(KRW bn) value (KRW)
12-month forward target EV/(EBIT+R&D) of 7.4x applied
A. Operating value 1,251.6 118,623 50.9% (30% discount to 10-year (2005-2014) average multiple of
large-cap health care companies under our coverage)

B. Non-operating value 1,206.7 114,366 49.1%

Stakes in affiliates 493.1 46,730 20.1%
2018F PE of 13x applied to NP excluding 1Q one-off cost
Yuhan Kimberly (30%) 375.9 35,624 15.3% (50% discount to the weighted average 2018F PE of
AmorePacific and LG Household & Healthcare)
Yuhan Chemical (100%) 63.4 6,011 2.6% Book value
Others 53.8 5,095 2.2% Book value
Shares owned (investment securities) 135.1 12,800 5.5%
Genexine (2.5%) 37.8 3,587 1.5% Current price
Theragen Etex (9.2%) 23.3 2,206 0.9% Current price
Bioneer (6.4%) 9.6 908 0.4% Current price
Coson (12.3%) 26.0 2,461 1.1% Current price
Others 38.4 3,638 1.6% Non-listed, based on book value
Idle properties 90.7 8,594 3.7% Plant site in Gunpo, based on book value
Net cash 487.9 46,241 19.8% End-2018 estimate
C. Total enterprise value (A+B) 2,458.3 232,989 100.0%
D. Creditor value - - -
E. Shareholder value (C-D) 2,458.3 232,989 100.0%

Source: DBS Bank

Yohan Corp: SOTP valuation (revised)
Value Per-share
Proportion Valuation method
(KRW bn) value (KRW)
12-month forward target EV/(EBIT+R&D) of 7.4x applied
(licensing profit excluded)
A. Operating value 1,251.6 118,623 41.1%
(30% discount to 10-year (2005-2014) average multiple of
large-cap health care companies under our coverage)

B. YH25448 (Lazertinib) value 572.6 54,272 18.8% Licensed out to Janssen for US$1.26bn

C. Non-operating value 1,217.9 115,430 40.0%

Stakes in affiliates 493.1 46,730 16.2%
2018F PE of 13x applied to NP excluding 1Q one-off cost
Yuhan Kimberly (30%) 375.9 35,624 12.4% (50% discount to the weighted average 2018F PE of
AmorePacific and LG Household & Healthcare)
Yuhan Chemical (100%) 63.4 6,011 2.1% Book value
Others 53.8 5,095 1.8% Book value
Shares owned (investment securities) 146.3 13,864 4.8%
Genexine (2.5%) 39.9 3,782 1.3% Current price
Theragen Etex (9.2%) 26.8 2,538 0.9% Current price
Bioneer (6.4%) 12.0 1,138 0.4% Current price
Coson (12.3%) 29.2 2,769 1.0% Current price
Others 38.4 3,638 1.3% Non-listed, based on book value
Idle properties 90.7 8,594 3.0% Plant site in Gunpo, based on book value
Net cash 487.9 46,241 16.0% End-2018 estimate (excl. licensing profit from Janssen)
D. Total enterprise value (A+B+C) 3,042.2 288,326 100.0%
E. Creditor value - - -
F. Shareholder value (D-E) 3,042.2 288,326 100.0%
Source: DBS Bank

Page 3
Company Focus
Yuhan Corporation

Yohan Corp: YH25448’s (Lazertinib) value

< Key assumptions for valuing YH25448 (Lazertinib) >
1. Target market
① NSCLC (Non-small cell lung cancer)
② Applied market research firm EvaluatePharma's estimates: NSCLC market US$7.7bn in 2015 → US$35.4bn in 2024
2. Janssen Biotech license deal: US$1.26bn in total (Apart from upfront payment, licensing profits are based on our assumptions as details have yet to be
disclosed)
① An initial upfront payment of US$50m to be paid in 4Q18, 40% of which will be paid to Oscotec and Genosco
② Development and sales milestones to total US$1.21bn
- Assuming development milestones 60%, sales milestones 40%
- Assuming development milestones to be paid in 2021 at once, and sales milestones in 2028
③ Royalty after product roll-out: Assumed to be 10-15%
3. Peak market share (7%) to be reached seven years after the roll-out (50% of rival product Tagrisso's market share), profits to be generated for 15
years after the roll-out
4. NPV discount at 10%, success probability for its Phase 3 clinical study assumed at 33% (based on 2016 US biotech association's statistics) given its
Phase 2 study completion in the near future
5. 60% of the licensing profits will be paid to Yuhan Corp

