Annual Report 2023

China Merchants China Direct Investments Limited Annual Report 2023 23 INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) REVIEW OF INVESTMENTS (CONTINUED) On 30 January 2024, iFLYTEK pre-announced that its unaudited net profit for 2023 would be in a range of RMB645 million to RMB730 million, down 15% to 30% year-over-year. The decrease in profit was mainly because of the company’s firm commitment to invest in a domestic substitution plan for its independently controllable core technologies and controllable industry chain. At the same time, the company has made vigorous efforts to seize the historic opportunities in the development of artificial general intelligence (AGI), and has increased its R&D investment accordingly in the cognitive large model on its independently controllable platform. In October 2023, iFLYTEK and Huawei jointly launched the “iFLYTEK Spark-1” platform, the first nationwide platform that supports trillion-parameter large model training in China. And the “Spark Desk V3.5,” with its training completed based on such platform, was officially published on 30 January 2024. The “Spark Desk V3.5” has achieved significant improvement in logical reasoning, language understanding, text generation, mathematical answering, coding, and multimodal capabilities, to the extent that its comprehensive capabilities have nearly approached that of GPT-4 Turbo. Meanwhile, iFLYTEK’s Spark Model has first been launched, and has generally surpassed Whisper-large-v3 published by OpenAI in terms of the first batch of 37 major languages, hence maintaining iFLYTEK’s international competitive edge in intelligent speech technology. Ningbo Meishan Free Trade Port Area Jiangmen Venture Capital LLP (the “Jiangmen Ventures Fund”) was established in Ningbo, Zhejiang in September 2016, with an investment horizon of 5 to 7 years (Note: With the consent of all limited partners, the investment horizon has been extended one year in order to meet the exit requirements of the projects held) and with a paid-in capital amounting to RMB262 million. Its major investment targets are chiefly early-stage business ventures related to machine intelligence, Internet of Things (IoT), natural user interface, and enterprise computing. The general partner and investment manager of the Jiangmen Ventures Fund is Jiangmen Capital Management (Beijing) Co., Ltd., which is responsible for defining and executing the investment strategy for the Jiangmen Ventures Fund, as well as for managing their operations. The Fund completed a capital contribution of RMB30 million (equivalent to US$4.74 million) in January 2018, representing 11.45% of the paid-in capital of the Jiangmen Ventures Fund as of 31 December 2023. In addition, through the end of December 2023, the Fund received cash distributions from the Jiangmen Ventures Fund in a cumulative amount of RMB11.21 million. As of the end of 2023, the carrying value of the Fund’s interest in the Jiangmen Ventures Fund was US$8.53 million, representing an increase of 2.77% over US$8.30 million at the end of last year. Through the end of December 2023, the Jiangmen Ventures Fund has made investments in nineteen projects for a total of RMB233 million. Currently, the Jiangmen Ventures Fund has entered into the investment exit period. Of these projects, two projects have been fully exited and three projects have been partially exited. In addition, a total of four projects have completed new rounds of equity financing during 2023.