Annual Report 2022

27 China Merchants China Direct Investments Limited Annual Report 2022 INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) REVIEW OF INVESTMENTS (CONTINUED) On 7 September 2022, Huashun Xin’an held a product launch conference entitled “Remapping Cyberspace Asset” to share its latest research and development achievements in fields such as cyberspace mapping technology and asset security. At present, Huashun Xin’an, based on its search engine for cyberspace resources, FOFA, has launched a total of six enterprise-level product systems—FOEYE, FORadar, DCC, FOASP, VulFocus and Goby—to meet the individual needs of different users. On 28 December 2022, the project “Cyberspace Security Operations and Emergency Response System,” jointly developed by Huashun Xin’an and the National Industrial Information Security Development Research Center, was recognised in the list of “2022 Application of Network Security Technology Pilot Demonstration Projects,” as announced by twelve government departments, including the Ministry of Industry and Information Technology and the Cyberspace Administration of China. Xinyi Information Technology Ltd. (“Xinyi”) was established in Zhang Jiang District, Shanghai in March 2017. It is a company that focuses on the research and development of SoC (system on a chip) for Internet of Things (IoT) for low-power wide-area network (LPWAN), and is committed to becoming a world-class manufacturer of Internet of Things intelligent terminal SoCs for the 5th generation mobile communications (5G), with applications mainly covering smart meters, smart security, smart transportation, smart cities, the sharing economy and other scenarios. The Fund invested RMB35 million (equivalent to US$5.42 million) in September 2021 for a 1.44% equity interest in Xinyi. As of the end of 2022, the carrying value of the Fund’s interest in Xinyi was US$6.71 million, representing an increase of 22.00% over US$5.50 million at the end of last year. Through the end of December 2022, nearly 40 million Xinyi NB-IoT XY1100 chips have been shipped, ranking first in the domestic industry in terms of shipments. The SoC of XY2100, a second-generation product specifically developed for smart meters, is now available for sale. In addition, the development of IoT CAT-1 chip for medium-speed IoT has been rapidly advancing and is expected to enter the market promotion stage in 2023. Rizhao Azuri Technologies Co., Ltd. (“Azuri”) was established in Rizhao, Shandong in August 2016. It is a company that develops and manufactures laser diode chips, optical devices and optical module products for high- speed optical communications, mainly targeting the fiber to the home (FTTH), 5th generation mobile communications (5G), enterprise networking and data centre markets. The Fund invested RMB30 million (equivalent to US$4.72 million) in December 2021 for a 2.50% equity interest in Azuri. As of the end of 2022, the carrying value of the Fund’s interest in Azuri was US$2.28 million, representing a decrease of 51.59% from the value at the end of last year of US$4.71 million. In 2022, the 10G-EPON PR30 OLT products continued to be shipped, and the industrial-grade 10G-EPON TO/BOSA products also began to be shipped to North America. At the same time, the company has made progress in the research and development of 10G 1270nm, 10G DML’s new generation ultra-low chirp as well as 25G 1310/1358nm chips.