(US$ bn / KRW bn) 2015 2016 2017 2018 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2036
NSCLC Target market 7.7 11.5 14.0 18.7 28.5 30.3 32.5 35.4 38.6 42.1 45.5 49.2 53.1 57.0 84.1
YOY 48.4% 21.5% 33.8% 10.6% 6.3% 7.2% 9.0% 9.0% 9.0% 8.1% 8.1% 8.1% 7.3% 5.9%
Janssen Lazertinib Sales 0.0 0.6 1.2 1.8 2.4 3.0 3.5 3.7 4.0 5.9
MS 0.1% 1.8% 3.4% 4.7% 5.6% 6.6% 7.0% 7.0% 7.0% 7.0%
Yuhan Corp Milestones 0.05 0.72 0.48
Yuhan Corp royalties 0.00 0.06 0.12 0.23 0.31 0.39 0.52 0.56 0.60 0.89
Royalty rate 10.0% 10.0% 10.0% 13.0% 13.0% 13.0% 15.0% 15.0% 15.0% 15.0%
FX rate (KRW) 1,100 1,090 1,090 1,090 1,090 1,090 1,090 1,090 1,090 1,090 1,090 1,090
Yuhan Corp's milestones & royalties (converted to KRW) 55 788 4 65 132 255 335 426 1,091 612 656 967
Tax rate 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%
NOPLAT 50 709 4 59 119 229 302 383 982 550 590 871
NPV of FCF (WACC:10%) 50 533 2 36 67 118 141 163 379 193 188 157

NPV SUM 2,892.1

Success rate 33.0%
YH25448's value (Yuhan Corp's portion) 572.6

Source: DBS Bank

Global NSCLC treatment market, drugs with highest revenue, and market share breakdown
(US$ bn) 2015 2016 2017 2018F 2019F 2020F 2021F 2022F 2023F 2024F
NSCLC Target market 7.7 11.5 14.0 18.7 22.4 25.8 28.5 30.3 32.5 35.4
YoY 48.4% 21.5% 33.8% 20.2% 14.8% 10.6% 6.3% 7.2% 9.0%
[Sales]
Keytruda (MRK) 0.1 0.4 1.8 4.0 5.4 6.1 6.9 7.4 7.4 7.6
Opdivo (BMY) 0.7 3.1 4.0 4.7 4.6 4.8 5.1 5.3 5.7 6.0
Tagrisso (AZN) 0.0 0.4 1.0 1.7 2.5 3.4 4.0 4.4 4.8 5.1
Tecentriq (Roche) - 0.1 0.3 0.6 1.1 1.7 2.1 2.3 2.6 2.8
Imfinzi (AZN) - - - 0.5 1.0 1.5 1.8 2.0 2.1 2.3
Alecensa (Roche) 0.0 0.1 0.2 0.6 0.9 1.0 1.1 1.2 1.2 1.3
Other 6.9 7.4 6.7 6.5 7.0 7.3 7.6 7.7 8.6 10.3
[Market share, %]
Keytruda (MRK) 0.9 3.3 12.6 21.5 24.0 23.6 24.1 24.3 22.9 21.4
Opdivo (BMY) 9.2 27.3 28.5 25.0 20.5 18.5 17.7 17.6 17.5 17.0
Tagrisso (AZN) 0.2 3.7 6.8 9.3 11.3 13.2 14.1 14.7 14.8 14.5
Tecentriq (Roche) - 0.7 2.2 3.0 4.8 6.7 7.4 7.6 7.9 7.9
Imfinzi (AZN) - - - 2.7 4.6 5.7 6.3 6.6 6.6 6.5
Alecensa (Roche) 0.0 0.7 1.6 3.5 3.8 3.9 3.9 3.9 3.8 3.6
Other 89.6 64.3 48.3 35.0 31.0 28.4 26.5 25.5 26.5 29.1
Source: EvaluatePharma, DBS Bank

