Market 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 2020. Feb.

2IR Webzine 2020

February

Market Review_ Stock Market

In February 2020, the KOSPI fell by 6.23% from the previous month to 1,987.01 points. Sharp decrease for two consecutive months broke the mid-term upward trend and aggravated investor sentiment.

The KOSPI showed a technical rally at early February on the strength of expectation on stimulative economic policies in major countries including China. Since then,

however, sharp increase of COVID-19 cases aroused concerns about global pandemic, which gave a shock to whole stock markets across the globe.

In March 2020, a technical rebound is expected in response to collapse for two months. Promotion of stimulative economic policies in major countries and interest rate reduction of the U.S. seem to be a catalyst.

2IR Webzine 2020

February

Classification% change of COWAY %change of

Stock Price vs. KOSPI vs. KOSPI200 KOSPI KOSPI200

5 Days -6.39 1.74 1.96 -8.13 -8.34

20 Days -21.53 -15.30 -15.72 -6.23 -5.80

60 Days -23.10 -18.27 -19.94 -4.83 -3.16

Market Review_ Stock Price

2IR Webzine 2020

February

Market Review_ Stock Price

The stock price of Coway sharply declined 21.53% from the previous month to KRW 68,900 in February.

This unfavorable result came mainly from lower-than-expected operating profit in 4Q despite sales growth. Operating profit in 4Q, which underperformed the market consensus, was attributable to the allowances of KRW 77 billion with regard to retirement pay and extra pay caused by temp-to-perm transition of the CS Doctor members. However, we expect our profitability to be recovered as it was one-time allowances and overseas subsidiaries continue double-digit sales growth.

During February, the number of shares held by foreigners increased 262,339 shares, or 0.59%, compared with the prior month. As of the end of February, they maintained 60.76% ownership. Domestic institutional investors marked net selling of 607,671 shares during the same period.

44,837,851 Shares (60.76%)

(as of February 28, 2020)

Changes in Stock Price in February

+262,339shares

(+0.59%)

Changes in Shares Held by Foreigners in February

Net Changes in Shares Held by Institutional Investors in February

-607,671 shares

-21.53%

2IR Webzine 2020

February

Market Review_ Analyst Opinion

Strong Buy 0Buy 2Hold 1Neutral 0Sell 0Strong Sell 0

Average Ratings Average Target Price =₩100,000

Low :₩100,000

High :₩100,000

Sell StrongBuy

4Q19 review: Concerns turn into realityWoongjin Coway reported 4Q19 consolidated sales of W794.6bn (+11.7% YoY) and OP of W44.6bn (-65.4% YoY), falling far below consensus (W139bn). In addition to reserves for retired repairmen booked in 2Q19, the company ...

2020-02-17 | Yuanta Securities | Target Price : ￦100,000 | HOLD

4Q19 Review: Share Price Volatility Inevitable as Uncertainties MountWe maintain BUY on Woongjin Coway, but cut the target price 9% to KRW100,000, because our 2020 EPS projection was revised down by 7%. Finding a new owner, “Netmarble,” is positive, resolving uncertainties involving ...

2020-02-17 | KB Securities | Target Price : ￦100,000 | BUY

Must find ways to overcome falling dividend meritWoongjin Coway reported consolidated 4Q sales of KRW794.6b (up 11.7% yy) and OP of KRW44.6b (down 65.4% yy), the latter m issing consensus by 68%. Labor strikes hurt parent based OP, as: 1) household appliances sales ...

2020-02-17 | Samsung Securities | Target Price : ￦100,000 | BUY

2IR Webzine 2020

February

Woongjin Coway News

Hold an online quiz event in commemoration of launching the Hanppyum Tankless Water PurifierCoway holds an online quiz event named “Innovative Tankless Water Purification” from February 3 to 28.

This event was prepared to inform customers of product innovation and enhance customer communication as part of the “Innovative Tankless Water Purification” promotion in commemoration of launching the “Hanppyum Tankless Water Purifier.”

Anyone can participate in this event through Coway’s corporate website or SNS (Instagram and Facebook). A clue of the quiz is offered when checking the features of this product by visiting corporate website. A variety of gifts including FWSS, cooler & heater, portable air purifier, and mobile coffee coupon are provided to 550 winners of the lottery. Winners will be disclosed on March 13.

The Hanppyum Tankless Water Purifier, launched in December 2019, is an innovative product demonstrating direct water purification through the RO membrane filter with excellent pollutant elimination function as well as slim size. The CIROO 2.0 filter distinguishes itself from other tankless water purifiers in the way that it ensures not only plenty of water but also filtration function that eliminates even mercury, chrome, and ultra-fine ion substances. New rental customers of this product for the event period can save monthly rental fee by 25%.

