Annual Report 2024

26 China Merchants China Direct Investments Limited Annual Report 2024 INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) REVIEW OF INVESTMENTS (CONTINUED) China UnionPay Co., Ltd. (“China UnionPay”) was established in March 2002, with its headquarters in Shanghai. It is a leading enterprise in the financial payment industry and is responsible for the construction and operation of a nationwide unified inter-bank information exchange network for bank cards, the provision of professional services related to inter-bank information exchange for bank cards, the management and operation of the “UnionPay” brand name, and the formulation of business specifications and technical standards for inter-bank transactions for bank cards. The Fund invested RMB220 million (equivalent to US$31.12 million) in June 2020 for a 0.17% equity interest in China UnionPay. On 20 November 2023, the Fund signed an equity transaction contract with an independent third party, pursuant to which the Fund agreed to sell a 0.12% equity interest in China UnionPay to the independent third party, thereby realising investment gains from this partial disposal and obtaining funds of RMB275 million (equivalent to US$38.7 million) for working capital. The equity transfer was completed in the first quarter of 2024. As of 31 December 2024, the Fund held a 0.05% equity interest in China UnionPay, with a corresponding investment cost of RMB66.00 million (equivalent to US$9.33 million). In September 2024, the Fund received a cash dividend of RMB0.87 million from China UnionPay for 2023. As of the end of 2024, the carrying value of the Fund’s interest in China UnionPay was US$23.27 million, representing a decrease of 57.65% from the value at the end of last year of US$54.95 million. The Fund’s unrealised gain attributable to its investment in China UnionPay for 2024 was US$7.41 million, up 219.40% year-over-year. In May 2024, UnionPay International, a subsidiary of China UnionPay, announced that it had entered into a cooperation with the Rakuten Bank of Japan to launch a mobile banking APP that supports UnionPay QR code payment. The customers of Rakuten Bank can now use the mobile banking APP to complete payments by scanning a UnionPay QR code in Japan or China, or for other cross-border transactions. UnionPay has also become the first Chinese payment brand to offer QR code payment services to local residents in Japan. In June 2024, the themed event, “Explore China, Pay Your Way,” organised by the Chinese Banking Association of Hong Kong and co-organised by UnionPay International, was held in Hong Kong. This event aimed to deepen synergies within the industry and to accelerate the construction of an interconnected payment network in the Guangdong-Hong Kong-Macao Greater Bay Area, bringing a more convenient payment experience to Hong Kong and Macao residents heading north, as well as to foreigners from around the world coming to China. In December 2024, UnionPay International announced a cooperation agreement with WeChat Pay, allowing overseas UnionPay cooperative wallets to scan domestic WeChat Pay payment codes in order to complete a payment. A total of 8 wallets (namely Hong Kong’s BoC Pay of the Bank of China (Hong Kong), Octopus cards, PayMe of HSBC and Tap & Go, Mobile Banking of Bangkok Bank, K PLUS, NAVER Pay of South Korea, ICBC Mobile Banking (ICBC Pay) of Malaysia) have enabled this functionality in the first round, further expanding the mobile payment options for foreigners in China.