Page 4
Company Focus
Yuhan Corporation

Phase 1/2 clinical trial results for Lazertinib announced at Phase 1/2 clinical trial results for Lazertinib announced at
2018 ASCO 2018 ASCO

Note: Extracranial tumour Note: Intracranial brain tumour

Source: EvaluatePharma, DBS Bank Source: EvaluatePharma, DBS Bank

Anticancer effects of co-administration of Janssen’s JNJ-61186372 and Tagrisso

Source: Janssen, Cancer Research, DBS Bank

Revision to quarterly earnings forecasts
(KRW bn)

Previous Revised Diff. (%, ppts)

2018.12 2019.03 2019.06 2019.09 2018.12 2019.03 2019.06 2019.09 2018.12 2019.03 2019.06 2019.09
Revenue 394.9 365.4 394.5 405.6 450.9 365.4 394.5 405.6 14.2 0.0 0.0 0.0
Operating profit 7.8 16.0 11.5 11.7 35.8 16.0 11.5 11.7 358.7 0.0 0.0 0.1
OP margin (%) 2.0 4.4 2.9 2.9 7.9 4.4 2.9 2.9 6.0 0.0 0.0 0.0
EBITDA 17.2 25.4 21.0 21.3 45.2 25.4 20.9 21.2 163.1 (0.0) (0.1) (0.2)
EBITDA margin (%) 4.3 7.0 5.3 5.2 10.0 7.0 5.3 5.2 5.7 (0.0) (0.0) (0.0)
Net profit 22.5 34.6 9.8 9.4 50.5 34.6 9.8 9.4 124.4 0.0 0.0 0.0

Note: Based on parent K-IFRS

Source DBS Bank
Revision to annual earnings forecasts
(KRW bn)

Previous Revised Diff. (%, ppts)

2018F 2019F 2020F 2018F 2019F 2020F 2018F 2019F 2020F
Revenue 1,490.0 1,581.2 1,672.2 1,546.0 1,581.2 1,672.4 3.8 0.0 0.0
Operating profit 61.8 50.5 54.0 89.8 50.6 54.1 45.3 0.0 0.2
OP margin (%) 4.1 3.2 3.2 5.8 3.2 3.2 1.7 0.0 0.0
EBITDA 96.5 88.8 93.5 124.5 88.6 93.2 29.0 (0.1) (0.3)
EBITDA margin (%) 6.5 5.6 5.6 8.1 5.6 5.6 1.6 (0.0) (0.0)
Net profit 89.6 79.4 82.5 117.6 79.5 82.6 31.3 0.0 0.1
Note: Based on parent K-IFRS
Source: DBS Bank

