KB Value FocusKorea
Equity Fund
2018.8
• Please note that marketing materials without an approval code granted
from the Compliance Division of KB Asset Management are not official
materials authorized under our internal procedure. This marketing
material is for general information purposes only and subject to change.
Investors should be aware that this presentation does not purport to be
a complete explanation of risks and other risks may also be relevant
from time to time. In the future the Fund may be exposed to risks that
are currently difficult to predict. Risks that are not described in it are
considered as immaterial at the moment, but they may become
substantial later on and adversely affect the fund. KB Asset
Management does not guarantee investment decisions and investment
outcomes based on the information of this marketing material.
Approval Code Granted from the Compliance Division of KB Asset Management:
2018_105
KB Asset
Management
KB Asset
Management
2.
2
※ Thisdocumentisforillustrativepurposesonlyanddoesnotrepresentanyactualinvestmentperformance.Priortoinvesting,investorsmustreadthe
Fund’sprospectusinfulltomakeaninformedinvestmentdecision.
※ Aninvestment in the Fundinvolves investment risks, including the possible loss of the principal amount invested.KBAssetManagementand any of
related companies do not and are not obligated to guarantee principal and/or investment returns shown in this presentation. In addition, the Fund
maypay outdividendsbasedontheFund’sperformanceandgains orlosses oninvestmentsmaybeincurred.Suchgainsandlossesareimputedto
investors.
※ Investorsshouldbeawarethatitdoesnotpurporttobeacompleteexplanationofrisksandotherrisksmayalsoberelevantfromtimetotime.Inthe
future the Fund may be exposed to risks that are currently difficult to predict. Risks that are not described in it are considered as immaterial at the
moment,buttheymaybecomesubstantiallateronandadverselyaffectthefund.
※ ThevalueoftheFund’sinvestmentsissubjecttochangeduetovariousfactors,e.g.,geopoliticallandscape,unrestinthefinancialmarket,changesin
interest rates, currency risks, and credit crunch. The performance quoted here and is past performance and is not a guarantee of future results. In
addition,thereisnoguaranteethatanyforecastsoropinionswillberealized.
※ The returnsillustratedinthispresentationindicatereturnsbefore taxes.Inaddition,investorsin theFundmaybesubjecttoariskofdouble-taxation.
DependingonmarketconditionsaftertheFundissetup,transactioncoststhathavenotbeenspecifiedinthisdocumentmaybeincurredadditionally.
Disclaimers
3.
Fund Information
33
Investment ManagementFee
Sales Charge /
Redemption Charge
Minimum initial investment
(KRW)
CLASS C - F 0.79% N/A 10,000,000,000
Legal Structure / Domicile South Korea
ISIN / Bloomberg Ticker KR5223174917
Launch date 2009-11-09
NAV (USD)
* As of August 31, 2018
853.42 mil
Portfolio Manager Woong-pil Choi, Younggu Nam
Benchmark KOSPI
Portfolio PER 7.21
Portfolio PBR 0.84
Turnover Ratio(1Y) 59.25
Standard Deviation (%) 11.02
Beta (1Y) 0.62
Sharpe Ratio (1Y) 0.13
Information Ratio (1Y) 0.39
Classes of shares available for subscription
4.
Investment Philosophy
4
Active Management
Theaim is to achieve excess returns based on thorough fundamental research &
concentrated investment.
Research capability is much stressed: sector managers are in charge of
investment universe and model portfolio. They conduct their own company
analyses and invest with conviction. The focus is on stock selection based on
bottom-up approach.
Long-term Approach
Portfolios are managed based on a long-term perspective rather than a short-
term momentum.
Managers decide to invest preemptively based on research focusing on a long-
term perspective.
Thorough Risk
Management
Market and credit risks are constantly monitored so that upcoming and
subsequent changes are identified.
Changes are met with appropriate responses while the effect on the stock
holdings is examined.
Cutting Through the noise – a disciplined approach to stock picking
5.
10 Question StockResearch Framework
5
Business
Model
Q1 — Are there good earnings visibility
for the next 5 years?
Q2 — Is the business model a model that
can sustain earnings?
Structural
Growth
Financial
Strength
Paradigm
Shift
Valuation
Q3 — Can it maintain structural growth
though market diversification and/or
expansion?
Q4 — Which phase of organizational life
cycle is the company going through?
Q5 — Are the return profiles
worthwhile?
Q6 — Can the earnings be retained
without intense capital investment?
