Annual Report 2022

118 China Merchants China Direct Investments Limited Annual Report 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2022 5. FINANCIAL INSTRUMENTS (CONTINUED) Fair value measurement of financial instruments Fair value of the Group’s financial assets and financial liabilities that are measured at fair value on a recurring basis Most of the Group’s financial assets and financial liabilities are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets and financial liabilities are determined (in particular, the valuation techniques and inputs used), as well as the level of the fair value hierarchy into which the fair value measurements are categorised (Levels 1 to 3) based on the degree to which the inputs to the fair value measurements are observable. 31 December 2022 31 December 2021 Increase(+)/ decrease(-) in fair value of assets if 10% increase/ Increase(+)/ decrease(-) in fair value of assets if 10% increase/ Significant 31 December 31 December Relationship of decrease of the decrease of the 31 December 31 December Fair value Valuation unobservable 2022 2021 unobservable inputs unobservable unobservable Financial assets 2022 2021 hierarchy techniques input(s) Range Range to fair value inputs (Note 2) inputs (Note 2) US$ US$ US$ US$ Financial assets at FVTPL Listed equity securities (Note 1) 329,113,881 486,206,288 Level 1 Quoted bid prices in active market N/A N/A N/A N/A N/A N/A Equity securities (including equity securities traded on the National Equities Exchange and Quotations (“ New Third Board ”) and unlisted equity securities), unlisted preferred equity and participating preferred unit (Note 1) 276,439,769 357,474,540 Level 3 Market comparable companies - Earnings multiples - Revenue multiples - Book value multiples 19.1x - 24.7x 1.6x - 10.0x 0.7x - 6.8x 19.1x - 23.1x 1.8x - 273.6x 0.8x - 6.7x The higher the multiples, the higher the fair value +31,075,000/ -31,075,000 +36,565,000/ -36,565,000 - Discount rate for lack of marketability and specific risk 43.2% - 54.5% 42.8% - 54.2% The higher the discount rate, the lower the fair value -26,955,000/ +26,955,000 -43,351,000/ +43,351,000 Unlisted debt investment (Notes 1 and 4) 5,285,300 5,980,463 Level 3 Discounted cash flow - Discount rate 2% 0% The higher the discount rate, the lower the fair value -18,000/ +18,000 — Unlisted equity (Note 1) 71,231,656 57,915,319 Level 3 Net asset value - Net asset value of the underlying investments N/A N/A The higher the net asset value, the higher the fair vlaue N/A N/A Equity securities (including equity securities traded on the New Third Board and unlisted equity securities) (Note 1) 8,000,000 59,796,768 Level 3 Recent transaction price with discount / premium - Discount / premium for events / changes after transaction price 0% 0% The higher the discount / premium, the lower / higher the fair value +800,000/ -800,000 +5,979,677/ -5,979,677 Closing balance 690,070,606 967,373,378