Cho Jin-yeon, the head of Marketing Planning Team, said, “This event was prepared to inform customers of innovative functions of the Hanppyum Tankless Water Purifier more easily and interesting. We will continue to showcase special contents that can enhance brand familiarity and deliver our core values going forward.”

2IR Webzine 2020

February

- The fastest sales of KRW 30 billion in the premium massage chair sector

- On the strength of innovativeness that adopted oriental medicine and segmented massage programs

- Provide the “premium rug” to buyers for free in commemoration of sur-passing sales of KRW 30 billion

Woongjin Coway News

Sales of the oriental style premium massage chair surpass KRW 30 billion in less than a yearCoway announced that sales of the oriental style premium massage chair (MC-S01) surpassed KRW 30 billion in less than a year since its launch in February 2020.

Sales of this product had exceeded KRW 5 billion just in two months since its launch and sales growth has been stable. As a result, it became the first product to surpass KRW 30 billion sales in the shortest period among premium massage chairs the company has launched.

Key features of the oriental style premium massage chair are innovativeness that adopted traditional oriental medical care and user convenience guided by tailored massage programs.

This product helps relax body and improve sleep by stimulating major acupoints. It was verified for the effectiveness through clinical test at the Dongguk University Ilsan Oriental Hospital. It also won the “2019 CES Innovation Award” in recognition for a new-concept product which combined oriental medicine with massage chair.

Coway’s patent technology “Thermal Therapy Tool” is adopted to this product. It operates two thermal therapy balls in the product to stimulate major acupoints, thereby making users feel warm and convenient.

Moreover, a total of 13 kinds of massage courses (7 Chuna massage programs and 6 general massage programs) help users enjoy tailored massage depending on their body conditions.

2IR Webzine 2020

February

In commemoration of surpassing sales of KRW 30 billion, Coway provides the premium rug for massage chair to buyers for free.

Kim Seok-hoon, the massage chair planner, said, “This product was recognized for innovativeness by winning the 2019 CES Innovation Award. We will continue sales growth of the premium massage chair through diverse marketing activities.”

2IR Webzine 2020

February

Woongjin Coway News

Reappoint Lee Hae-sun as the CEOBang Jun-hyuk was appointed as the BOD Chairman and Lee Hae-sun was reappointed as the CEO at the BOD meeting on February 7.

Lee Hae-sun had served as the CEO of CJ CheilJedang and CJ O Shopping. He was appointed as the CEO of Coway in 2016 and has contributed to improving customer trust and enhancing global competitiveness as the general CEO since 2019.

An official of Coway said, “The reappointment of Lee Hae-sun as the CEO was determined according to the judgment that he is a well-qualified person who can stably operate the health appliances business and lead changes and innovation for sustainable growth.”

Meanwhile, Seo Jang-won, deputy president and the head of Netmarble Coway TF, will serve as an executive director and head of Corporate Management Division to enhance organizational competency.

2IR Webzine 2020

February

Woongjin Coway News

Win the “iF Design Award” for 13 consecutive yearsCoway received design award in the product design category of the 2020 iF Design Award, accomplishing the splendid feat of winning award for 13 consecutive years.

The iF Award, hosted by the International Design Forum, is a world’s renowned design award with 67 years of tradition. The award is given by comprehensively evaluating design innovativeness, user convenience, and brand value. This year, a total of 7,298 products from 56 countries participated in the iF Design Award.

Coway has been awarded for 13 consecutive years, thus proving its global competitiveness in design.

The award-winning products were Self-care Air Purifier Cartridge (AP-1019C), Interior Design Series (CHP-7200N, AP-1019), and Wall-mounted Air Purifier Series (AP-3519A, AP-1519B).

The Self-care Air Purifier Cartridge boasts innovative design optimized for self-care. Detachable filter system on the front side (free filter, deodorization filter, and dust collection filter) ensures easier cleaning than existing products. Especially, the pullable free filter from top side without opening the front cover maximizes user convenience as it needs frequent cleaning.

The Interior Design Series pursue “emotional home appliance that changes home atmosphere.” Product color and materials that deliver the feeling of warmth harmonize with interior design. The air purifier (CHP-7200N) ensures high space efficiency by square design, while air purifier (AP-1019) pursues intuitive minimal design.

- Three products including “Self-care Air Purifier Cartridge” were recognized for design innovation

- For 13 consecutive years since 2008

2IR Webzine 2020

February

Woongjin Coway News

Song Hyun-joo, the head of Design Research Center, said, “We have designed these products focused on user convenience and harmonization with their lifestyle. We will continue to embed our design philosophy and value in all products.”

