Launched “Clinic Bidet” with the Function of Sitz Bath

- Developed the ‘Sitz Bath Water Stream’ through joint research with colorectal surgery of Seoul National University Hospital for the first time in Korea

- ‘Micro Soft Stream’ for female users for the first time in Korea

- First to introduce the “Euro Sterilization System” that sterilizes every path inside the bidet where water travels

Hot Issue

Recorded KRW 496.1 billion in sales and KRW 97.0 billion in operating profit for 3Q

- Efficient control of rental asset disposal loss by maintaining stable cancellation rate- Hit the quarterly rental sales in 3Q with 310 thousand units- Continued growth in the homecare business

IR WEBZINE2014. October

Market ReviewStock Market

The KOSPI slid 2.76% from the previous month to 1,964.43 points at the close of trading in October. Foreign investors who had led the domestic stock market showed strong selling of large-cap stocks during the period, which rolled the KOSPI back down 2,000 points. They have sold some KRW 3.3 trillion worth of stocks since mid September.

This unfavorable market environment was unleashed by strong US dollar, diffusion of pessimism about European economy, and disappointing 3Q earnings release of the domestic large companies. However, the collapse of the KOSPI in early October was somewhat offset since the middle of the month thanks to advanced countries’ rapid responses, strong purchasing power aiming at short-term margins, Korean government’s economic stimulus plans, and the release of the New Dividend Index by KRX. During the period, insurance (+5.8%), electrical & electronic equipment (+2.9%), and securities (+2.2%) sectors showed strong stance, while construction (-10.9%), transport equipment (-8.4%), and telecommunication (-7.5%) sectors fell most sharply.

In November, the prevailing forecast is that the KOSPI will take on the contraction of volatility and seek for stability. Mitigated concerns about interest rate increase are a positive factor, while the depreciation of Yen guided by the Bank of Japan will be an obstacle to the domestic companies. Therefore, it’s not easy to expect a swift rebound of the KOSPI.

IR WEBZINE2014. October

Market ReviewStock Price

The stock price of Coway fell 3.2% from the previous month to KRW 81,600 at the end of October. It surpassed KRW 90,000 in mid October once again backed by strong purchasing of institutional investors. However, it was dragged down by the drastically bearish KOSPI and investors’ attitudes for taking margin. Meanwhile, the increase of trading volume is expected to show the signal of preparing a rebound around KRW 80,000, the support level price since September.

Currently, large-cap stocks are so bearish due mainly to unfavorable 3Q earnings release, while the stock price of Coway remains stability thanks to unflappable sales growth in flagship rental business and double-digit operating margin, relatively high level in the industry. This advantage will give rise to strong stock price when the KOSPI will turn bullish.

During October, the number of shares held by foreigners increased 58,923 shares or +0.1%, compared with the prior month. As of the end of October, they maintained 54.65% ownership. Domestic institutional investors marked net selling of 497 shares during the same period.

Classification% change of COWAY %change of

KOSPI%change of KOSPI200Stock Price vs. KOSPI vs. KOSPI200

5 Day -12.54 -14.55 -15.64 2.01 3.10

20 Day -3.77 -2.41 -2.84 -1.36 -0.93

60 Day -8.21 -2.83 -1.08 -5.38 -7.13

58,923 shares(+0.1%)

-497 shares-3.20%

IR WEBZINE2014. October

42,150,950 shares

(as of October. 31, 2014)

Changes in Stock Price in October

Changes in Shares Held by Foreigners in October

Net Changes in Shares Held by Institutional Investors in October

Market ReviewStock Price

• Strong Buy

• Buy

• Hold

• Underperform

• Sell

0

4

0

0

0

Average Ratings Average Target Price = \111,500

Sell StrongBuy Low :\105,000

High :\120,000

2014-10-27 | Shinhan Investment Corp | Target price : 115,000 | BUY

Structural boom for rental biz in 2015Coway posted K-IFRS standalone sales of W496.1bn (+1.4% YoY) and operating profit of W97bn (-0.1% YoY). Rental accounts stood at 4.54mn (+3.6% YoY) and ARPU (Average Revenue Per User) was …

