Annual Report 2023

30 30 China Merchants China Direct Investments Limited Annual Report 2023 INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) REVIEW OF INVESTMENTS (CONTINUED) Beijing Hanwei Innovation Technology Co., Ltd. (“Hanwei”) was established in Shanghai in June 2019. It is a fabless IC (Integrated Circuit) design company focusing on ultra-wideband (UWB) technology, and its high-precision positioning products developed primarily for consumer goods such as automotives, smartphones and wearables. The Fund invested RMB50 million (equivalent to US$7.02 million) in July 2023 for a 6.42% equity interest in Hanwei. As of the end of 2023, the carrying value of the Fund’s interest in Hanwei was US$7.06 million. In 2023, Hanwei’s second-generation product, MK8080, is under research and development, and Hanwei has already secured recognition from leading customers in the Internet of Things (IoT) sector for its products, along with a small number of initial orders. Meanwhile, negotiations are ongoing with other IoT customers for order contracts. Moonshot AI Ltd. (“Moonshot AI”) was established in Cayman Islands in May 2023. It is a startup company that is focused on the research and development of general-purpose large multimodal model and end-customer applications. The Fund invested US$10 million in December 2023 for a 1.29% equity interest in Moonshot AI. As of the end of 2023, the carrying value of the Fund’s interest in Moonshot AI was US$10 million. In October 2023, Moonshot AI announced a breakthrough in the “long-text” field and launched its first intelligent assistant product, Kimi Chat. The product can support the input of 200,000 Chinese characters. Moonshot AI has currently commenced beta testing for Kimi Chat, which has so far demonstrated superior performance over similar domestic products. Hwagain Group Co., Ltd. (“Hwagain”) was formed by the merger of two paper manufacturers located in Nanning, Guangxi in 1998. It is principally engaged in the research and development, production, and sale of high quality printing paper and tissue paper. The Fund invested RMB119.99 million (equivalent to US$19.00 million) in January 2012 for a 7.10% equity interest in Hwagain. As of the end of 2023, the carrying value of the Fund’s interest in Hwagain was US$2.89 million, representing a decrease of 15.50% from the value at the end of last year of US$3.42 million. In 2023, Hwagain continued to maintain sound and stable development. In addition to continuously addressing daily business operation management issues in areas such as pulp paper production, paper product sales, and forestry operations, Hwagain has also made certain improvements to the production process, while adopting some technological innovations. In addition, Hwagain recorded an unaudited net profit of RMB32.97 million for 2023, down 41.89% year-over-year, due to the sales price fluctuation of paper products.