Annual Report 2019

INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) China Merchants China Direct Investments Limited Annual Report 2019 15 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 for a 6.46% equity interest in JIC Leasing. As of the end of 2019, the carrying value of the Fund’s interest in JIC Leasing was US$29.40 million, representing an increase of 6.02% over US$27.73 million at the end of last year. In 2019, JIC Leasing continued to follow the principle of making progress while ensuring stability and strictly controlling risks. It also continued to focus on its principal businesses and optimised its professionalised ancillary systems and mechanisms in a gradual way. Its principal businesses and various financial indicators thus grew steadily during the year, with budget targets and major work tasks completed successfully. In 2019, JIC Leasing recorded single-digit growth in its unaudited net profit as compared to 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. In 2019, JIC Leasing continued to actively maintain communication with the CSRC and local finance bureaus, and completed an update to its IPO application materials as scheduled. JIC Leasing is still in queue for review by the CSRC, now among the next 15 companies to be reviewed for listing on the Main Board of the Shanghai Stock Exchange. 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 2019, 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 2019, the Fund received a cash dividend (net of tax) of HK$2.13 million from China Re for 2018. As of the end of 2019, the carrying value of the Fund’s interest in China Re was US$11.05 million, representing a decrease of 19.05% from the value at the end of last year of US$13.65 million. On 7 February 2020, China Re pre-announced that its unaudited net profit for 2019 ranged from RMB5.78 billion to RMB6.15 billion, up 55% to 65% year-over-year. The primary reasons for the increase in net profit were a rise in investment income as compared to last year, along with the inclusion of income from a newly acquired business during the year. On 17 December 2019, China Re announced that China Reinsurance (Hong Kong) Company Limited, a wholly-owned subsidiary of China Life Reinsurance Company Ltd., which is a subsidiary of China Re, has been authorised to conduct insurance business in or from Hong Kong by the Hong Kong Insurance Authority. The company was incorporated in Hong Kong with registered capital of HK$2 billion and is mainly engaged in the life and health reinsurance business. The establishment of the company represents an important step by China Re in reinforcing its international strategic plan.