2IR Webzine 2020

February

Win gold award at the “2020 Asia Design Prize”Coway’s Hanppyeom CIROO Tankless Water Purifier won gold award at the “2020 Asia Design Prize” on February 13.

The Asia Design Prize is recognized as Asia’s largest design award and major evaluation categories include aesthetic impression, scarcity, and functionality. Hanppyeom CIROO Tankless Water Purifier and Air Bottle, a portable air purifier, received Gold Award and Winner Award, respectively.

Hanppyeom CIROO Tankless Water Purifier is an innovative product featuring high space efficiency (22cm width) and tankless water purification despite adopting RO membrane filter with the most excellent pollutants elimination function. Quartz brown color and tempered glass on the front also demonstrate premium design.

Interior Air Purifier and Air Bottle is very available for bedroom and portable use, respectively. Interior Air Purifier can be used as the bedside table due to optimized product height and provides wireless charging function for Air Bottle. Meanwhile, Air Bottle boasts excellent portability due to mini size and sliding strap.

Song Hyun-joo, the head of Design Research Center, said, “Our product design considers customer lifestyle and high space efficiency. We will continue to develop customer-oriented innovative product design to ensure the value of healthy life.”

Woongjin Coway News

2IR Webzine 2020

February

First surpass KRW 3 trillion in salesSales of Coway in 2019 recoded KRW 3.019 trillion, an increase of 11.5% from the previous year, on a consolidated basis, first surpassing KRW 3 trillion it its history.

This remarkable performance resulted from favorable health appliances business in Korea and robust growth in overseas business.

Sales from the domestic health appliances business reached KRW 2.111 trillion, surpassing KRW 2 trillion for two consecutive years. It was attributable to stable sales growth of new rental products such as FWSS and electric range as well as water purifier and air purifier.

Overseas sales were KRW 749.1 billion on the strength of client diversification and sales growth of overseas subsidiaries. The proportion of overseas sales was also expanded from around 20% in 2018 to 25% in 2019. This trend proves sustainable growth of Coway’s global business.

Coway achieved record-high domestic rental sales in 2019 by launching innovative products such as “Hanppyeom CIROO Tankless Water Purifier, Wall-mounted Type Air Purifier, and Four-season FWSS Double Care. The number of customer accounts reached 7.79 million (6.28 million in Korea and 1.51 million in the world).

Lee Hae-sun, the CEO of Coway, said, “We opened the era of KRW 3 trillion in annual sales by achieving stable and robust growth in all business areas. In 2020, we will focus on enhancing global business and launching innovative products to take a new leap and ensure mid- and long-term growth.”

Woongjin Coway News

- 11.5% growth year-on-year in sales in 2019

- Backed by record-high domestic rental sales and around 8 million ac-counts

2IR Webzine 2020

February

First develop the “GPT Index” in the industryCoway announced on February 17 that it developed the GPT Index (Good water = Pure water +Tasty water) for the first time in the industry. The index was prepared to identify the fact that water taste is changed by diverse factors such as water purifiers, filters, and parts and to inform customers of objective data which prove that water taste should be put first in selecting water purifiers.

The GPT Index consists of “filtering performance” and “sensory evaluation on water taste.” Filtering performance is calculated by using the “purification performance certification evaluation index” guided by the KC Mark and WQA (Water Quality Association). Sensory evaluation on water taste was developed by the Coway’s Water Taste Research Center for over one year, in which 244 consumers and 9 water experts participated.

Coway identifies a total of 166 kinds of water taste terms through a consumer survey on diverse water purifiers and then selected 31 terms by analyzing attribute and correlation. The second stage was to draw up six core water taste attributes through statistical analysis after selecting 15 water taste terms by expert and consumer evaluation. Core water taste attributes of water purifiers are divided into three positive and three negative expressions. Sensory evaluation on water taste are conducted based on six core attributes and the index is calculated by adding weight factors.

The final index is calculated by averaging filtering performance index and sensory evaluation on water taste index.

Coway plans to use the electronic nose analysis equipment for scientific certification and advancement of water taste. Coway is the only health appliance company who has the electronic nose analysis equipment

Woongjin Coway News

- Independent index consisting of fil-tering performance and water taste

- Plan to use the electronic nose anal-ysis equipment for scientific certifica-tion and advancement of water taste

2IR Webzine 2020

February

specializing in fragrance analysis. The equipment will be used for identifying substances which can have effects on water taste.

