market review coway news coway announced that it ranked top in the household water purifier sector...

IR Webzine 2018. Oct.1010Market Review Coway News

This material includes quarterly development of stock markets, stock prices and related data of Coway, financial status, operating results, and other major issues related to IR. This is aimed to provide a variety of information that could be a reference to shareholders and investors. Therefore, it cannot be the evidential material for legal responsibility regarding investment results of shareholders and investors in any case.

IR Webzine 2018. October

10Market Review_ Stock Market

The KOSPI fell 13.37% from the previous month to 2,029.69 points at the end of October. In the technical aspect, the KOSPI dived under the previous low point after failing in retaking the long-term moving average line, which caused an array of bearish pattern of moving average lines. Therefore, it seems to be confronted with tough situation where mere technical rebounds are expected for a while.

The unexpected collapse was mainly triggered due to the fall of the US stock market at the beginning of the month. The UK’s No Dean Brexit issue and bearish Chinese stock market also had negative effect. Most countries except Brazil faced downturn and the domestic experienced relatively greater difficulties. All sectors were weak and especially healthcare, construction, and machinery met bigger declines.

In November, the KOSPI seems to try technical rebounds on the strength of investment sentiment recovery entailed from the resolution of uncertainties after the mid-term Congressional election of the US. Another positive factor is the expectation on the ease of the US-China trade conflict.


10

The stock price of Coway dropped 19.01% from the previous month to KRW 70,300 at the end of October. The suspected collapse was sparked by the announcement that the largest shareholder Coway Holding (MBK Partners) determined to sell its 22.17% ownership to Woongjin Group. However, we expect a rapid stock price recovery based

Market Review_ Stock Price

Classification% change of COWAY %change of

Stock Price vs. KOSPI vs. KOSPI200 KOSPI KOSPI200

5 Days -16.51 -13.27 -13.80 -3.24 -2.71

20 Days -18.73 -5.51 -6.68 -13.22 -12.05

60 Days -25.05 -13.48 -13.81 -11.57 -11.24


10Market Review_ Stock Price

on our corporate fundamentals.

Coway attained favorable operation performance in 3Q satisfying market consensus. Particularly, operating margin in our overseas business nearly caught up with the level of domestic rental business backed by robust growth of Malaysia subsidiary and US subsidiary, which is further solidifying our profit creation base. Moreover, Woongjin Group promised to maintain our high dividend payout ratio and shareholder-friendly policy. Therefore, concerns about the change of the largest shareholder will be fully addressed before long.

During October, the number of shares held by foreigners decreased 314,947 shares, or 0.66%, compared with the prior month. As of the end of October, they maintained 64.13% ownership. Domestic institutional investors marked net purchasing of 343,347 shares during the same period.

47,329,865 Shares (64.13%)

(as of October 31, 2018)

Changes in Stock Price in September

-19.01%-314,947

shares (-0.66%)

Changes in Shares Held by Foreigners in September

Net Changes in Shares Held by Institutional Investors in September

+343,347shares


10Coway News

Launch an electric range named “Hyper Highlight”

Coway launches an electric range (CER-03) named “Hyper Highlight” on October 1.

The best feature of this product is a large-sized hyper burner boasting strong firepower. Turbo mode generates 2.7kw high power, which allows users to reduce cooking time by around 56% compared with existing product without the hyper burner.

This product offers four kinds of cooking modes – turbo mode which can reduce cooking time, single or dual modes that accommodate multiple pan sizes, and heat-retaining mode, which help users enjoy cooking more easily and conveniently.

This product adopted glass stovetop of Germany-based SCHOTT CERAN and E.G.O.’s heating elements to ensure high quality and safety. In addition, electric work is not required as it uses general power cable, which helps easy product mobility and efficient energy use.

Se-yong Kim, the head of Product Strategy Division, said, “Our new electric range demonstrates high-powered hyper highlight burner that makes cooking easy and reduces cooking time, thereby better satisfying customers.”


10Coway News

Win the “Good Design Award” for 12 consecutive years

Coway announced that its six products including the CIROO Tankless Water Purifier (CHP-7300R) and air purifier (AP-1018F) won the design award at the “2018 Good Design Award” of Japan on October 4.

