Annual Report 2020

China Merchants China Direct Investments Limited Annual Report 2020 24 INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) REVIEW OF INVESTMENTS (CONTINUED) Pony AI Inc. (“Pony AI”) was established in Silicon Valley, the United States, in December 2016, and is a research and development company in China that focuses on technology solutions for autonomous driving. In July 2018, the Fund invested US$8 million for a 0.889% equity interest in Pony AI. In April 2019, the Fund exercised its anti- dilution rights and invested US$0.61 million in Pony AI during a new round of equity financing, with the equity interest remaining unchanged after the investment. As such, the Fund has invested a total of US$8.61 million and held a 0.889% equity interest in Pony AI. In March 2020, Pony AI completed another round of equity financing led by Toyota Motor of Japan, with a post-investment valuation of US$3 billion. In January 2021, Pony AI completed a further round of equity financing led by a scientific innovation investment platform affiliated with the Ontario Teachers’ Pension Plan of Canada, with a post-investment valuation of US$5.3 billion. The Fund’s equity interest in Pony AI was diluted to 0.670%, accordingly. As of the end of 2020, the carrying value of the Fund’s interest in Pony AI was US$35.19 million, representing an increase of 308.71% over US$8.61 million at the end of last year. The Fund’s unrealised gain attributable to its investment in Pony AI for 2020 was US$26.57 million, while the relevant amount for 2019 was US$3,433. Through the end of December 2020, Pony AI has recorded a total accumulated autonomous driving distance of over 4 million kilometres. The increase was mainly attributable to a significant increase in fleet scale, the geographic area of the test-run zone, the daily operating hours and operating efficiency. MPI (i.e. the average mileage traveled between two interventions) increased by 150-200% in 2020. On 9 February 2021, the company announced that Lexus RX450, the L4 autonomous driving vehicle equipped with its newest generation system, AlphaX, had been officially launched from its standardised production line, and was about to undergo all-weather autonomous driving tests on public roads in Guangzhou, Beijing and Shanghai, and they would be placed into scale operations as part of its Robotaxi fleet. Furthermore, the collaboration project in Irvine, California between Pony AI and Yamibuy.com, the largest shopping platform for Asian goods in North America, continues to operate during the novel coronavirus pandemic, and the collaboration agreement will remain in effect until mid-2021. Arashi Vision Inc. (“Arashi Vision”) was established in Shenzhen, Guangdong in July 2015, and is striving to become a global leader engaged in the research, development and manufacture of 360-degree video products. The Fund invested RMB20 million (equivalent to US$2.83 million) and RMB10 million (equivalent to US$1.44 million) in September and November 2019, respectively, bringing the Fund’s total investment in Arashi Vision to RMB30 million (equivalent to US$4.27 million), for a 1.625% equity interest in the company. As of the end of 2020, the carrying value of the Fund’s interest in Arashi Vision was US$3.29 million, representing an increase of 14.63% over US$2.87 million at the end of last year. Arashi Vision convened an inaugural meeting of the joint-stock limited company on 18 January 2020, at which it conveyed that an application for listing on the SSE STAR Market was scheduled for September 2020. Arashi Vision eventually submitted the listing application on 23 October 2020, which was then accepted for review on 28 October 2020. The company is now at the questioning stage for its listing application. Moreover, the company officially changed its name from “Shenzhen Arashi Vision Co., Ltd.” to its present name on 26 February 2020. According to its listing document, Arashi Vision recorded an audited net profit of RMB55.73 million for the first half of 2020.