Q7 — Is the company a market leader
and/or pioneer that can fundamentally
change the industry?
Q8 — Does the company have a lead in
terms of the paradigm shift?
Q9 — Is the company undervalued
compared to intrinsic values?
Q10 — Why doesn’t the market realize
this undervaluation?
Business
Model
Structural
Growth
6.
Investment Process ofKB Value Focus
6
Investment Universe (500+)
Constructed by Research Team
Reviewed on a monthly basis
Final call: CIO
Actual Portfolio (Focused on Stock Selection)
Constructed by Portfolio Management Team
Final call: Portfolio Management Team
Valuation, earnings forecast, price attractiveness, market & credit risk consistently monitored
Invest mainly in premium and re-rating stocks, occasionally picking discount stocks, if necessary
Market Cap ≥ 300 bn. KRW
Recent 3-month Trading volume ≥ 10 bn. KRW
Has not been in the Korea Exchange investment warning s list in the last 2 years
Stocks that do not meet criteria above require the CIO’s approval to be included in the Investment Universe.
KOSPI(750+ Constituents) & KOSDAQ (1150+ Constituents)
Quantitative Analysis
PER & PBR : 30 % discounted compared
to the market
Dividend Yield: Higher than 3%
Other factors: Free Cash Flow, EBIDTA
Qualitative Analysis
10 Question Stock Research Frame
work
Premium: Stocks with good reasons to be traded at a higher valuation
Re-rating: Stocks undervalued compared to intrinsic values
Discount: Stocks with good reasons to be cheap
7.
We Investfor the long term
Our main advantage in a market that focuses on short term gains
We are Korean specialists and purely stock driven
Select stocks irrespective of sector weight and index classification
Freedom to choose the best stocks with less restrictions
Team investment management encourages creativity and nurtures collective intelligence
We are optimistic and constantly seek value
Bottom-up stock selectors always looking for valuation anomalies
The market may reflect information quickly, but the participants are not efficient
Our Core Investment Beliefs
7
We invest for the long term in undervalued companies
8.
The fund’s focus& principles
8
Undervaluation is not the only
focus
Rather than blindly following the
benchmark index
While maintaining our principle
of Buy & Hold
Earning value is as much
important
We engage in active trading
upon significant price changes
We primarily invest in stocks
with upside potential
Robust Business Model
Excellent Structural Growth
Sustainability of Earnings
Turnover Ratio:
2013: 56.03%
2014: 62.38%
2015: 70.53%
2016: 34.90%
We do not invest in large cap
companies just to follow the
benchmark index
9.
Focused on stockselection, not on forecasting market outlook
Stocks that have significantly higher intrinsic value
Companies posting stable growth of earnings
Stocks that match these conditions are actively purchased when the prices of the stocks tumble or the stocks are neglected
Selection of Stocks
9
If stocks that generate stable profits based on their
franchise value or intrinsic competitive advantage are
undervalued compared to the market valuation, the
value of the stocks will eventually converge to the
intrinsic value
Re-Rating
Market Share
Predictability of Earnings
Sustainability of Earnings
If companies that are identified to have expected
structural growth and paradigm shifts are
undervalued relative to their growth potential. Their
structurally stable growth potential will eventually be
recognized by consensus and the stocks will be
valued higher than the market valuation
Premium
Probability of Market Diversification
Life Cycle
Growth Potential of Flagship Products
10.
Track Recordvs Benchmark (has outperformed the KOSPI by 90.3%)
KB Value Focus Performance
10Source: Morningstar. Data as of Aug. 30st, 2018. The performance quoted is past performance and is not a guarantee of future results. All figures are net of fees, and gross of tax. Returns are calculated in
USD.No representation is made that any portfolio will or is likely to achieve profits or losses similar to those shown.
0.00
40.00
80.00
120.00
160.00
200.00
2009-11 2011-02 2012-05 2013-08 2014-11 2016-02 2017-05 2018-08
KBVF KOSPI
Why Value Focus?
12
KBValueFocus Korea Equity FundInvests in
02 focuses on stock selection rather than indices or economic outlook
•The fund invests in stocks that are undervalued relative to their intrinsic values, including values of an
enterprise, assets, and earnings
•It also invests in stocks that are expected to see a stable growth in earnings while being less affected
by external changes such as economic fluctuations
•Such is a new type of value investment strategy, which has evolved from a traditional value strategy
01 invests in stocksthat are undervalued and expected to see stablegrowth
•The fund does not forecast the market or make sector bets
•Focuses on stock selection whereas portfolio composition and sector weights are results of stock selection
•We believe that our strategy is a necessary evolution from a traditional value investment strategy
13.