FULL REPORT VIEW

2014-10-27 | Korea Investment & Securities | Target price : 106,000 | BUY

Fared well in 3Q14; Recovery and dividend in 4Q143Q14 separate sales grew only 1.4% YoY but OP met our expectation at W97bn (OPM 19.5%). While Cowayachieved the fattest quarterly profitability in 3Q13 onreduced commission costs due to slowed new sales, …

FULL REPORT VIEW

2014-10-27 | KDB Daewoo Securities | Target price : 120,000 | BUY

Earnings quality continues to improveFor 3Q, Coway announced non-consolidated preliminary revenue of W496.1bn (+1.4% YoY) and operating profit of W97bn (flat YoY; OP margin of 19.6%). Revenue was slightly lower than expected …

FULL REPORT VIEW

2014-10-24 | Mirae Asset Securities | Target price : 105,000 | BUY

Weak 3Q, better 4QCoway has reported inline weak 3Q14 results. We expect the company’s earnings growth to resume from 4Q and think the company’s healthy earnings growth and improving cash management …

FULL REPORT VIEW

IR WEBZINE2014. October

Coway News

First in the Industry to Obtain the NET Certification with the Sitz Bath Stream Technology

Coway’s sitz bath water stream technology obtained the NET (New Excellent Technology) certification, hosted by the Ministry of Health & Welfare and conducted by the Korea Health Industry Development Institute.

The sitz bath stream technology, jointly developed by Coway and the Colorectal Surgery of Seoul National University Hospital, was highly recognized in the evaluation. In particular, this certification is significantly meaningful in the way that it is the first case in the industry.

This system reduces the stream pressure and minimizes the impact on anus by focusing streams onto one point and lets users enjoy the sitz bath that feels like sitting on a fountain. This new technology was applied to the ‘Clinic Bidet (BASH21-A)’ which launched this month.

Dr. Gyu-ju Park, Colorectal Surgeon of Seoul National University Hospital who joined the research with Coway on the sitz bath stream, said “Clinical trial showed that the sitz bath stream was able to reduce the anorectal pressure similar to the regular sitz bath. The similar effect will help to prevent anorectal diseases.”

Seon-yong Lee, Chief of Environmental Technology Research Center, said “This technology was developed based on the fact that many people are suffering from anorectal diseases today. We will continue to give our customers new values in life through developing innovative technologies and products.”

The NET certification is a certification mark given by the Korea Health Industry Development Institute on new health technology that are developed in Korea. It certifies the safety and functionality of technologies in the fields of that are close to national health, such as food, medicine, and cosmetic product, according to the Health Medical Technology Act.

IR WEBZINE2014. October

Coway News

Recorded KRW 496.1 billion in sales and KRW 97.0 billion in operating profit for 3Q

On the 24th, Coway announced that the company continued stable growth in 3Q. Non-consolidated sales (K-IFRS) in 3Q increased 1.4% year-on-year to KRW 496.1 billion and operating profit was KRW 97.0 billion, similar to the same period of the previous year. Net profit rose by 6.6% to KRW 66.4 billion.

Sales growth stemmed from efforts for maintaining low rental cancellation rate, growth of rental sales by launching innovative products, and continued growth in the homecare business.

► Efficient control of rental asset disposal loss by maintaining stable cancellation rate Coway has been focusing on maintaining low cancellation rate by continuously strengthening the quality of products and services. As a result, cancellation rate in 3Q dropped 0.08% over the previous quarter, recording 0.96%.