The Good Design Award hosted by JIDPO (Japan Industrial Design Promotion Organization) is the most prestigious international design contest in Japan and at the same time, one of four world’s major design awards. It is given after evaluating the aspects of humanity, honesty, innovation, esthetics, and ethics of products in a comprehensive manner. Award-winning products can label the “G-Mark.”

Coway has won the Good Design Award for 12 consecutive years.

Particularly, the CIROO Tankless Water Purifier is an innovative product that enables tankless water supply despite quipping with RO membrane filter boasting the most excellent pollutants removal function.

Users can easily check the condition of water purifier through the display panel on the front side of this product, which was highly recognized at the evaluation. The changes in pictogram color and shape on the display panel allow users to understand the temperature and amount of water more easily. Moreover, the moving faucet accommodates diverse sizes or shapes of containers.

Hyun-joo Song, the head of Design Research Center, said, “Design plays a key role in customers getting the first impression and making our corporate identity known to the public. We will make a concerted effort to develop innovative designs that can satisfy customers at all times.”

- �Six products including the CIROO Tankless Water Purifier and air purifier

- �Win the Good Design Award for 12 consecutive years


10Coway News

- �Marathon race for health attended by more than 6,000 Malaysian people

- �Raised�a�social�contribution� fund�equivalent�to�the�number�of�partici-pants�to�solve�local�water�issues

- �Become a national brand in Malaysia

Host the “2nd Coway Run” marathon race in Malaysia

At 7 a.m. local time, the “2nd Coway Run” marathon race was held at the CERDAN MAEPS Park in Malaysia, which proved the status of Coway as a national enterprise. This event was prepared to share the value of healthy life with local people by making participants feel the value of clean water and air through drinking water and breathing in the race.

More than 6,000 local people participated in the Coway Run marathon race. Hae-sun Lee, the CEO of Coway, also joined 5km race to encourage them. The size of event further increased compared with the previous year.

A variety of items that symbolize water and air, which are core capabilities of Coway, were included in the race course. Participants were able to experience the value of water and air by passing through a large mist tunnel, an air tunnel, and sprinklers. Particularly, 3 meter-high water purifier and air purifier attracted much attention.

Moreover, Coway promoted the improvement of water welfare in local communities through this event. The company raised a social contribution fund equivalent to the number of participants. The fund will be spent on improving the quality of water at outer regions with water shortage. Coway has been taking the initiative in addressing water shortage issue by supporting rainwater supply equipment to 1,000 households in Malaysia for five years starting since the previous year.

Besides, Coway arranged Korea-related event zones where local people can enjoy Korean traditional clothes and Korean foods in collaboration with the


10 Korea Tourism Organization, thereby introducing the culture and lifestyle of Korea to them naturally.Malaysia subsidiary, established in 2006, has enjoyed more than 30% growth annually for recent six years and maintained No. 1 position in the local water purifier market. Sales in 2017 stood at KRW 207.5 billion and sales in the first half of 2018 reached KRW 157.3 billion, an increase of 70% year-on-year, as well. Malaysia subsidiary expects the number of accounts to surpass one million this year and plans to accelerate growth as a hub for Coway’s overseas business.

Hae-sun Lee, the CEO of Coway, said, “This event has a great meaning in the way that we can introduce our brand direction and deliver the value of clean water to local people by directly communicating with them. We will continue to share our management philosophy pursuing healthy life with all people and emerge as a global leader in the health appliance business.”


10Coway News

-�Offer�differentiated�services�by�Cody-��Highly�recognized�for�showcasing�innovative�products�such�as�“CIROO�Tankless�Water�Purifier”

Rank top in the household water purifier sector of the 2018 KCSI

Coway announced that it ranked top in the household water purifier sector of the “2018 KCSI (Korea Customer Satisfaction Index)” hosted by KMAC (Korea Management Association Consulting) on October 11. The company has ranked No. 1 position 15 times since the first achievement in 2000.

The KCSI, which shows the level of customer satisfaction on products and services in each industrial field, was first developed by KMAC in 1992 and has demonstrated the longest history and public confidence in Korea.

Coway received 82.9 points in the comprehensive satisfaction level and relatively higher scores in most categories including “general satisfaction,” “element satisfaction,” and “intention of repurchasing” than competitors.

