Annual Report 2019

CHAIRMAN’S STATEMENT China Merchants China Direct Investments Limited Annual Report 2019 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 2019 amounted to US$649.05 million, representing an increase of 12.87% compared to US$575.06 million in 2018. The net asset value per share was US$4.261, representing the same percentage increase of 12.87% compared to US$3.775 in 2018. The Group’s audited consolidated profit after taxation for 2019 was US$101.81 million, while the audited consolidated loss for last year was US$87.02 million. The Board has recommended the payment of a final dividend of US$0.07 per share for the year 2019, the same as last year. As there were no interim dividends or special dividends during 2019, total dividends payable for the year 2019 were also US$0.07 per share. In 2019, the growth of the US economy has slowed against a backdrop of sluggish global economy, the emergence of trade protectionism and the combined effects of various uncertainties. The US Federal Reserve (“ Fed ”) estimated that the US economy would reach a growth rate of 2.3% for 2019, down from 2.9% in 2018. Also affected by the external environment and geopolitical factors, fundamental macroeconomic data from the Eurozone showed that the growth rate has slowed significantly in that region, with both growth and inflation remaining at a low level. China’s Gross Domestic Product (GDP) growth in 2019 was 6.1%, which is in line with the expected target growth of 6% to 6.5% set at the beginning of the year, but still the lowest rate of economic growth in the past 29 years. According to a preliminary report by the National Bureau of Statistics, China’s GDP for 2019 was approximately RMB99 trillion, representing an increase of 6.1% over the previous year in terms of comparable prices. The yearly gross import and export volume of goods increased by 3.4% over the previous year, while the growth recorded last year was 9.7%. The growth rate of foreign trade has slowed but also has showed steady development overall. The yearly value added by the country’s larger industrial enterprises actually increased by 5.7% over the previous year, showing slow, but steady, growth. The Consumer Price Index of China for the year rose by 2.9% year-over-year, which is in line with the expected goal of about 3%. In 2019, the A shares market of China showed a significant uptrend in general. The SSE Composite Index rose continuously from the beginning of the year and climbed to 3288 points at its highest level of the year on 8 April 2019, but then dropped subsequently and fluctuated between 2750 points to 3050 points for a prolonged period. It finally closed at 3050 points at the end of 2019, which was 22.30% higher than that at the end of 2018. In 2019, the Hong Kong stock market generally experienced an upward trend with significant volatility over the period. In particular, the Hang Seng Index rose continuously from the beginning of the year and increased to 30280 points at its highest level of the year on 15 April 2019, and then declined to a low of 24900 points on 15 August 2019, with some recovery afterward. It finally closed at 28190 points at the end of 2019, representing an increase of 9.07% as compared to the end of 2018. At the end of 2019, the Group’s total holdings in investment projects amounted to US$713.97 million (US$634.21 million at the end of 2018), accounting for 89.91% of the Group’s total asset value and representing an increase of US$79.76 million. This was largely due to a net increase in the fair value of investment projects. Meanwhile, cash and cash equivalents were US$64.14 million, accounting for 8.08% of the total asset value of the Group.