Annual Report 2019

INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) China Merchants China Direct Investments Limited Annual Report 2019 17 REVIEW OF INVESTMENTS (CONTINUED) As of the end of 2019, the unaudited net asset value of China Media Investment was RMB2.34 billion, representing a decrease of 16.95% compared to the end of last year. By the end of December 2019, China Media Investment had completed a full exit from four projects, while continuing to hold three projects, namely Star China, Shanghai Oriental DreamWorks Co., Ltd. (“ Oriental DreamWorks ”) and Weiying. Of these, Shanghai Canxing Culture Media Co., Ltd., the domestic operating entity of Star China, has submitted the materials to apply for an IPO with the CSRC by the end of December 2018, and its application to be listed on the Chinext of the Shenzhen Stock Exchange is in queue for review. Furthermore, China Media Investment has a concrete plan to exit from the Oriental DreamWorks project, with plans for implementation in 2020. As for the lapsed disposal of the equity interest in Weijing, please see the section on China Media Management above. NBA China, L.P. (“NBA China”) is a limited liability partnership incorporated in the Cayman Islands in 2007. NBA China conducts all of the NBA’s businesses in the Greater China Region, including television broadcasting rights, advertising, sponsorships, events, digital media, and merchandising, among other new businesses. The original investment by the Fund in 2008 was US$23 million, representing a 1% partnership interest in NBA China. The Fund subsequently received partial returns of capital from NBA China in 2013, 2016 and 2017, respectively, for a total amount of US$23 million, representing a full recovery of the capital invested in NBA China by the Fund. As of 31 December 2019, the Fund held a 1% partnership interest in NBA China. The Fund received a cash distribution from NBA China of US$1.44 million in January 2019. As of the end of 2019, the carrying value of the Fund’s interest in NBA China was US$14.63 million, representing a decrease of 2.73% from the value at the end of last year of US$15.04 million. The Fund’s unrealised gain attributable to its investment in NBA China for 2019 was negative of US$0.41 million, down 97.66% year-over-year. On 7 March 2019, NBA China and Alibaba jointly announced an expansion of their partnership by carrying out comprehensive cooperation in areas such as NBA video content, programme broadcasting, e-commerce and big data. On 10 April 2019, the NBA, Top Sports (a leading retailer of sports equipment and sporting products in China), and Nike (an official partner of the NBA) jointly announced the official opening of the NBA Beijing Flagship Store in Wangfujing, Beijing, as the biggest NBA flagship store outside the US. On 29 July 2019, NBA and Tencent jointly announced that the contract between the two parties, which was to expire in 2020, will instead be renewed for another five years. As a result, Tencent’s role as the exclusive official digital media partner of NBA China will continue until 2025. In early October 2019, the general manager of the NBA Rockets posted a controversial tweet about Hong Kong on Twitter, which stirred wide debate in China and harmed the image of the NBA, at least temporarily. As a result of this incident, CCTV Sports Channel (CCTV5) of the China Media Group reached a decision to suspend immediately the broadcast of NBA games in China. In addition, several partners of NBA China made public announcements in which they terminated or suspended cooperation with the NBA. The online platform Tencent Sports also suspended the broadcast of NBA preseason games (China) in October 2019, but the broadcast of certain NBA games has now resumed.