On top of that, Coway took the No.1 ranking in the 2018 NCSI (National Customer Satisfaction Index). These remarkable achievements proved the company’s unrivaled service capability in Korea.

Particularly, Coway was highly recognized for differentiated service quality conducted by the Cody system and continuous launch of customer-centered innovative products.

To realize corporate value, the company established the “Service Lab,” an innovative place for customers in May of this year. It aims to analyze customer experience and promote service differentiation. Coway is facilitating monitoring and research of services through the Service Lab


10 with the purpose of offering customers the best experience in the process of product installation and use.The company also launched the “CIROO Tankless Water Purifier (CHP-7300R).” It changed prejudice about existing water purifiers that it was very difficult to pursue high filtering performance and tankless water purification at the same time. The CIROO Tankless Water Purifier is an innovative product adopting tankless method despite RO membrane filter.

Hyun-jeong Yoon, the head of CS HQ, said, “Coway will not only keep the value of clean water and air but also provide customers with differentiated services, thereby becoming a company to deliver impression to them.”


10Coway News

Launch the FWSS on the CJ ENM’s home shopping channel

Coway announced that it would start a rental sale of FWSS (FAD-01) through the CJ ENM’s O Shopping channel. It will be broadcast for 65 minutes from 10:45 p.m. on October 16. Monthly rental fee is KRW 49,900 and regular services including free filter change are provided.

In commemoration of the launching, a variety of benefits and presents are given to consumers who request consultation on the product through a lottery.

The FWSS (FAD-01), launched in May of this year, is recognized as an innovative product which has established a new benchmark for total clothes care as it not only ensures sterilization, deodorization, and reduction of wrinkles for clothes but also makes even the space for keeping clothes clean. And homecare experts visit once a quarter to offer systematic 7-step services to rental customers.

Se-young Lim, a representative show host who has undertaken most signature fashion items at the home shopping channel, was assigned as the main performer of the FWSS. She has a good reputation as a show host who can sincerely introduce products to consumers by directly using those before broadcasting.

Yong-joo Park, the head of Marketing HQ, said, “We have prepared this home shopping sales to help consumers feel more familiar with the FWSS. Having gained popularity from different age groups, this product is expected to receive favorable responses from more consumers.”


10Coway News

Name to the “DJSI World” for three consecutive years

Coway has been included in the “DJSI World” for three consecutive years and the “DJSI Asia Pacific” for six consecutive years at the “2018 Dow Jones Sustainability Indices Evaluation,” proving its world-class competitiveness in sustainability management.

The Dow Jones Sustainability Indices (DJSI) is a family of indices evaluating corporate sustainability which was co-developed by S&P Dow Jones of the US and RobecoSAM of Switzerland. Assessing management activities in the aspects of financial performance, social contribution, and environment in a comprehensive manner, the DJSI is recognized for the world’s leading authority in corporate management evaluation.

Coway has named to the DSJI World for three consecutive years and the DJSI Asia Pacific for six consecutive years in the durable goods sector. Particularly, Coway has become the only Korean company to enter the DSJI World in the durable goods sector. Only 317 global companies, 12.6% of 2,521 target companies, entered the DJSI World this year. In Korea, only 20 companies named to the list.

Particularly, Coway received the best marks in CRM and environmental policy & management system sectors. Brand management, HR development, and product quality were also praised for excellence.

By putting customer trust first in management activities, Coway has focused on developing innovative and eco-friendly products, enhancing service quality, and reducing GHG emissions and energy consumption. Moreover,


10 the company has made a concerted effort to fulfill its social, environmental, and ethical responsibilities as well as share the value of clean water.Sang-joon Kim, the head of Communication Office, said, “Coway was recognized as a leader in sustainability management. This recognition is an important reflection of how well we are doing to create value and improve lives for all of our stakeholders. We will continue our efforts to become a company trusted by all stakeholders.”


10Coway News

Promote the 2H 2018 internship program premised on formal employment

Coway promotes the 2H 2018 internship program premised on formal employment from October 22 to November 2.

Targets are university graduates with a bachelor or higher degrees and prospective graduates in February 2019. Recruitment is carried out in 17 fields including management support, strategic planning, sales/marketing at home and abroad, research, and production/quality.

