Annual Report 2021

China Merchants China Direct Investments Limited Annual Report 2021 16 INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) REVIEW OF INVESTMENTS (CONTINUED) JIC Leasing Co., Ltd. (“JIC Leasing”) was established in Beijing in 1989 and is a leading independent finance leasing firm in China, principally engaged in finance leasing for businesses in a wide range of industries, including information technology; high-end equipment manufacturing; and healthcare, environmental protection and new energy. The Fund invested RMB246 million (equivalent to US$38.78 million) in October 2015 and held a 4.98% equity interest in JIC Leasing as of 31 December 2021. As of the end of 2021, the carrying value of the Fund’s interest in JIC Leasing was US$21.30 million, representing a decrease of 57.11% from the value at the end of last year of US$49.66 million. The Fund’s unrealised gain attributable to its investment in JIC Leasing for 2021 was negative of US$29.20 million, while the relevant amount for 2020 was US$17.24 million. In 2021, JIC Leasing proactively adopted various regulatory requirements, operated its business in a conservative manner and adhered to the necessities of risk management in order to ensure progress while maintaining stability. Due to stricter regulation of its industry and the fact that its customers-related industries were greatly affected during the coronavirus disease pandemic, and after a prudent assessment of risks, the amount of risk provision for JIC Leasing increased significantly compared with last year, resulting in a decline in its unaudited net profit in 2021 compared with last year. JIC Leasing submitted the materials to apply for an initial public offering (IPO) with the China Securities Regulatory Commission (“ CSRC ”) in early May 2017. It is still in the queue for the CSRC’s review of its listing application for the Main Board of the Shanghai Stock Exchange and as of 31 December 2021, it ranked 3rd in the queue. From 2018 to 2021, JIC Leasing was recognised as “AAA Credit Rating of Beijing Enterprise” for four consecutive years, as well as ”China Finance Leasing Company of the Year” by China Association of Enterprises with Foreign Investment in 2021. China Reinsurance (Group) Corporation (“China Re”) originated from The People’s Insurance Company of China, founded in 1949 as the first insurance company to be established in New China, with its headquarters in Beijing. It was listed on the Hong Kong Stock Exchange in October 2015. As currently the largest local reinsurance group in China, the business of China Re spans reinsurance, insurance, asset management, insurance brokerage, and insurance media. During the periods of November to December 2015 and of February to April 2016, respectively, the Fund acquired 67.24 million H shares of China Re at an average price of HK$2.23 per share on the Hong Kong secondary stock market, for an aggregate invested amount of HK$150 million (equivalent to US$19.31 million). As of 31 December 2021, the Fund held 67.24 million H shares of China Re, accounting for 0.158% of the total issued share capital of China Re. In August 2021, the Fund received a cash dividend (net of tax) of HK$2.98 million from China Re for 2020. As of the end of 2021, the carrying value of the Fund’s interest in China Re was US$6.47 million, representing a decrease of 5.55% from the value at the end of last year of US$6.85 million. On 28 October 2021, China Re announced that the unaudited net profit for its insurance business for the first three quarters of 2021 was RMB5.70 billion, down 7.62% year-over-year.