Annual Report 2020

China Merchants China Direct Investments Limited Annual Report 2020 21 INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) REVIEW OF INVESTMENTS (CONTINUED) Xi’an Jinpower Electrical Co., Ltd. (“Jinpower Electrical”) was established in Xi’an, Shaanxi in 2001, and is a high technology enterprise principally engaged in the research and development, and production, of intelligent online monitoring systems for transmission lines and substation equipment for the power grid. The stock of Jinpower Electrical was listed for trading on the New Third Board in January 2016. The Fund invested RMB20 million (equivalent to US$3.03 million) in January 2011 and held 2.89 million shares in Jinpower Electrical as of 31 December 2020, accounting for 4.83% of the issued share capital of Jinpower Electrical. As of the end of 2020, the carrying value of the Fund’s interest in Jinpower Electrical was US$0.86 million, representing an increase of 26.47% over US$0.68 million at the end of last year. On 28 August 2020, Jinpower Electrical announced that its unaudited net loss for the first half of 2020 was RMB3.57 million, representing a decrease in the loss of 43.90%, as compared to the corresponding period last year, due mainly to a reduction in both selling expenses and management expenses during the period. In 2020, due to the outbreak of the novel coronavirus and other factors, and considering that both demand for online monitoring equipment and bidding volume by the State Grid Corporation of China (“ SGCC ”) were significantly down compared to previous years, the company suffered lower sales than expected. The company will be shifting part of its core business to focus on operations and maintenance, while it continues to respond to the construction of SGCC’s Ubiquitous Electric Power Internet of Things (IoT) project, which started in 2019. Meanwhile, the company will continue to promote its self-developed Ubiquitous Electric Power IoT sensors as it attempts to proactively expand the loT product market. Anhui Iflytek Venture Capital LLP (“Iflytek Venture Capital”) was established in Hefei, Anhui in December 2015, with an investment horizon of 7 to 9 years and with a fund size of RMB602 million. Its major investment targets are industries related to the Internet and applications of AI in China, primarily to areas including education, healthcare, tourism, motor vehicles, Internet of Things (IoT), smart hardware, information security, e-commerce, interactive entertainment, smart toys, robotics and Internet advertising. The general partner and investment manager of Iflytek Venture Capital is Wuhu Iflytek Investment Management LLP, which is responsible for defining and executing the investment strategy for Iflytek Venture Capital, as well as for managing their operations. The Fund has committed to subscribe to an aggregate of RMB90 million by installment, for a 14.95% interest in Iflytek Venture Capital. In December 2016, August 2017, April 2018, January 2019, March 2020 and July 2020, the Fund completed capital contributions of RMB36 million (equivalent to US$5.19 million), RMB13.50 million (equivalent to US$2.01 million), RMB13.50 million (equivalent to US$2.15 million), RMB13.50 million (equivalent to US$1.99 million), RMB4.50 million (equivalent to US$0.65 million) and RMB9 million (equivalent to US$1.29 million) to Iflytek Venture Capital, respectively, representing an aggregate of RMB90 million (equivalent to US$13.28 million) or 100% of the subscription amount committed by the Fund. In addition, through the end of December 2020, the Fund received cash distributions from Iflytek Venture Capital in a cumulative amount of RMB33.89 million. As of the end of 2020, the carrying value of the Fund’s interest in Iflytek Venture Capital was US$12.33 million, representing an increase of 26.20% over US$9.77 million at the end of last year. Through the end of December 2020, Iflytek Venture Capital has made investments in a total of twenty-seven projects, including two new investments in 2020. Among these twenty-seven projects, Iflytek Venture Capital has exited entirely from three projects and has exited partially from another three projects. Furthermore, one project has been reviewed and approved for listing by the Chinext Listing Committee in Mainland China.