Annual Report 2020

China Merchants China Direct Investments Limited Annual Report 2020 19 INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) REVIEW OF INVESTMENTS (CONTINUED) Oriental Pearl Media Co., Ltd. (“Oriental Pearl”) is a new operating entity formed following a merger and reorganisation with BesTV New Media Co., Ltd. (“ BesTV ”), a listed company under Shanghai Media Group Ltd. (“ SMG ”), and Shanghai Oriental Pearl (Group) Co., Ltd., formerly also a listed company, along with the injection of relevant advertising, content production and new media assets by SMG, its largest shareholder, before being renamed to Oriental Pearl from BesTV. The restructuring was completed in June 2015. In May 2015, the Fund invested RMB120 million (equivalent to US$19.62 million), through a partnership entity, in Oriental Pearl for a beneficial ownership of 3.70 million A shares. Subsequently, the Fund beneficially owned a total of 4.81 million A shares of Oriental Pearl, as a result of the receipt of 1.11 million new shares via a capitalisation issue from Oriental Pearl in 2018. In October 2020, the partnership entity that held shares of Oriental Pearl for the Fund dissolved due to end of its business license, and the Fund becomes the direct holder of those shares. During the period of November to December 2020, the Fund sold a total of 3.27 million A shares of Oriental Pearl for net proceeds of RMB31.16 million (equivalent to US$4.74 million). As of 31 December 2020, the Fund still held 1.54 million A shares of Oriental Pearl, accounting for 0.045% of the issued share capital of Oriental Pearl. The Fund will continue to sell the remaining shares at an appropriate time. As of the end of 2020, the carrying value of the Fund’s interest in Oriental Pearl was US$2.11 million, representing a decrease of 66.35% from the value at the end of last year of US$6.27 million. On 29 October 2020, Oriental Pearl announced that its unaudited net profit for the first three quarters of 2020 was RMB1.31 billion, up 1.01% year-over-year. Yunnan Jinlanmei International Travel Investment Development Co., Ltd. (“Jinlanmei Travel”) was established in Mengla County, Xishuangbanna Dai Autonomous Prefecture, Yunnan in 2016, with registered capital of RMB100 million. Based in Yunnan, Jinlanmei Travel will seek to establish a global presence and engage broadly in the operation of tourism and shipping within the territorial waters of the Lancang/Mekong River. Jinlanmei Travel was established jointly by the Fund and Shanghai-listed Yunnan Metropolitan Real Estate Development Co., Ltd., among others, with stakes of 20% and 35%, respectively. In October 2016, the Fund completed the capital contribution of RMB10 million (equivalent to US$1.49 million) to Jinlanmei Travel. As of the end of 2020, the carrying value of the Fund’s interest in Jinlanmei Travel was US$0.69 million, representing a decrease of 18.82% from the value at the end of last year of US$0.85 million. Jinlanmei Travel faced some challenges during 2020 that have hindered its growth to some extent. First, the number of tourists visiting Xishuangbanna has decreased significantly, due largely to the outbreak of novel coronavirus. Then, in addition, travel is being limited to once per week throughout 2020 due to new regulations affecting certain navigation channels in the Lancang River. In response, the company has been taking steps to manage risks posed by the pandemic, while investing in its marketing programs and expanding its business offerings into the field of wedding photography, in an effort to broaden its customer base and develop new revenue streams for the company.