Annual Report 2021

China Merchants China Direct Investments Limited Annual Report 2021 29 INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) REVIEW OF INVESTMENTS (CONTINUED) As of the end of 2021, the carrying value of the Fund’s interest in Wuhan Rixin was US$4.04 million, representing an increase of 65.57% over US$2.44 million at the end of last year. On 23 August 2021, Wuhan Rixin announced that its unaudited net loss for the first half of 2021 was RMB18.15 million, while it recorded a net profit of RMB26.13 million for the same period last year. The loss was due mainly to an increase in raw material prices. Moreover, the revenue has yet to be recognised since the company’s revenue chiefly comes from the business of engineering, procurement and construction (EPC) of power stations, however the power stations are still in the construction stage and have yet to be delivered to the end customers. On 8 December 2021, Wuhan Rixin announced the completion of a private placement of new shares. The total amount of funds raised was RMB52 million at the issue price of RMB5.20 per share for 10 million shares, increasing the issued share capital of Wuhan Rixin from 117 million shares to 127 million shares. The Fund’s equity interest in Wuhan Rixin was thus diluted from 4.24% to 3.90%. Nanning Huiyou Xingyao Equity Investment Fund L.P. (“Huiyou Xingyao Fund”) was established in Nanning, Guangxi in September 2020, with an investment horizon of 5 to 7 years and with a total fund subscription amount of RMB113 million. Huiyou Xingyao Fund is a single-project equity investment fund, making equity investments solely in Wuhan YZY Biopharma Co., Ltd. (“ YZY Biopharma ”). YZY Biopharma is a pharmaceutical company with a bispecific antibody platform and related biopharmaceutical research and development capabilities. The fund manager of Huiyou Xingyao Fund is Tongde Qianyuan (Beijing) Investment Management Co., Ltd., which is responsible for providing consultation and advice on investment matters, as well as providing daily operations and investment management services. The Fund has committed to subscribe to an aggregate of RMB24 million by installment, representing 21.24% of the total fund subscription amount of Huiyou Xingyao Fund. The Fund completed capital contributions of RMB16.31 million (equivalent to US$2.47 million) and RMB7.69 million (equivalent to US$1.19 million) in November 2020 and July 2021, respectively, representing an aggregate of RMB24 million (equivalent to US$3.66 million) or 100% of the subscription amount committed by the Fund. As of the end of 2021, the carrying value of the Fund’s interest in Huiyou Xingyao Fund was US$3.79 million, representing an increase of 51.60% over US$2.50 million at the end of last year. Leveraging its advanced and mature bispecific antibody platform technology, YZY Biopharma has been deeply engaged in the bispecific antibody field for T-cell recruitment of target CD3, and has developed three CD3 bispecific antibody products (namely M802, M701 and Y150) which are at the clinical trial stage, as well as a number of other CD3 bispecific antibody products which are at various pre-clinical trial stages. Of these, the key product, M701, is a bispecific antibody medicine for malignant ascites. In June 2021, at the inaugural BioChina Summit Forum of Innovative Biomedical of China, five lists of Top Biopharmaceutical Companies in China were published, and YZY Biopharma was rated as one of the “Top 10 Leading Corporations for Bispecific Antibody Drugs in China.” In January 2022, YZY Biopharma completed its conversion into a joint-stock limited company and the Chinese name of the company also changed.