► Growth of rental sales3Q rental sales reached 310 thousand units thanks to launching innovative products such as the sparkling water purifier. Especially, the accumulated sales at the end of 3Q surpassed 999 thousand units, up 14.3% year-on-year, hitting a new record. Consequently, the amount of 3Q rental sales increased 5.3% year-on-year to KRW 352.7 billion.

► Continuous growth in the homecare businessSales from the homecare business centered on selling and managing mattress soared 57.8% year-on-year to KRW 17.0 billion in 3Q. This was mainly attributable to completing the entire mattress lineup. The number of managing accounts also exceeded 200 thousands.

► Overseas businessThe accumulated sales in overseas business recorded KRW 134.0 billion, an increase of 17.5%, at the end of 3Q. During the same period, Those of local subsidiaries in Malaysia and the US also increases of 17.8% and 14.3% to KRW 61.7 billion and KRW 31.7 billion, respectively.

Jae-ho Lee, Head of Operation Management Department, said “Thanks to continuously launching innovative products and growth in the homecare business, we were able to secure stable growth in 3Q. We believe this trend will continue in 4Q as well.“

- Efficient control of rental asset disposal loss by maintaining stable cancellation rate- Hit the quarterly rental sales in 3Q with 310 thousand units- Continued growth in the homecare business

IR WEBZINE2014. October

Coway News

Received the “Carbon Management Sector Winner” Award for 6 Consecutive Years

Coway received the “Carbon Management Sector Winner” in the selected consumer goods sector from the CDP (Carbon Disclosure Project) Korea in recognition of its superior carbon management. This is the 6th award in a row.

The CDP, a non-profit organization located in the UK, launches analysis reports on major listed companies’ responses to climate change. The index released through the report is recognized to have the greatest public confidence in the field of environmental management evaluation.

This evaluation has targeted top 250 listed companies in the KOSPI market capitalization and items included the system and strategy for response to climate change, greenhouse gas reduction performance, and the level of greenhouse gas disclosure.

Coway won 97 points on disclosure score and 95 on performance score in recognition of proactive eco-friendly activities such as introducing solar power in worksites, reducing energy usage through efficient production system, and increasing energy efficiency through eco-friendly technology development. The disclosure score presents the fidelity of disclosure on CDP requests and the performance score shows the company’s actions regarding easing, adapting and transparency of climate change.

Especially, although Coway is not included in the greenhouse gas and energy target management system or emission trading system, the company achieved entering top 10 place on both disclosure and performance score.

Gawng-sik Shin, Chief of Environmental Quality Research Center, said “This award is very meaningful that our efforts and passion on environmental management have been recognized at home and abroad. We will continue to play our part and responsibility as the environmental friendly company that represents Korea.”

On top of that, Coway was enrolled on the DJSI Asia Pacific in this September 2 years in a row.

[Ref. 1: Greenhouse gas target management system, emission trading system]

Greenhouse gas target management system aims to achieve national greenhouse gas reduction goal and efficiently respond to climate change. In line with this system, companies that emit large amount of greenhouse gas and consume much energy have to set up and manage the goals for reducing greenhouse gas and energy consumption.

Greenhouse gas emission trading system is a system based on the market mechanism, where each company is assigned to certain amount of greenhouse gas emission rights and let companies trade the emission surplus and shortage amount. It will start in next year January 1st and it is the first in the Asian region.

IR WEBZINE2014. October

Coway News

Participate in the “Carbon Footprint Gallery-Seoul 2014”

From 15th to 21st, Coway takes part in the “Carbon Footprint Gallery-Seoul 2014” held at the ARA Art Center located in Insa-dong.

The exhibition, hosted by the Korea Productivity Center, was planned to promote the development of eco-friendly products and the culture of eco-friendly consumption. The concept of the exhibition is “Adding Emotion and Art into Eco-friendly Products”.

A total of 12 domestic and overseas low-carbon certified companies, including Samsung Electronics and Coway, display various art pieces created with eco-friendly products.