Page 5
Company Focus
Yuhan Corporation

BALANCE SHEET INCOME STATEMENT

(Unit:KRWbn) 2016 2017 2018F 2019F 2020F (Unit:KRWbn) 2016 2017 2018F 2019F 2020F
Current Assets 868.8 933.9 1,048.6 1,087.1 1,129.8 Revenue 1,312.0 1,452.0 1,546.0 1,581.2 1,672.4
Cash & Short-term
453.3 454.8 515.9 530.2 548.5 Growth (%) 17.0 10.7 6.5 2.3 5.8
investment
Accounts Receivable 231.0 279.6 302.9 318.8 334.9 Operating Profit 72.3 80.4 89.8 50.6 54.1
Inventories 109.7 113.5 142.8 150.3 157.9 Growth (%) 2.2 11.2 11.7 (43.7) 7.0
Fixed assets 829.3 876.6 911.9 946.9 981.2 EBITDA 93.0 106.1 124.5 88.6 93.2
Non-operating
Investment Assets 635.1 643.7 667.2 694.3 722.5 84.4 65.4 59.3 56.3 57.1
Gains/Losses
Tangible Assets 179.3 214.5 217.6 225.6 231.7 Net Interest Income 57.6 60.4 59.2 56.3 57.1
Intangible Assets 14.9 18.5 27.1 27.0 27.1 Foreign Currency Gains 7.7 (11.9) 1.6 0.0 0.0
Total Assets 1,698.1 1,810.5 1,960.5 2,034.0 2,111.1 Equity Method Gains 0.0 0.0 0.0 0.0 0.0
Current Liabilities 240.6 245.5 286.0 299.0 312.3 Pre-tax Profit 156.7 145.7 149.0 106.9 111.2
Accounts Payable 120.7 91.6 116.8 123.0 129.2 Net Profit 122.4 110.7 117.6 79.5 82.6
Short-term Debts 0.0 0.0 0.0 0.0 0.0 Growth (%) 13.9 (9.5) 6.2 (32.4) 3.9
Non-current Liabilities 66.7 77.0 92.3 96.0 99.9 NOPLAT 56.5 61.1 70.8 37.6 40.2
Long-term Debts 0.0 0.0 0.0 0.0 0.0 (+) Dep 20.7 25.7 34.7 38.1 39.1
Total Liabilities 307.3 322.5 378.3 395.0 412.3 (-) Wc 69.6 58.7 13.1 11.2 11.2
Capital Stock 56.9 59.5 62.2 62.2 62.2 (-) Capex 31.8 54.9 44.3 42.2 41.3
Capital Surplus 115.8 118.5 115.8 115.8 115.8 OpFCF (24.3) (26.8) 48.1 22.2 26.9
Earned Surplus 1,296.3 1,371.3 1,470.8 1,527.5 1,587.4 3 Yr CAGR & Margins
Capital Adjustment (78.2) (61.3) (66.6) (66.6) (66.6) Revenue growth(3Yr) 12.1 12.9 11.3 6.4 4.8
Treasury Stock (164.9) (152.8) (165.1) (165.1) (165.1) OP growth(3Yr) 8.9 6.2 8.3 (11.2) (12.3)
Total Equity 1,390.8 1,488.0 1,582.2 1,639.0 1,698.8 EBITDA growth(3Yr) 10.2 8.9 12.2 (1.6) (4.2)
Invested capital 862.4 887.9 985.1 1,024.3 1,062.5 NP growth(3Yr) 19.4 10.8 3.0 (13.4) (9.3)
Net debt / (cash) (453.3) (454.8) (515.9) (530.2) (548.5) Gross margin (%) 27.2 27.8 29.9 26.2 26.2
ROA 7.5 6.3 6.2 4.0 4.0 OP margin (%) 5.5 5.5 5.8 3.2 3.2
ROE 9.1 7.7 7.7 4.9 4.9 EBITDA margin (%) 7.1 7.3 8.1 5.6 5.6
ROIC 8.8 7.0 7.6 3.7 3.9 NP margin (%) 9.3 7.6 7.6 5.0 4.9

