Annual Report 2023

26 26 China Merchants China Direct Investments Limited Annual Report 2023 INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) REVIEW OF INVESTMENTS (CONTINUED) Xunfei Spark Medical Model, a model tailored for every family, aiming to create personal AI health assistants for every individual, was officially unveiled on 31 October 2023 at the 6th World Voice Expo and iFLYTEK 1024 Global Developers Festival 2023. The model is reported to have a “smart” brain. An assessment of the six major technological capabilities of the Xunfei Spark Medical Model by the National Science and Technology Information Resources Comprehensive Utilisation and Public Service Centre showed that it outperforms GPT-4 in terms of the six core capabilities, including massive knowledge-based question-answering, complex clinical language understanding and professional medical document generation. iFLYTEK, the controlling shareholder of Xunfei Healthcare, announced on 10 January 2024 that it proposes to apply to spin off Xunfei Healthcare with a listing in Hong Kong. Following the completion of the spin-off and listing, Xunfei Healthcare will obtain financing through the Hong Kong capital market, which will help it to maintain its leading role in the field of medical AI and to increase its international presence, thus enhancing Xunfei Healthcare’s overall competitiveness as a listing entity. On 31 January 2024, iFLYTEK announced that Xunfei Healthcare had submitted an application for an initial public offering (IPO) of H shares to the Hong Kong Stock Exchange. According to the listing documents, Xunfei Healthcare recorded a loss and total comprehensive expense of RMB89.40 million (audited), RMB209 million (audited) and RMB170 million (unaudited) for 2021, 2022 and the nine months ended 30 September 2023, respectively. 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. On 20 November 2023, the Fund signed an equity transaction contract with an independent third party, pursuant to which the Fund agreed to sell a 0.12% equity interest in China UnionPay to the independent third party, thereby realising investment gains from this partial disposal and obtaining funds of RMB275 million (equivalent to US$38.69 million) for working capital. The equity transfer was completed subsequent to the balance sheet date. In September 2023, the Fund received a cash dividend of RMB2.90 million from China UnionPay for 2022. As of the end of 2023, the carrying value of the Fund’s interest in China UnionPay was US$54.95 million, representing an increase of 2.65% over US$53.53 million at the end of last year. The Fund’s unrealised loss attributable to its investment in China UnionPay for 2023 was US$2.32 million, down 69.03% year-over-year. The registered capital of China UnionPay increased from RMB2.930 billion to RMB9.963 billion after the completion of a capitalisation issue in September 2023, while the shareholding of the Fund in China UnionPay remained unchanged.