Coway utilizes its slim-type water purifier (CHP-260L) to show an art piece that signifies “Coway’s clean water gives life to the people and the environment of the future”.

The water purifier (CHP-260L) is an eco-friendly product with the first-class energy efficiency rating. Also, it demonstrates optimal water tank size to meet the amount of daily water consumption of customers and high space efficiency.

Gawng-sik Shin, Chief of Environmental Quality Research Center, said “Coway performs detailed analysis of environmental effect of any product from the developmental phase. We will continue to create eco-friendly value and strengthen our status as a leader in eco friendliness.”

IR WEBZINE2014. October

Coway News

Launched “Clinic Bidet” with the Function of Sitz Bath

Coway launched “Clinic Bidet (BASH21-A)”. It is the first in Korea to offer Sitz Bath Stream function which has been jointly developed by Coway and the colorectal surgery of Seoul National University Hospital.

■ Jointly developed Korea’s first ‘Sitz Bath Stream’ with the colorectal surgery of Seoul National University Hospital

The Sitz Bath Stream function focuses two streams onto one point to reduce the stream pressure and minimizes the impact on the anus. Therefore, users can enjoy the sitz bath which will feel like sitting on a fountain. The sitz bath function can be used by pressing the “Clinic” button on the control panel of the bidet. Once the button is pressed, mist stream is sprayed for first 15 seconds to relax the anus and then 2 minutes and 45 seconds of soft sitz bath stream is sprayed. Compared to the regular sitz bath, Clinic Bidet maintains the water temperature at a certain level more stably and prevents the secondary contamination by using filtered water. Also, it can be used without undressing or getting the bath ready.

Dr. Gyu-ju Park, Colorectal Surgeon of Seoul National University Hospital, said “We have conducted a clinical trial on the sitz bath stream and we were able to obtain results that the stream will lower the anorectal pressure during the resting period similarly as the regular sitz bath.” and “Because it creates similar effects as the regular sitz bath, it will help to prevent anorectal diseases.

■ ‘Micro Soft Stream’ for the female users

This product offers Korea’s first female user exclusive function, the ‘Micro Soft Stream”. This function sprays very soft stream from the micro size hole to reduce skin irritation and enhance cleansing of women’s sensitive skins. Other existing female exclusive cleansing mode uses 1 or 3 to 6 thick streams, which can be too harsh on women and does not cover the wide area needed for the female users.

- Developed the ‘Sitz Bath Water Stream’ through joint research with colorectal surgery of Seoul National University Hospital for the first time in Korea

- ‘Micro Soft Stream’ for female users for the first time in Korea - First to introduce the “Euro Sterilization System” that sterilizes every path inside the bidet where water travels

IR WEBZINE2014. October

Coway News

■ Introduced the “Euro Sterilization System” that sterilizes every path inside the bidet where water travels

Clinic Bidet offers the “Euro Sterilization System” that self-sterilizes every path inside the bidet where water travels for the customers who stresses on sanitation of the bidet. The system automatically sterilizes twice a week (based on 12 times of usage per day) by producing electrolysis sterilization water. In addition, nozzle sterilization and pottery sterilization function, which cleans the nozzle and the pottery part with the electrolysis sterilization water, has been added to sterilize the parts where germs spread easily.

■ Luxurious appearance with clean touch panel and exterior design

Clinic Bidet’s control panel has been made entirely out of touch system to make the bidet easy and simple to use. Also, the simple control panel and the white tone color of the product give luxurious appearance.

Soon-mok Hwang, head of Product Planning Team 2, said “We’ve noticed that the number of people who are suffering from anorectaldiseases have increased, which led to developing the Clinic Bidet” and “If the previous bidets were focused on cleansing and hygiene, Clinic Bidet is an innovative product that added health to the existing values.”

Clinic Bidet’s rental price is KRW 25,900 per month. (with registration fee of KRW 100,000) and lump sum sales price is KRW 819,000.