CASH FLOW KEY INDICATOR

(Unit:KRWbn) 2016 2017 2018F 2019F 2020F (Unit:KRW,x,%) 2016 2017 2018F 2019F 2020F
Operating cash flow 94.4 48.5 64.6 86.2 89.7 Per share Data (w)
Net Profit 122.4 110.7 117.6 79.5 82.6 EPS 10,073 9,096 9,590 6,469 6,727
Depr. & Amort. 20.7 25.7 34.7 38.1 39.1 BPS 110,864 118,186 124,956 129,523 134,326
Chg in Working Capital (20.6) (68.1) (42.5) (11.2) (11.2) DPS 2,000 2,000 2,000 2,000 2,000
Chg in Accounts
(21.1) (46.3) (23.1) (15.9) (16.1) Valuation (x,%)
Receivable
Chg in inventories 12.3 (3.6) (29.0) (7.5) (7.6) PER 19.0 24.1 26.1 38.6 37.2
Chg in Accounts Payable (3.6) (29.0) 24.9 6.1 6.2 PBR 1.7 1.9 2.0 1.9 1.9
Investing cash flow (68.8) (39.6) (67.4) (61.4) (61.4) EV/EBITDA 20.5 21.3 20.9 29.2 27.5
Chg in Short-term
0.0 (20.3) 4.9 (12.2) (12.7) Dividend yield 1.0 0.9 0.8 0.8 0.8
Investments
Chg in Long-term
0.0 (7.0) (24.7) (3.3) (3.4) PCR 20.6 23.3 29.0 31.9 30.9
Investment Securities
Capex (31.8) (54.9) (44.3) (42.2) (41.3) PSR 1.8 1.9 2.0 2.0 1.9
Disposal of
(3.5) (4.1) (3.3) (3.8) (4.0) Stabilities (%)
Tangible&Intangible Assets
Financing cash flow (21.7) (1.4) 0.3 (22.7) (22.7) Liabilities Ratio 22.1 21.7 23.9 24.1 24.3
Chg in debt 0.0 0.0 0.0 0.0 0.0 Net debt/Equity CASH CASH CASH CASH CASH
Chg in Equity (21.7) (1.3) 0.3 (22.7) (22.7) Net debt/EBITDA CASH CASH CASH CASH CASH
Dividend Payout 20.5 20.5 21.7 22.7 22.7 Current ratio 361.1 380.4 366.7 363.6 361.8
Chg in Cash 6.6 4.7 (2.4) 2.1 5.6 Interest coverage ratio n/a n/a n/a n/a n/a
Gross cash flow 115.0 116.6 107.1 97.5 100.8 Interest/Sales n/a n/a n/a n/a n/a
(-) Chg in WC 69.6 58.7 13.1 11.2 11.2 Asset Structure
(-) Capex 31.8 54.9 44.3 42.2 41.3 IC 44.2 44.7 45.4 45.5 45.5
(+) Disposal of Assets (3.5) (4.1) (3.3) (3.8) (4.0) Cash + IC(%) 55.8 55.3 54.6 54.5 54.5
Free Cash Flow 10.0 (1.0) 46.4 40.3 44.4 Capital Structure
(-) Other Investments 0.0 7.0 24.7 3.3 3.4 Debt/Asset 0.0 0.0 0.0 0.0 0.0
Free Cash 10.0 (8.0) 21.7 37.0 41.0 Equity/Asset 100.0 100.0 100.0 100.0 100.0
Source: KTB
Source: DBSInvestment
Bank & Securities *Asset = Equity + Debt, P/E is derived by using diluted EPS.
Note: Results are parent-based
Note: Results are parent-based
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
*Asset = Equity
on information + obtained
and data Debt, P/E
from is derived
sources by using
we consider diluted
reliable. However,EPS.
KTB Investment & Securities does not warrant or guarantee the accuracy or completeness of this document and has no liability
for its content. The 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
This report
material of KTBhas been &prepared
Investment forand
Securities Co. informational
thus, it may not purposes only,
be reproduced, and does
distributed not constitute
or modified an offer
without the prior consentor
of solicitation
KTB Investmentof a contract
& Securities Co. for trading. Opinions in this
report reflect professional judgment at this date based on information and data obtained from sources we consider reliable. However, DBS Bank does not
warrant or guarantee the accuracy or completeness of this document and has no liability for its content. The 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 DBS
Bank and thus, it may not be reproduced, distributed or modified without the prior consent of DBS Bank.

Page 6
Company Focus
Yuhan Corporation

Stock Ratings

The stock investment opinion below is based on the expected return of the recommended stock
over the next 12 months relative to the closing price of the day it is recommended.

STRONG BUY: Expected to produce a return of at least 50% from the closing price of the day the
stock is recommended
BUY: Expected to produce a return between 15% and 50% from the closing price of the day the
stock is recommended
HOLD: Expected to produce a return between -5% and 15% from the closing price of the day the
stock is recommended
REDUCE: Expected to produce a return of less than -5% from the closing price of the day the stock
is recommended
RATING UNDER REVIEW: Temporary suspension of recommendation when there is material
uncertainty in corporate value. TP is not provided.

