Annual Report 2020

China Merchants China Direct Investments Limited Annual Report 2020 5 CHAIRMAN’S STATEMENT (CONTINUED) In 2020, the Investment Manager actively sought new investment opportunities, with intensive due diligence and the screening of many prospects. Consequently, the Group completed direct investments in five new projects, across a range of industries that included financial payment, information technology and pharmaceutical—namely, China UnionPay Co., Ltd., Anhui iFlytek Healthcare Information Technology Co., Ltd., CASREV FUND III-RMB L.P., Nanning Huiyou Xingyao Equity Investment Fund L.P. and Flexiv Ltd. The amount invested in the above projects, both completed and committed, was US$55.95 million in total. In 2020, the Group decided to exit from two direct investment projects due to the future prospects of the projects being less than expected. Therefore, the Group sold all of its equity interest in Jiangsu Huaer Quartz Materials Co., Ltd. and, in addition, transferred all of its equity interest in Guangxi Xinhua Preschool Education Investment Corporation Limited to the project’s major shareholder. The net proceeds of the above projects were US$5.78 million in total. Looking ahead to 2021, there will be challenges as well as opportunities. The World Bank anticipates that the global economy in 2021 may rise by 4%, following the sharp decline caused by the novel coronavirus pandemic last year. However, this outlook remains lower than the 4.2% previously forecasted last June. The downside risks include the possibility of a reoccurrence of the pandemic, a delay in vaccinations, or greater-than-expected collateral damage to the broader economy as a result of the pandemic. It is expected that the weak recovery of US economy may develop into a more stable and stronger recovery as the new administration takes office and as vaccines become more widely available—to be followed, potentially, by a strong recovery once the impact of the pandemic has been eliminated. With respect to China, there are three underlying factors that may continue to support the steady recovery of the economy. The first is the gradual introduction of favourable policies as part of the “14th Five-Year” plan, with a strong focus on technological innovation, industry upgrades and the reform of factor markets. The second is an improvement in the corporate profits driven by a transition from passive destocking to active restocking. And the third is the expansion of global trade, promoted by the weakening of the US dollar which further drives China’s import and export trade. Although we expect that various asset price risks, arising from slowing growth in the global economy (including China) in medium- to long-term and volatility in the capital markets, will bring certain challenges to our investment portfolio, the Investment Manager, as always, will face the challenges ahead and strive to identify new investment opportunities, as well as to seek to optimise our mix of investments in a way that will increase shareholders’ return. Lastly, on behalf of the Board, I would like to offer my heartfelt gratitude to the members of the Audit Committee, Nomination Committee and Investment Committee, and to the entire staff of the Investment Manager, for their many contributions and dedicated effort, and to the shareholders for their support. As always, I, with the Board, will continue to give our best effort in leading the Group as we seek to create value for shareholders in the coming year. Mr. ZHANG Jian Chairman Hong Kong, 29 March 2021