Application will be accepted through Coway’s website (www.coway.co.kr) from 9 a.m. on October 22 to 4 p.m. on November 2. Document examination result will be announced in mid-November through the website.

The recruitment process consists of document examination, job suitability test, and interview (1st and 2nd). Evaluation will be focused on applicants’ basic competence based on the suitability for jobs, understanding of jobs they apply, and their potential.

Successful applicants will join the internship program for two months from January 2019 and can become regular employees depending on evaluation results.

Jae-seok Kim, the head of HR Support Office, said, “This program was prepared to offer applicants a chance to increase the understanding of the company and duties through real experiences at business fields. We intend to select talents with competitiveness and support them to display their abilities.”


10Coway News

4,000 units of FWSS sold out in October

Coway succeeded in selling out 4,000 units of FWSS, which was the monthly sales target, in just the first week of October. And the number of accumulated units sold exceeded 10 thousand on the strength of initiating rental sales.

The FWSS was launched in May of this year as a unique total clothes care product that ensures clothes care and space air care at the same time. Customers are able to enjoy the FWSS and regular care services at a reasonable rental fee.

Coway had monitored customer responses to this product by promoting lump-sum sales trend for initial three months after launching. According to a survey result showing increasing customer needs for rental purchasing, the company started rental sales in August. Since then, the monthly average unit sales have surpassed 3,000.

The first launching of FWSS on the CJ ENM home shopping channel in October 17 gained favorable responses from female customers in their 30s to 50s about the product’ new concept. With this popularity, Coway plans the second marketing through home shopping channels at the end of October.

Hae-sun Lee, the CEO of Coway, said, “Customers have given an enthusiastic response to the FWSS’ innovative concept pursuing clothes care and space air care at the same time. Considering a rapid growth of sales since the beginning of rental program, we expect the FWSS to become a new growth engine of Coway going forward.”

- �Exceeded 10 thousand units in accumulated sales

- �Attributable to Korea’s first two-in-one concept and rental sales strategy

- �Successful launching of FWSS on TV home shopping channels, 2nd on-air at the end of October


10Coway News

- �Highly recognized for operating the Service Lab, initiating the Cody-On service, and introducing the service liability system

Rank top in the water purifier and air purifier A/S sector

Coway ranked top in the water purifier and air purifier A/S sector at the “2018 KS-SQI” evaluation hosted by the Korea Standards Association on October 31.

The KS-SQI (Korean Standard-Service Quality Index) is a service quality evaluation model co-developed by the Korea Standards Association and Management Research Institute of the Seoul National University. The evaluation is conducted by surveying customers who have directly used products and services.

Since first being ranked top in the water purifier A/S sector in 2002, Coway has taken the top position 12 times until now. Coway ranked No.1 in the air purifier A/S sector which was initiated this year, proving its top-class service competence in the health appliance business as well.

The company won 75.2 points and 75 points, the highest scores, in the water purifier and air purifier sector, respectively, by being highly recognized for operating the Service Lab, initiating the Cody-On service, and introducing the service liability system.

The Service Lab, an innovative place for customers, was initiated in May of this year. It was prepared under the principle of “faithfully serve from customers’ point of view and innovating customer experience with new ideas,” thereby spearheading the innovation of Coway services.

The Cody-On service allows customers to directly check the service process through mobile devices. Coway also operates the service liability system


10 where service experts manage entire service process ranging from receiving complaints, offering solutions, and identifying improvements.Hyun-jeong Yoon, the head of CS HQ, said, “Coway is developing services in full consideration of customers’ product purchasing, installation, and use cycle. We will make a concerted effort to continuously innovate our service quality.”


10Coway News

-��Rental�sales�at�home�and�abroad�amounted�to�451�thousand�units,�the�largest�quarterly�record

-��The�largest�sales�and�operating�profit�from�Malaysia�subsidiary

-��Plan�to�further�enhance�sales�compe-tence�and�overseas�business�in�4Q

Attain the largest 3Q sales and operating profit

Coway announced that it achieved the largest 3Q sales and operating profit. Sales and operating profit increased 6.4% and 5% year-on-year to KRW 669.8 billion and KRW 130.4 billion, respectively, in 3Q 2018 on a consolidated basis of K-IFRS.