The investment opinion presented in this report is based on the industry’s outperformance relative
to the market, and may differ from that of an individual stock.
Overweight: The industry’s return is expected to outperform the average total return of the KOSPI
over the next 12 months.
Neutral: The industry’s return is expected to be in line with the average total return of KOSPI, over
the next 12 months.
Underweight: The industry’s return is expected to underperform the average total return of KOSPI,
over the next 12 months.

Notes) The industry’s return is on a risk-adjusted basis

Recent 2yr. Rating and TP Change

Yuhan Corporation (000100 KS)

Date 2016.12.29 2017.4.28 2017.7.3 2017.7.6 2017.9.29 2017.11.1
Rating BUY BUY BUY BUY BUY BUY
TP 280,000 290,000 300,000 310,000 280,000 270,000
Date 2018.4.30 2018.10.31 2018.11.6
Rating BUY BUY BUY
TP 280,000 230,000 290,000
Source: DBS Bank
Analyst Name: Regional Research Team
Recent 2yr. TP Change
Yuhan Corporation (000100 KS)
(KRW) Stock price Target price
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
Nov-16 Feb-17 May-17 Aug-17 Nov-17 Feb-18 May-18 Aug-18 Nov-18
Source: DBS Bank
Analyst Name: Regional Research Team

Page 7
Company Focus
Yuhan Corporation

Completed Date: 7 Nov 2018 09:42:30 (HKT)

Dissemination Date: 7 Nov 2018 11:19:18 (HKT)

Sources for all charts and tables are DBS Bank unless otherwise specified
GENERAL DISCLOSURE/DISCLAIMER
This report is prepared by DBS Bank. This report is solely intended for the clients of DBS Bank Ltd, its respective connected and associated
corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii)
redistributed without the prior written consent of DBS Bank.
The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS
Bank Ltd, its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively,
the “DBS Group”) have not conducted due diligence on any of the companies, verified any information or sources or taken into account any other
factors which we may consider to be relevant or appropriate in preparing the research. Accordingly, we do not make any representation or
warranty as to the accuracy, completeness or correctness of the research set out in this report. Opinions expressed are subject to change without
notice. This research is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific
investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees
only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal or financial
advice. The DBS Group accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit)
arising from any use of and/or reliance upon this document and/or further communication given in relation to this document. This document is not
to be construed as an offer or a solicitation of an offer to buy or sell any securities. The DBS Group, along with its affiliates and/or persons
associated with any of them may from time to time have interests in the securities mentioned in this document. The DBS Group, may have
positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and
other banking services for these companies.
Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can
be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments.
The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed, it may
not contain all material information concerning the company (or companies) referred to in this report and the DBS Group is under no obligation to
update the information in this report.
This publication has not been reviewed or authorized by any regulatory authority in Singapore, Hong Kong or elsewhere. There is no planned
schedule or frequency for updating research publication relating to any issuer.
The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and
assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on
which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual
results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED
UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that:
(a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and
(b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk
assessments stated therein.
Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets.
Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies)
mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the
commodity referred to in this report.
DBSVUSA, a US-registered broker-dealer, does not have its own investment banking or research department, has not participated in any public
offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months and does not engage
in market-making.

Page 8
Company Focus
Yuhan Corporation

ANALYST CERTIFICATION
The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the
companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her
compensation was, is, or will be, directly or indirectly, related to specific recommendations or views expressed in the report. The research analyst (s)
1
primarily responsible for the content of this research report, in part or in whole, certifies that he or his associate does not serve as an officer of the
issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the management company of the real
estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the entity who is responsible for the
management of the issuer or the new listing applicant) and the research analyst(s) primarily responsible for the content of this research report or
2
his associate does not have financial interests in relation to an issuer or a new listing applicant that the analyst reviews. DBS Group has
procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in connection with the production of
research reports. The research analyst(s) responsible for this report operates as part of a separate and independent team to the investment
banking function of the DBS Group and procedures are in place to ensure that confidential information held by either the research or investment
banking function is handled appropriately. There is no direct link of DBS Group's compensation to any specific investment banking function of the
DBS Group.