KBVF examples: Com2us& Fila
13
Attractive valuationandgrowth potential
Low Valuation / Good Business Model Good Business Model
0
10000
20000
30000
40000
50000
2010-08-31 2012-08-31 2014-08-31 2016-08-31 2018-08-3
Fila
Fila
0
50000
100000
150000
200000
2009-12-31 2011-12-31 2013-12-31 2015-12-31 2017-12-31
Com2us
Com2us
2017 2016 2015 2014
Revenue 508 513 434 235
Operating
Income
194 192 166 101
Net Income 142 152 126 79
2017 2016 2015 2014
Revenue 2,530 967 816 797
Operating
Income
217 12 81 94
Net Income 62 323 133 56
Source: Bloomberg Historical Data as of Sept. 30th, 2018. The performance quoted is past performance and is not a guarantee of future results. No representation is made that any portfolio will or is likely to
achieve profits or losses similar to those shown. Returns are calculated in KRW. Figures related to KB Value Focus are net of fees, and gross of tax.
14.
Portfolio of KBValue Focus
14
Stock Portfolio BM
Fila Korea Ltd 5.69 0.13
Com2us Corporation 5.68 0.00
Dongwon Industries Co. 5.27 0.07
Meritz Financial Group 4.40 0.12
Sk Holdings Co. Ltd 3.62 1.25
Korea Zinc 3.47 0.53
HDC 3.42 0.17
Meritz Fire & Marine Ins 3.39 0.14
Krea Real Estate Invmt 3.16 0.05
Korea Reinsurance 2.83 0.09
Top 10 Holdings
(%)Breakdown by Cap Size
Weight (%) KOSPI KOSDAQ
Large Cap 25.20 0.00
Middle Cap 41.38 6.50
Small Cap 17.82 9.10
Total 84.41 15.59
Sector Allocation
GICS Sector Portfolio BM
Consumer Discretionary 19.51 11.42
Industrials 18.88 13.24
Financials 16.19 11.86
Materials 14.89 9.46
Information Technology 10.98 32.58
Consumer Staples 9.45 7.81
Real Estate 3.51 0.15
Cash 2.44 0
Telecom. Services 2.35 2.36
Others 1.80 11.11
Fund Facts
ISIN/BB ticker KR5223174917
Primary
Benchmark
KOSPI
Domicile South Korea
Base Currency South Korean Won
Morningstar
Category
Korea Large-Cap
Equity
Fund Legal
Structure
Unit Trust
Fund Size USD 853.42 mil.
Inception Date 2009-11-09
Manager Name Woongpil Choi
Portfolio Statistics
Portfolio PER 7.21
Portfolio PBR 0.84
Turnover Ratio(1Y) 59.25
Standard Deviation (%) 11.02
Beta (1Y) 0.62
Sharpe Ratio (1Y) 0.13
Information Ratio (1Y) 0.39
Summary
Source: Morningstar, Statpro. Historical Data as of August. 30th, 2018. The performance quoted is past performance and is not a guarantee of future results. No representation is made that any portfolio will or
is likely to achieve profits or losses similar to those shown. Returns are calculated in KRW. Figures related to KB Value Focus are net of fees, and gross of tax.
15.
KB Star Funds– KB Value Focus Korea Equity
15
Investment Management Fee
Sales Charge /
Redemption Charge
Minimum initial investment
(USD/EUR)
A ACC USD/EUR 2.00% 5.00% 1,000
I ACC USD/EUR 0.75% N/A 5,000
I2 ACC USD/EUR 0.50% N/A 5,000,000
Legal Structure / Domicile UCITS SICAV / Luxemboug
ISIN / Bloomberg Ticker LU1361298729 (X Share Class) / KBVKXAU LX
Launch date June 20, 2016
NAV (USD)
* As of August 31, 2018
57.72 mil
Portfolio Manager Woong-pil Choi, Younggu Nam
Service Providers
Investment Manager KB Asset Management Co Ltd
Depositary Bank, Central Administrator and Transfer Agent:
HSBC Bank plc, Luxembourg branch
(Tel: +352-40-46-46-767,
E-mail: Transferagency@lu.hsbc.com)
Management Company Carne Luxembourg S. A.
Legal Advisor Elvinger, Hoss & Prussen Luxembourg
Auditor Deloitte Audit S.à r.l.
Classes of shares available for subscription