Annual Report 2019

INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) China Merchants China Direct Investments Limited Annual Report 2019 25 REVIEW OF INVESTMENTS (CONTINUED) In 2019, Pony AI obtained the Yangtze River Delta’s intelligent connected vehicle testing license to carry out autonomous driving testing on public roads in Shanghai, Anhui, Jiangsu and Zhejiang. Furthermore, it obtained a California autonomous driving operating license to provide autonomous driving mobility services for the public within California. In addition, Pony AI has also entered into collaboration with Toyota Motor of Japan and Hyundai Motor of Korea in areas of research and development of autonomous driving technology and testing for commercial applications. Shenzhen Arashi Vision Co., Ltd. (“Arashi Vision”) was established in Shenzhen, Guangdong in September 2014 and is striving to become a global leader engaged in the research, development and manufacture of 360-degree video products. The Fund invested RMB20 million (equivalent to US$2.83 million) in September 2019 for a 1% equity interest in Arashi Vision, and entered into an equity transfer agreement with an existing shareholder of Arashi Vision in October 2019 for the acquisition of another 0.625% equity interest in Arashi Vision at a price of RMB10 million, bringing the Fund’s total investment in Arashi Vision to RMB30 million, accounting for a 1.625% equity interest in the company. As of the end of 2019, the carrying value of the Fund’s interest in Arashi Vision was US$2.87 million. The 360-degree camera brand of “Insta360” created by Arashi Vision is a global leader in the field of 360-degree cameras and covers both the professional-grade and consumer-grade 360-degree imaging markets, including professional 3D/360-degree cameras, consumer 360-degree action cameras and camera products for mobile phones. Arashi Vision successfully launched four new products in 2019, including Insta360 EVO, a 3D anti-shake camera; Insta360 Titan, a professional 360-degree camera; Insta360 Go, a thumb-sized anti-shake camera; and Insta360 One R, an HD anti-shake action camera with interchangeable-lens, among which Titan and Go won the fifth and sixth annual CES Innovation Awards for Arashi Vision. Insta360 One X, its flagship product launched in 2018, continued to record remarkable sales volume worldwide, especially in the US, China, Japan and Germany. The sales revenue of Arashi Vision in 2019 is expected to increase by more than 120% as compared to last year. Shenzhen Geesun Intelligent Technology Co., Ltd. (“Geesun Intelligent”) was established in Shenzhen, Guangdong in 2006 and is a leading professional manufacturer of production equipment and automated production lines for lithium ion batteries and super capacitors in China. Its name was changed to Shenzhen Geesun Zhiyun Technology Co., Ltd. in April 2015 as a result of an acquisition and capital increase, and was further changed to its present name as a result of a transfer of its entire equity interest by its then controlling shareholder to CAS Investment Management Co., Ltd., then the second largest shareholder, in October 2016. The Fund invested RMB20 million (equivalent to US$2.93 million) in May 2010. As of 31 December 2019, the Fund’s equity interest in Geesun Intelligent was diluted from 6.78% to 5.32%, subsequent to an employee share incentive scheme completed in January 2019. As of the end of 2019, the carrying value of the Fund’s interest in Geesun Intelligent was US$4.65 million, representing a decrease of 11.09% from the value at the end of last year of US$5.23 million.