Annual Report 2022

18 China Merchants China Direct Investments Limited Annual Report 2022 INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) REVIEW OF INVESTMENTS (CONTINUED) On 19 February 2022, NBA China and PUMA, the world’s leading sports brand, jointly announced a long-term partnership in which PUMA became an official marketing partner of NBA China. Both parties will continue to use their joint resources in order to promote the strength of their respective brands as well as the diversification development of basketball industry. On 30 March 2022, China Central Television Channel 5 (CCTV-5) resumed the broadcasting of NBA games, which had been suspended since October 2020. As a match that is competitive, entertaining, enjoyable and open to the public, the NBA3X 3-on-3 Basketball Challenge 2022 held audition through satellite competitions, and then held qualifying matches in various cities. The regional finals of the tournament were held in Guangzhou, Changsha, Xi’an and Chengdu from mid-August to mid- September. The NBA3X tournament was held with the support of many NBA China’s marketing and media partners. Oriental Pearl Media Co., Ltd. (“Oriental Pearl”) is a new operating entity formed following a merger and reorganisation with BesTV New Media Co., Ltd. (“ BesTV ”), a listed company under Shanghai Media Group Ltd. (“ SMG ”), and Shanghai Oriental Pearl (Group) Co., Ltd., formerly also a listed company, along with the injection of relevant advertising, content production and new media assets by SMG, its largest shareholder, before being renamed to Oriental Pearl from BesTV. The restructuring was completed in June 2015. In May 2015, the Fund invested RMB120 million (equivalent to US$19.62 million), through a partnership entity, in Oriental Pearl for a beneficial ownership of 3.70 million A shares. Subsequently, the Fund beneficially owned a total of 4.81 million A shares of Oriental Pearl, as a result of the receipt of 1.11 million new shares via a capitalisation issue from Oriental Pearl in 2018. In October 2020, the partnership entity that held shares of Oriental Pearl for the Fund dissolved due to end of its business license, and the Fund becomes the direct holder of those shares. During the period of November to December 2020, the Fund sold a total of 3.27 million A shares of Oriental Pearl for net proceeds of RMB31.16 million (equivalent to US$4.74 million). In March 2021, the Fund further sold a total of 0.55 million A shares of Oriental Pearl for net proceeds of RMB5.30 million (equivalent to US$0.81 million). As of 31 December 2022, the Fund still held 0.995 million A shares of Oriental Pearl, accounting for 0.029% of the issued share capital of Oriental Pearl. The Fund will continue to sell the remaining shares at an appropriate time. In August 2022, the Fund received a cash dividend of RMB0.27 million from Oriental Pearl for 2021. As of the end of 2022, the carrying value of the Fund’s interest in Oriental Pearl was US$0.95 million, representing a decrease of 35.81% from the value at the end of last year of US$1.48 million. On 30 January 2023, Oriental Pearl pre-announced that its unaudited net profit for 2022 would be in a range of RMB127 million to RMB190 million, down 90% to 93% year-over-year. The decrease in profit was mainly due to the impact of the coronavirus pandemic on the company’s core businesses, such as culture and tourism, and video shopping. In the meantime, the company’s income and return on certain projects and equity investments also declined year-over-year for the reasons of pandemic and industry changes.