COMPANY-SPECIFIC / REGULATORY DISCLOSURES

1. DBS Bank Ltd., DBS HK, DBS Vickers Securities (Singapore) Pte Ltd (“DBSVS”) or their subsidiaries and/or other affiliates do not have a
proprietary position in the securities recommended in this report as of 30 Sep 2018.

2. Neither DBS Bank Ltd nor DBS HK market makes in equity securities of the issuer(s) or company(ies) mentioned in this Research Report.

Compensation for investment banking services:

3. DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of securities
as a manager or co-manager or in any other investment banking transaction in the past twelve months. Any US persons wishing to
obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed
in this document should contact DBSVUSA exclusively.

Disclosure of previous investment recommendation produced:

4. DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates may have published other
investment recommendations in respect of the same securities / instruments recommended in this research report during the preceding
12 months. Please contact the primary analyst listed in the first page of this report to view previous investment recommendations
published by DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates in the
preceding 12 months.

1 An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of
which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person
accustomed or obliged to act in accordance with the directions or instructions of the analyst.
2 Financial interest is defined as interests that are commonly known financial interest, such as investment in the securities in respect of an issuer or
a new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This
term does not include commercial lending conducted at arm's length, or investments in any collective investment scheme other than an issuer or
new listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new listing applicant.

Page 9
Company Focus
Yuhan Corporation

RESTRICTIONS ON DISTRIBUTION
General This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or
located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be
contrary to law or regulation.

Australia This report is being distributed in Australia by DBS Bank Ltd. (“DBS”) or DBS Vickers Securities (Singapore) Pte Ltd
(“DBSVS”). DBS holds Australian Financial Services Licence no. 475946.

DBSVS is exempted from the requirement to hold an Australian Financial Services Licence under the Corporation Act 2001
(“CA”) in respect of financial services provided to the recipients. DBSVS is regulated by the Monetary Authority of Singapore
under the laws of Singapore, which differ from Australian laws.

Distribution of this report is intended only for “wholesale investors” within the meaning of the CA.

Hong Kong This report has been prepared by an entity which is not licensed by the Hong Kong Securities and Futures Commission to
carry on the regulated activity of advising on securities in Hong Kong pursuant to the Securities and Futures Ordinance
(Chapter 571 of the Laws of Hong Kong). This report is being distributed in Hong Kong and is attributable to DBS Bank
(Hong Kong) Limited, a registered institution registered with the Hong Kong Securities and Futures Commission to carry on
the regulated activity of advising on securities pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of
Hong Kong).

For any query regarding the materials herein, please contact Carol Wu (Reg No. AH 8283) at equityresearch@dbs.com.

Indonesia This report is being distributed in Indonesia by PT DBS Vickers Sekuritas Indonesia.

Malaysia This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). Recipients of this report, received from
ADBSR are to contact the undersigned at 603-2604 3333 in respect of any matters arising from or in connection with this
report. In addition to the General Disclosure/Disclaimer found at the preceding page, recipients of this report are advised
that ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their respective connected
and associated corporations, affiliates, their directors, officers, employees, agents and parties related or associated with any
of them may have positions in, and may effect transactions in the securities mentioned herein and may also perform or seek
to perform broking, investment banking/corporate advisory and other services for the subject companies. They may also
have received compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory and
other services from the subject companies.

Wong Ming Tek, Executive Director, ADBSR

Singapore This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn No.
198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the
Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign
entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial
Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert
Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons
only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 6327 2288 for matters arising from,
or in connection with the report.

Thailand This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd.

Page 10
Company Focus
Yuhan Corporation

United This report is produced by DBS Bank Ltd which is regulated by the Monetary Authority of Singapore.
Kingdom
This report is disseminated in the United Kingdom by DBS Vickers Securities (UK) Ltd, ("DBSVUK"). DBSVUK is authorised
and regulated by the Financial Conduct Authority in the United Kingdom.

In respect of the United Kingdom, this report is solely intended for the clients of DBSVUK, its respective connected and
associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any
form or by any means or (ii) redistributed without the prior written consent of DBSVUK. This communication is directed at
persons having professional experience in matters relating to investments. Any investment activity following from this
communication will only be engaged in with such persons. Persons who do not have professional experience in matters
relating to investments should not rely on this communication.

