Annual Report 2022

24 China Merchants China Direct Investments Limited Annual Report 2022 INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) REVIEW OF INVESTMENTS (CONTINUED) Anhui iFlyHealth Co., Ltd. (“iFlyHealth”) was established in the High-tech Development Zone, Hefei, Anhui in 2016 and is a startup AI medical enterprise. The Fund invested RMB60 million (equivalent to US$8.6 million) in February 2020 and RMB50 million (equivalent to US$7.8 million) in November 2021, for an aggregate investment of RMB110 million (equivalent to US$16.40 million) in iFlyHealth, representing a 3.514% equity interest in iFlyHealth as of 31 December 2022. As of the end of 2022, the carrying value of the Fund’s interest in iFlyHealth was US$6.27 million, representing a decrease of 84.64% from the value at the end of last year of US$40.83 million. Through the end of June 2022, iFlyHealth’s product, “Assistant to the General Medical Practitioner,” was deployed in 30 provinces (autonomous regions and municipalities), as well as 353 districts and counties nationwide. It has been adopted by more than 50,000 grass-roots-level doctors and 100 million residents in total. Furthermore, it has helped the grass-roots-level doctors to complete more than 168 million standardised electronic medical records, and it has been used to provide more than 440 million AI-assisted diagnosis suggestions, and to add value in revising a diagnosis more than 540,000 (In this last scenario, the doctors revised their original diagnosis after referring to the diagnosis prompt of the “Assistant to the General Medical Practitioner,” after which the final diagnosis was consistent with the medical record information). As announced by its controlling shareholder, Iflytek, on 4 August 2021, iFlyHealth is actively preparing a plan for listing. As disclosed in the interim report for 2022 published by Iflytek, the controlling shareholder of iFlyHealth, on 23 August 2022, its operating revenue from the intelligent healthcare business segment amounted to RMB140 million, up 40.17% year-over-year. In October 2022, iFlyHealth established a new subsidiary, Shanghai iFly Zhixin Medical Technology Co., Ltd. (“ iFly Zhixin ”). By virtue of extensive product research and the development of “AI + medical” by iFlyHealth, iFly Zhixin will be able to offer AI capability construction and innovative applications in the field of cardiovascular health, as well as to realise the vision of digitised management of medical records over a lifetime for cardiovascular patients. China UnionPay Co., Ltd. (“China UnionPay”) was established in March 2002, with its headquarters in Shanghai. It is a leading enterprise in the financial payment industry and is responsible for the construction and operation of a nationwide unified inter-bank information exchange network for bank cards, the provision of professional services related to inter-bank information exchange for bank cards, the management and operation of the “UnionPay” brand name, and the formulation of business specifications and technical standards for inter-bank transactions for bank cards. The Fund invested RMB220 million (equivalent to US$31.12 million) in June 2020 for a 0.17% equity interest in China UnionPay. In December 2022, the Fund received a cash dividend of RMB4 million from China UnionPay for 2021. As of the end of 2022, the carrying value of the Fund’s interest in China UnionPay was US$53.53 million, representing an increase of 5.71% over US$50.64 million at the end of last year. The Fund’s unrealised loss attributable to its investment in China UnionPay for 2022 was US$7.49 million, up 231.42% year-over-year.