IR WEBZINE2014. October

Coway News

Re:NK’s “Cell-to-Cell Essence” Won an Award in the World Package Design Contest

Re:NK’s “Cell-to-Cell Essence” won the bronze award in the luxury sector at the from the ‘Pentawards 2014’, a world renown package design contest.

The Pentawards is the only international contest that evaluates package design. It celebrates the 8th anniversary this year. The winners are selected through comprehensively evaluating the creativity and innovation of package design and ensuing brand value.

The package design of Re:NK’s Cell-to-Cell Essence was highly recognized in the way that it materialized the luxurious and functional image as the premium brand by embodying product features with soft golden glow and the cells image.

Won-hee Lee, head of the Cosmetic Design Team, said “We are thrilled that the Re:NK’s differentiated design and competitiveness were recognized by the world class contest. We will continue to enhance our design competitiveness to deliver our products’ unique values and ensure high quality.”

The Cell-to-Cell Essence, launched in last March, is a total anti-aging essence that concentrates one million real cells extracted from the plant without destroying the original form to moisturize from deep inside of the skin to create moist and elastic skin.

IR WEBZINE2014. October

Coway News

Ranked First in the Korea Sustainability Index (KSI) for 5 Consecutive Years

On October 7, Coway took the first place in the environmental home appliance sector at the “2014 Korea Sustainability Index Award” which was held at Ritz-Carton Hotel. This was 5th awards in a row.

Korea Sustainability Index (KSI) is conducted by the Korea Standard Association. The index evaluates performance on social responsibility and sustainability of Korea’s 45 major business categories and 169 companies based on ISO 26000, an international guidance standard on social responsibility.

Coway received 61.28 points from the index, exceeding the average 59.78 points of environmental home appliance category and entire average 57.49 points.

The company received high scores on “efforts for environmental pollution prevention”, “efforts for consumer welfare and safety protection”, “efforts for resolving customer dissatisfaction and dispute”, and “increasing demands for the safety of products and services”.

Gawng-sik Shin, Chief of Environmental Quality Research Center, said “Coway is making great efforts to create sustainable value as the company that represents the rental business and environmental home appliance service industry. We will continue our efforts to become a company that grows with the stakeholders based on the idea of making the world a better place”.

IR WEBZINE2014. October

Coway News

Creating Characters to Help Children Form Water Drinking Habits

Coway created characters for the ‘Water Comma Project’ in association with the ICONIX, the ‘Pororo’ character producer, to help children to form advisable water drinking habits. The characters, named ‘Coming’ and ‘Cowri’, symbolize the elephant to make children feel a sense of friendliness toward water.

Besides the main characters, who are siblings, there are other characters like friends, mother, and father to help children feel more familiar to the characters.

Coway also utilized the characters to create educational animation films, talking posters, cups, and stickers and plans to provide them to more than 500 children education facilities participating in the Water Comma Project for free. These contents and items have been created through consultation and verification by experts in caring children in the fields of oriental medicine, psychology, medical, and child development.

Woo-jin Lee, head of the Contents Development Team of ICONIX, said “We’ve gladly decided to participate in this project with an advisable purpose of helping children form water drinking habit.”A survey showed that 84.2% of children in Korea were in a state of insufficient water-drinking. And many advanced countries have been already conducting various campaigns to help children for advisable water-drinking habits. Based on these facts, Coway started the ‘Water Comma Project’.

This campaign aims to teach the importance of water to children and help them develop water-drinking habits by themselves in the long run.

- To make children feel a sense of friendliness toward water- Made character-based animation films and cups to provide them to participating education facilities for free- Character contents will be created through consultation and verification by experts in caring children.

IR WEBZINE2014. October

EVENT

DATE

LOCATION

NOTE

IR Conference_Earning Release for 3Q, 2014

2014-10-24

Korea Exchange, Yoido, Seoul

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IR Activities

IR WEBZINE2014. October