Annual Report 2022

16 China Merchants China Direct Investments Limited Annual Report 2022 INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) REVIEW OF INVESTMENTS (CONTINUED) China Reinsurance (Group) Corporation (“China Re”) originated from The People’s Insurance Company of China, founded in 1949 as the first insurance company to be established in New China, with its headquarters in Beijing. It was listed on the Hong Kong Stock Exchange in October 2015. As currently the largest local reinsurance group in China, the business of China Re spans reinsurance, insurance, asset management, insurance brokerage, and insurance media. During the periods of November to December 2015 and of February to April 2016, respectively, the Fund acquired 67.24 million H shares of China Re at an average price of HK$2.23 per share on the secondary stock market, for an aggregate invested amount of HK$150 million (equivalent to US$19.31 million). During the period of September to December 2022, the Fund sold a total of 54.64 million H shares of China Re for net proceeds of HK$28.32 million (equivalent to US$3.63 million). As of 31 December 2022, the Fund still held 12.60 million H shares of China Re, accounting for 0.03% of the total issued share capital of China Re. Subsequent to the balance sheet date and in early January 2023, the Fund further sold the remaining 12.60 million H shares of China Re for net proceeds of HK$6.45 million (equivalent to US$0.83 million). As such, the Fund has sold all of the China Re shares that it held. In August 2022, the Fund received a cash dividend (net of tax) of HK$3.19 million from China Re for 2021. As of the end of 2022, the carrying value of the Fund’s interest in China Re was US$0.80 million, representing a decrease of 87.63% from the value at the end of last year of US$6.47 million (Note: The primary reason for the significant decrease in carrying value was exactly as mentioned above: the Fund sold a majority of its China Re shares before the end of 2022). On 10 February 2023, China Re pre-announced that its unaudited net profit for 2022 was estimated to be down by approximately 60% to 70% year-over-year. The primary reason for the decrease in profit was the decline in investment income year-over-year due to significant volatility in the capital markets. In addition, the company suffered losses from investments in certain non-controlled entities. China Media (Tianjin) Investment Management Co., Ltd. (“China Media Management”) was established in Tianjin, with registered capital of RMB60 million. The Fund invested RMB4.62 million (equivalent to US$0.68 million) in April 2010 for a 7.70% equity interest in China Media Management. As the general partner and investment manager of China Media Investment (see the section on China Media Investment below), China Media Management is responsible for defining and executing the investment strategy for China Media Investment, as well as for managing their operations. As of the end of 2022, the carrying value of the Fund’s interest in China Media Management was US$1.45 million, representing a decrease of 17.14% from the value at the end of last year of US$1.75 million. During the investment period, China Media Management helped China Media Investment to invest in an aggregate of seven projects, and also completed the disposal of four projects, namely OCJ ( 東方購物 ), Shanghai Jade East Propagation Co., Ltd., Renren Inc. and IMAX China Holding, Inc. Presently, China Media Management is still actively assisting with exit arrangements for the projects of Star China, Shanghai Oriental DreamWorks Co., Ltd. (“ Oriental DreamWorks ”) and Beijing Weiying Technology Co., Ltd. (“ Weiying ”).