Dubai This research report is being distributed by DBS Bank Ltd., (DIFC Branch) having its office at units 608-610, 6th Floor, Gate
International Precinct Building 5, PO Box 506538, Dubai International Financial Centre (DIFC), Dubai, United Arab Emirates. DBS Bank
Financial Ltd., (DIFC Branch) is regulated by The Dubai Financial Services Authority. This research report is intended only for
Centre professional clients (as defined in the DFSA rulebook) and no other person may act upon it.

United Arab This report is provided by DBS Bank Ltd (Company Regn. No. 196800306E) which is an Exempt Financial Adviser as defined
Emirates in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. This report is for information purposes
only and should not be relied upon or acted on by the recipient or considered as a solicitation or inducement to buy or sell
any financial product. It does not constitute a personal recommendation or take into account the particular investment
objectives, financial situation, or needs of individual clients. You should contact your relationship manager or investment
adviser if you need advice on the merits of buying, selling or holding a particular investment. You should note that the
information in this report may be out of date and it is not represented or warranted to be accurate, timely or complete. This
report or any portion thereof may not be reprinted, sold or redistributed without our written consent.

United States This report was prepared by DBS Bank Limited. DBSVUSA did not participate in its preparation. The research analyst(s)
named on this report are not registered as research analysts with FINRA and are not associated persons of DBSVUSA. The
research analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation, communications with a subject
company, public appearances and trading securities held by a research analyst. This report is being distributed in the United
States by DBSVUSA, which accepts responsibility for its contents. This report may only be distributed to Major U.S.
Institutional Investors (as defined in SEC Rule 15a-6) and to such other institutional investors and qualified persons as
DBSVUSA may authorize. Any U.S. person receiving this report who wishes to effect transactions in any securities referred
to herein should contact DBSVUSA directly and not its affiliate.

Other In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified,
jurisdictions professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.

DBS Bank Ltd.

12 Marina Boulevard, Marina Bay Financial Centre Tower 3
Singapore 018982
Tel. 65-6878 8888
e-mail: equityresearch@dbs.com
Company Regn. No. 196800306E

Page 11
Company Focus
Yuhan Corporation
DBS Regional Research Offices
HONG KONG
DBS Bank (Hong Kong) Ltd
Contact: Carol Wu
11th Floor The Centre
99 Queen’s Road Central
Central, Hong Kong
Tel: 852 3668 4181
Fax: 852 2521 1812
e-mail: dbsvhk@dbs.com
INDONESIA
PT DBS Vickers Sekuritas (Indonesia)
Contact: Maynard Priajaya Arif
DBS Bank Tower
Ciputra World 1, 32/F
Jl. Prof. Dr. Satrio Kav. 3-5
Jakarta 12940, Indonesia
Tel: 62 21 3003 4900
Fax: 6221 3003 4943
e-mail: research@id.dbsvickers.com
MALAYSIA SINGAPORE
AllianceDBS Research Sdn Bhd DBS Bank Ltd
Contact: Wong Ming Tek (128540 U) Contact: Janice Chua
19th Floor, Menara Multi-Purpose, 12 Marina Boulevard,
Capital Square, Marina Bay Financial Centre Tower 3
8 Jalan Munshi Abdullah 50100 Singapore 018982
Kuala Lumpur, Malaysia. Tel: 65 6878 8888
Tel.: 603 2604 3333 Fax: 65 65353 418
Fax: 603 2604 3921 e-mail: equityresearch@dbs.com
e-mail: general@alliancedbs.com Company Regn. No. 196800306E
THAILAND
DBS Vickers Securities (Thailand) Co Ltd
Contact: Chanpen Sirithanarattanakul
989 Siam Piwat Tower Building,
9th, 14th-15th Floor
Rama 1 Road, Pathumwan,
Bangkok Thailand 10330
Tel. 66 2 857 7831
Fax: 66 2 658 1269
e-mail: research@th.dbs.com
Company Regn. No 0105539127012
Securities and Exchange Commission, Thailand
Page 12