Annual Report 2022

15 China Merchants China Direct Investments Limited Annual Report 2022 INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) REVIEW OF INVESTMENTS (CONTINUED) CCT constantly reviews its trust projects to identify projects with potential risk, as well as to review and evaluate existing risk protection measures. As a result, the firm has gradually reduced its scope of business with certain real estate enterprises. Starting from the second half of 2021, it was reported that several large real estate enterprises have been suffering financial difficulties. In this regard, CCT has closely monitored any risks this may pose to its existing projects, and has taken corresponding risk mitigation measures as soon as practical, in order to protect the interests of trust product investors. CCT has formulated specific strategies for real estate trust projects with default risk, and is making good progress in mitigating the risk posed by some of these projects. Furthermore, several new policies adopted by the regulatory authorities since November 2022 may help real estate enterprises to mitigate risk and to solve their financial difficulties, especially those policies designed to make it easier to obtain financing (whether by loans, debt, or equity). However, CCT will almost certainly continue to devote considerable time and effort to managing risk in this business. On 17 June 2022, CCT won two awards: the Excellent Securities Investment Trust Product and the Excellent Family Office of the “The Second Session of Golden Honour Award for China Asset Management and Wealth Management Industry in 2022.” On 30 December 2022, CCT’s “Assembled Fund Trust Plan Products of Huiying Series” was recognised with the “Outstanding Securities Investment Trust Product Award” of “Golden Wisdom Award 2022” by JRJ Navigation China. Thus, CCT has now received awards by JRJ Navigation China for five consecutive years. 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 and held a 4.98% equity interest in JIC Leasing as of 31 December 2022. As of the end of 2022, the carrying value of the Fund’s interest in JIC Leasing was US$16.23 million, representing a decrease of 23.80% from the value at the end of last year of US$21.30 million. The Fund’s unrealised loss attributable to its investment in JIC Leasing for 2022 was negative of US$3.36 million, down 88.49% year-over-year. In 2022, JIC Leasing strived to overcome the impact of the coronavirus pandemic, carefully implemented the regulatory requirements in all aspects of its operations, proactively served the national strategies, and continued to focus on the steady development of the business. As a result, JIC Leasing recorded an unaudited net profit of RMB353 million for 2022, up 12.97% year-over-year. In June 2022, JIC Leasing withdrew its application for an initial public offering (IPO), previously submitted in May 2017, and has obtained a “notice of termination of examination” from the China Securities Regulatory Commission (“ CSRC ”). This decision was based on a financial adviser’s recommendation, per their analysis of the review policy and industry regulatory policy on the listing of quasi-financial enterprises, as promulgated by the CSRC. Furthermore, it was approved by the shareholders meeting of JIC Leasing.