Annual Report 2021

CHAIRMAN’S STATEMENT China Merchants China Direct Investments Limited Annual Report 2021 4 The board of directors (the “ Board ”) announces that the audited consolidated net asset value of China Merchants China Direct Investments Limited (the “ Company ”) and its subsidiaries (together, the “ Group ”) as of 31 December 2021 amounted to US$805.70 million, representing an increase of 3.90% compared to US$775.43 million in 2020. The net asset value per share was US$5.289, representing the same percentage increase of 3.90% compared to US$5.090 in 2020. The Group’s audited consolidated profit after taxation for 2021 was US$24.21 million, representing a decrease of 73.04% compared to an audited consolidated profit after taxation of US$89.79 million for last year. The Board has recommended the payment of a final dividend of US$0.07 per share for the year 2021, the same as last year. In addition, a special dividend of US$0.07 per share will be proposed, while a special dividend of US$0.01 per share was distributed last year. As there were no interim dividends during 2021, total dividends payable for the year 2021 were US$0.14 per share, compared to US$0.08 per share last year, representing an increase of 75%. In 2021, the global economy recovered gradually from the fight against coronavirus disease pandemic. The World Bank estimated that, in 2021, the global economy grew by 5.5%, the US economy by 5.6%, the Eurozone economy by 5.2% and the Japanese economy by 1.7%, while China’s gross domestic product (GDP) grew by 8.1%. Viewed by quarter, the GDP growth rates for China from the first to the fourth quarter were 18.3%, 7.9%, 4.9% and 4.0%, respectively. China’s economy continued to recover steadily in 2021, and both its economic development and pandemic prevention and control measures maintained a leading position in the world. According to a preliminary report by the National Bureau of Statistics, in 2021, total consumption expenditures, gross capital formation, and net exports of goods and services drove economic growth by 5.3, 1.1 and 1.7 percentage points, respectively, and their contribution rates to economic growth were 65.4%, 13.7% and 20.9%, respectively. Furthermore, the Consumer Price Index of China for 2021 rose by 0.9%, representing a decrease of 1.6 percentage points as compared to the growth rate last year, residing within a reasonable range. In 2021, the A shares market of China experienced some up-and-down swings. The SSE Composite Index fluctuated several times between 3300 and 3750 points, peaking at 3732 points on 18 February and falling to its lowest point of the year at 3313 points on 28 July, before rebounding in mid-November to close at 3640 points by the end of 2021, up 4.80% as compared to the end of 2020. In 2021, the Hong Kong stock market generally experienced a downward trend. The Hang Seng Index increased to its highest point of the year at 31183 on 18 February, early in the year, then fell to close at 23398 points at the end of 2021, representing a decrease of 14.08% as compared to the end of 2020. At the end of 2021, the Group’s total holdings in investment projects amounted to US$967.37 million (US$909.27 million at the end of 2020), accounting for 95.05% of the Group’s total asset value and representing an increase of US$58.10 million. This was largely due to a net increase in the fair value of investment projects. Meanwhile, cash and cash equivalents were US$36.64 million, accounting for 3.60% of the total asset value of the Group. In 2021, 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 three new projects in 2021, all of which focused on information technology—namely, Beijing Huashun Xin’an Technology Co., Ltd., Xinyi Information Technology Ltd. and Rizhao Azuri Technologies Co., Ltd. The Group also increased its investment in an existing information technology project—Anhui iFlytek Healthcare Information Technology Co., Ltd. The amount invested in the above projects was US$22.54 million in total.