Annual Report 2021

China Merchants China Direct Investments Limited Annual Report 2021 112 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2021 5. FINANCIAL INSTRUMENTS (CONTINUED) Fair value measurement of financial instruments Fair value of the Group’s financial assets and financial liabilities that are measured at fair value on a recurring basis Most of the Group’s financial assets and financial liabilities are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets and financial liabilities are determined (in particular, the valuation techniques and inputs used), as well as the level of the fair value hierarchy into which the fair value measurements are categorised (Levels 1 to 3) based on the degree to which the inputs to the fair value measurements are observable. 31 December 2021 31 December 2020 Increase(+)/ decrease(-) in fair value of assets if 10% increase/ Increase(+)/ decrease(-) in fair value of assets if 10% increase/ Significant 31 December 31 December Relationship of decrease of the decrease of the 31 December 31 December Fair value Valuation unobservable 2021 2020 unobservable inputs unobservable unobservable Financial assets 2021 2020 hierarchy techniques input(s) Range Range to fair value inputs (Note 2) inputs (Note 2) US$ US$ US$ US$ Financial assets at FVTPL Listed equity securities (Note 1) 486,206,288 423,278,417 Level 1 Quoted bid prices in active market N/A N/A N/A N/A N/A N/A Listed equity securities within lock-up period (Note 1) — 16,725,161 Level 3 Quoted bid price in active market and adjusted for lack of marketability - Discount rate for lack of marketability N/A 9.6% The higher the discount rate, the lower the fair value N/A -178,000/ +178,000 Equity securities (including equity securities traded on the National Equities Exchange and Quotations (“ New Third Board ”) and unlisted equity securities), unlisted preferred equity and participating preferred unit (Note 1) 357,474,540 294,607,458 Level 3 Market comparable companies - Earnings multiples - Revenue multiples - Book value multiples 19.1x - 23.1x 1.8x - 273.6x 0.8x - 6.7x 12.0x - 84.8x 2.4x 1.4x - 6.7x The higher the multiples, the higher the fair value +36,565,000/ -36,565,000 +28,736,000/ -28,736,000 - Discount rate for lack of marketability and specific risk 54% 52% The higher the discount rate, the lower the fair value -43,351,000/ +43,351,000 -30,587,000/ +30,587,000