Annual Report 2022

21 China Merchants China Direct Investments Limited Annual Report 2022 INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) REVIEW OF INVESTMENTS (CONTINUED) As of the end of 2022, the unaudited net asset value of Iflytek Venture Capital was RMB2,436 million, representing an increase of 5.33% compared to an audited net asset value as of the end of last year. Through the end of December 2022, Iflytek Venture Capital has made investments in twenty-seven projects. Currently, Iflytek Venture Capital has entered into the investment exit period. Of these projects, four projects have been fully exited and four projects (including iFlyHealth) have been partially exited. Iflytek Co., Ltd. (“Iflytek”) was established in 1999 and is headquartered in Hefei, Anhui. It was listed on the SME Board of the Shenzhen Stock Exchange in May 2008. It is a national key software enterprise dedicated to the research of intelligent speech, language technologies, and AI technologies; the development of software and chip products; the provision of speech information services; and the integration of e-government systems. During the period of November to December 2016, the Fund acquired 4.54 million A shares of Iflytek at an average price of RMB19.09 (adjusted) per share on the secondary stock market with an aggregate invested amount of RMB130 million (equivalent to US$18.83 million). As of 31 December 2022, the Fund held a total of 6.81 million A shares of Iflytek, as a result of the receipt of 2.27 million new shares via a capitalisation issue from Iflytek in 2018, accounting for 0.293% of the issued share capital of Iflytek. In June 2022, the Fund received a cash dividend (net of tax) of RMB0.65 million from Iflytek for 2021. As of the end of 2022, the carrying value of the Fund’s interest in Iflytek was US$32.07 million, representing a decrease of 42.83% from the value at the end of last year of US$56.10 million. The Fund’s unrealised loss attributable to its investment in Iflytek for 2022 was negative of US$19.90 million, while the relevant amount for 2021 was US$12.27 million. On 3 July 2022, the board of directors of Iflytek approved a repurchase plan for A shares of the company. According to the repurchase plan, the total amount of funds for the repurchase will not exceed RMB1 billion and will not be less than RMB500 million. Under the condition that the price of the repurchased shares shall not exceed RMB58.60 per share, it is estimated that the number of shares to be repurchased will not be less than 17,064,846 shares, representing approximately 0.73% of the total issued share capital of the company, based on the upper limit of the repurchase amount of RMB1 billion. Furthermore, it is estimated that the number of shares to be repurchased will not be less than 8,532,423 shares, representing approximately 0.37% of the total issued share capital of the company, based on the lower limit of the repurchase amount of RMB500 million. The repurchase period will be 12 months from the date the repurchase plan was approved by the board of directors. All repurchased shares will be used for subsequent issuances of shares under the company’s share incentive or employee stock ownership plans. As of 31 December 2022, Iflytek has repurchased 18,555,961 shares of the company, representing 0.80% of the total issued share capital of the company, for an amount of RMB759 million. The highest and lowest repurchase price per share was RMB44.60 and RMB32.17, respectively. On 30 January 2023, Iflytek pre-announced that its unaudited net profit for 2022 would be in a range of RMB467 million to RMB623 million, down 60% to 70% year-over-year. The decrease in profit was mainly due to the impact of unfavourable factors such as the resurgence of coronavirus pandemic in 2022, as well as a decrease in gain on the change in fair value of listed stock investments held by the company due to stock price fluctuations as compared to last year.