Kang Sang-hyun, the head of Research Division at the Environmental Technology Research Center, said, “Coway has ranked top at the evaluations on water taste from water purifiers hosted by the Korea Management Association and the Korea International Sommelier Association as a result of making utmost efforts for improving water taste. We will actively utilize the GPT Index for providing cleaner water and developing innovative water purifiers.”

Woongjin Coway News

2IR Webzine 2020

February

Run a promotion that offers filters to self-care air purifier buyers for freeCoway runs a promotion that offers filters to self-care air purifier buyers for free in time for the fine dust season until the end of March.

Target products are Self-care Air Purification Cartridge (AP-1019C), Dual Smart Air Purifier IoCare (AP-2219K), and Portable Air Purifier Air Bottle (AP-0119SA). More details are available on the corporate website.

Self-care Air Purification Cartridge buyers can receive the number of composite filters required for two years and remaining product buyers can receive the filter required for one year.

The above three products are innovative air purifiers developed with the purpose of easy self-care by users. For example, the Self-care Air Purification Cartridge informs users of the time of cleaning free filter and replacing fine dust collection filter. Detachable filter system allows users to easily clean filters and minimize dust scattering.

The Dual Smart Air Purifier IoCare is operated through the IoT technology. It shows air quality level and the time of replacing filters through smartphone application. The application also helps users easily visit the shopping mall for filter purchasing. The dual power system driven by the 4-step filters enables faster and stronger air care.

The Portable Air Purifier Air Bottle features compact size (21cm height and 530g weight) equivalent to natural water bottle. This product is effective in small spaces such as baby carriage, vehicle, and desk. It also obtained the CA certification from the Korea Air Cleaning Association.

Woongjin Coway News

2IR Webzine 2020

February

Prices of those products are as follows: KRW 259 thousand for Self-care Air Purification Cartridge; KRW 599,000 for Dual Smart Air Purifier IoCare; and KRW 249,000 for Portable Air Purifier Air Bottle.

Lim Chae-sung, the head of Marketing Strategy Team, said, “We prepared this promotion in order to help customers who want self-care of air purifiers. As a leader in the air purifier market, Coway will continue to secure product lineup meeting customer needs and enhance marketing communication activities.”

Woongjin Coway News

2IR Webzine 2020

February

Operate a special booth for air purifiers at the Tsutaya ElectricsIn order to target Japanese air purifier market, which is in great demand, Coway operates a special booth for air purifiers at the Tsutaya Electrics located in Tokyo until March 2.

The Tsutaya Electrics is famous as a space where books, furniture, and interior products as well as home appliances are exhibited and sold. Coway showcases diverse air purifiers including a newly launched Multi Action Mini Air Purifier at the booth. Especially, visitors are able to check Coway’s unique air purification technology at the air purification performance experience zone.

Moreover, Coway holds a talk event where visitors can get valuable information on how to effective care fine dust, harmful air pollutants, and odor during cooking.

Coway has been well received by customers who care children and early adopters in the Japanese air purifier market on the strength of powerful purification performance and excellent product design since its entrance in 3Q 2018. The Multi Action Mini Air Purifier, a newly launched product, is a follow-up model of existing product (AP-1516D, recommended space coverage of 50m2) which gained great popularity in Korea in 2016.

Recommended space coverage was set at 33m2 to satisfy needs of local people who prefer small-sized products.

Lee Ji-hoon, the head of Global Retail Sales Division, said, “Our air purifiers are gaining popularity in Japan in recognition for innovative technology and design. We will focus on introducing our differentiated technology and executing strategic marketing communication in order to expand local business.”

Woongjin Coway News

2IR Webzine 2020

February

Open the website of “Water Taste Research Center”Coway announced that it opened the website of “Water Taste Research Center” on Feb. 26.

The website was prepared under the concept of valuable information on water in order to inform consumers of Coway professionalism and leadership in water-related business and deliver the importance of water taste.

Diverse experiential contents of the website help users easily understand the importance of clean water and water purifiers.

Water Sommelier, R&D, and Sensory Evaluation menus provide visitors with opportunities for understanding Coway’s research activities aimed at improving water taste from water purifiers.

This website is available to everyone without membership.

Kang Sang-hyun, the head of Research Division at the Environmental Technology Research Center, said, “Coway has been establishing a new standard for tasty water including the development of GPT Index with the responsibility as Korea’s representative water company. It is expected that water taste will become a criterion for selection of water purifier beyond existing product quality, design, and filter technology.”

Woongjin Coway News

- Demonstrate Coway’s professional-ism and leadership in water

- Deliver experiential water-related contents

IR Webzine 2020. Feb.