Annual Report 2021

China Merchants China Direct Investments Limited Annual Report 2021 20 INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) REVIEW OF INVESTMENTS (CONTINUED) Yunnan Jinlanmei International Travel Investment Development Co., Ltd. (“Jinlanmei Travel”) was established in Mengla County, Xishuangbanna Dai Autonomous Prefecture, Yunnan in 2016, with registered capital of RMB100 million. Based in Yunnan, Jinlanmei Travel will seek to establish a global presence and engage broadly in the operation of tourism and shipping within the territorial waters of the Lancang/Mekong River. Jinlanmei Travel was established jointly by the Fund and Shanghai-listed Yunnan Metropolitan Real Estate Development Co., Ltd. (“ YM Real Estate ”), among others, with stakes of 20% and 35%, respectively. In October 2016, the Fund completed the capital contribution of RMB10 million (equivalent to US$1.49 million) to Jinlanmei Travel. In July 2021, YM Real Estate, the single largest shareholder of Jinlanmei Travel, transferred its 35% stake in Jinlanmei Travel to its related party, Yunnan Kangqi Enterprise Management Co., Ltd. As of the end of 2021, the carrying value of the Fund’s interest in Jinlanmei Travel was US$0.57 million, representing a decrease of 17.39% from the value at the end of last year of US$0.69 million. In 2021, the company completed the inspection and acceptance of a small-sized cruise ship with 60 seats and conducted normal business activities, while actively promoting the construction of a tourism pier. However, as the coronavirus disease pandemic has had an ongoing effect on the tourism industry in Xishuangbanna, many trips have had to be cancelled across the autonomous prefecture in 2021. The tourism industry in the Jinlanmei area, and especially the river tourism business, has been hobbled by these suspensions, which did have relatively material negative impact on the company’s operation during the year. Qinghai Provincial Qinghai Lake Tourism Group Co., Ltd. (“Qinghai Lake Tourism”) was established in Xining, Qinghai in 2008. It is a tourism operator with a focus on Qinghai Lake, a national 5A-class scenic spot, and is principally engaged in product development, business operations and provision of services related to tourism in Qinghai Lake and the surrounding regions. The Fund agreed to advance cash of RMB200 million in total to Qinghai Lake Tourism for a period of 3 years, with the right to convert the loan into an equity interest in Qinghai Lake Tourism during the term of the loan, subject to the fulfillment of certain precedent conditions. In August and September 2017, the Fund disbursed RMB50 million (equivalent to US$7.50 million) and RMB150 million (equivalent to US$22.93 million), respectively, amounting to RMB200 million (equivalent to US$30.43 million) in aggregate. Pursuant to a supplemental agreement to the convertible loan agreement entered into between the Fund and Qinghai Lake Tourism dated 9 May 2019, the Fund has received aggregate loan repayments of RMB200 million from Qinghai Lake Tourism, representing a full recovery of the loan made by the Fund. On 22 January 2021, the Fund entered into a letter of confirmation with Qinghai Lake Tourism with respect to an extension of interest payments, pursuant to which Qinghai Lake Tourism may postpone the payment of interest due for the loan of RMB200 million to 30 June 2022. The Fund will continue to closely monitor the situation with a goal to recover the interest, but will also consider whether to exercise its rights to convert an amount up to RMB200 million into shareholding under the supplemental agreement during the joint-stock restructuring of Qinghai Lake Tourism. As of the end of 2021, the carrying value of the Fund’s debt in Qinghai Lake Tourism was US$5.98 million, representing an increase of 9.12% over US$5.48million at the end of last year.