The outstanding operating performance was mainly attributable to the largest rental sales at home and abroad, soaring growth in overseas business, and solid growth of mattress rental sales.

▲ The Largest Rental Sales at Home and Abroad in 3Q

Rental unit sales at home and abroad amounted to 451 thousand, an increase of 13.1% year-on-year, the largest among 3Q records. Particularly, overseas rental unit sales rose by 59.5% to 129 thousand. Accumulated rental unit sales as of 3Q also increased 9.9% to 1.42 million, a record high.

Outstanding operating performance in the domestic business resulted mainly from not only solid sales growth of existing products such as water purifier, air purifier, and mattress but also the increase of rental accounts backed by the launch of FWSS. Soaring operating performance in overseas business depends on continuous sales growth of Malaysia subsidiary and US subsidiary.

The number of net rental account adds reached 145 thousand, an increase of 99.8% year-on-year, attributable to rental sales growth at home and abroad and total number of accounts surpassed 6.88 million – 5.85 million in Korea and 1.03 million in the world. Especially, the number of accounts from


10Coway News

overseas subsidiaries first exceeded one million. Coway expects the number of accounts to be reached at 7.11 million within this year.

▲ Soaring Growth in Overseas Business

Overseas sales increased 33.8% from the previous year to KRW 137.7 billion on the strength of the launch of new products, business expansion of overseas subsidiaries, and diversification of local sales channels.

Particularly, Malaysia subsidiary and US subsidiary continued robust sales growth. Sales of Malaysia subsidiary in 3Q stood at KRW 92.3 billion, an increase of 67.8% year-on-year, the highest on a quarterly basis. Operating profit was KRW 17.0 billion, the largest ever. The number of accounts also increased 48.6% from the previous year to 894 thousand, nearly reaching one million which is the target of this year. Sales of US subsidiary jumped 35.5% year-on-year to KRW 21.1 billion due to the growth of door-to-door sales and fast-selling air purifiers. The number of accounts at US subsidiary also increased 3.4% from the previous year to 113 thousand.

▲ Solid Growth of Mattress Rental Sales

Mattress rental sales in 3Q was 38 thousand units, an increase of 3.5% year-on-year, recording the highest among 3Q results. The number of accounts in mattress rental sales increased 18.7% to 415 thousand.

▲ Aim to Continue Growth in 4Q

To maintain solid growth in 4Q, Coway intends to focus on enhancing fee combination system aimed at increasing product sales, expanding sales of air purifiers and FWSS, promoting B2B and B2G transactions. As for overseas


10 business, Coway will make efforts to explore new markets in Southeast Asia where the success of Malaysia subsidiary can be transplanted.Jae-ho Lee, the CFO of Coway, said, “In 3Q, we achieved outstanding operating performance backed by unwavering growth of health appliance sector in Korea and major overseas subsidiaries. We will focus on increasing product sales and boosting business expansion of overseas subsidiaries to maintain upward trend in operating performance in 4Q as well.”


10 Coway’s CEO Hae-sun Lee had a special lecture at Ewha Women’s UniversityOn October 31, Coway’s CEO Hae-sun Lee attended the “CEO’s Special Lecture” program held at the Ewha & Sinsegye Hall of the Ewha Women’s University and delivered a special lecture with the theme of “Entrepreneurship and Response to the Change of Era” to more than 200 students majoring in business administration.

Major lecture contents were the 4th Industrial Revolution & future business, changes in the global market, and challenging spirit of global innovative companies. He also shared a variety of corporate innovation cases he had experienced during his time as the CEO.

Particularly, he emphasized that becoming a core talent in the era of 4th Industrial Revolution requires great discernment that can perceive what kinds of technologies and businesses are leading the world.

The CEO said “I hope our students set up more substantial dreams and goals towards a new era. I will also be proactive in communicating with young people through diverse lectures and sharing my expertise and experiences with them.”

Hae-sun Lee, as the CEO of Coway, has played a key role in Coway growing into Korea’s representative water and air specialty company since October 2016. He has also been serving as the chairman of the Korea Marketing Association.

IR Webzine 2018. Oct.

market review coway news coway announced that it ranked top in the household water purifier sector...

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