Annual Report 2023

4 4 China Merchants China Direct Investments Limited Annual Report 2023 CHAIRMAN’S STATEMENT The board of directors (the “ Board ”) announces that the audited consolidated net asset value of China Merchants China Direct Investments Limited (the “ Company ”) and its subsidiaries (together, the “ Group ”) as of 31 December 2023 amounted to US$557.94 million, representing a decrease of 2.38% compared to US$571.57 million in 2022. The net asset value per share was US$3.663, representing the same percentage decrease of 2.38% compared to US$3.752 in 2022. The Group’s audited consolidated profit after taxation for 2023 was US$5.73 million, while the audited consolidated loss for last year was US$153.17 million. The Board has recommended the payment of a final dividend of US$0.07 per share for the year 2023, the same as last year. In addition, a special dividend of US$0.01 per share will be proposed, while no special dividend was distributed last year. As there were no interim dividends during 2023, total dividends payable for the year 2023 were US$0.08 per share, compared to US$0.07 per share last year, representing an increase of 14.29%. In 2023, global growth continued to slow further in the face of elevated inflation, higher interest rates, and reduced investment, in addition to the disruptions caused by the Russia-Ukraine conflict to global economic activity. The World Bank estimated that, in 2023, the global economy grew by 2.6%, the US economy by 2.5%, the Eurozone economy by 0.4% and the Japanese economy by 1.8%. According to a preliminary report by the National Bureau of Statistics, in 2023, China’s gross domestic product (GDP) was over RMB126 trillion, representing an increase of 5.2%, calculated in constant prices, as compared to last year. In particular, industrial production recovered steadily and equipment manufacturing grew slightly faster. The total added value of the country’s larger industrial enterprises increased by 4.6% over last year. Market sales recovered rapidly and services consumption grew faster. The total retail sales of consumer goods reached RMB47 trillion, up 7.2% year-over-year. Investment in fixed assets scaled up and investment in high-tech industries witnessed a good momentum of growth. The country’s investment in fixed assets (excluding rural households) reached RMB50 trillion, up 3.0% year-over-year. Imports and exports of goods were generally stable and trade structure continued to optimise. The total value of imports and exports of goods was RMB42 trillion, up 0.2% year-over-year. Furthermore, the Consumer Price Index of China for 2023 rose by 0.2%, representing a decrease of 1.8 percentage points as compared to the growth rate last year. In 2023, the A shares market of China generally experienced volatility, first rising early in the year, then falling later as the year progressed. The SSE Composite Index headed upward near the beginning of the year, reaching its highest point of the year at 3419 points on 9 May, and then declined, finally closing at 2975 points at the end of 2023, representing a decrease of 3.69% as compared to the end of 2022. In 2023, the Hong Kong stock market generally experienced a brief, early rally, then fluctuated and fell for the rest of the year. The Hang Seng Index rose to its highest point of the year at 22701 points on 27 January, and then went into a downtrend, finally closing at 17047 points at the end of 2023, representing a decrease of 13.82% as compared to the end of 2022. At the end of 2023, the Group’s total holdings in investment projects amounted to US$683.31 million (US$690.07 million at the end of 2022), accounting for 98.75% of the Group’s total asset value and representing a decrease of US$6.76 million. This was largely due to a net decrease in the fair value of investment projects, as well as a decrease in the Renminbi exchange rate. Meanwhile, cash and cash equivalents were US$8.63 million, accounting for 1.25% of the total asset value of the Group. In 2023, the Investment Manager actively sought new investment opportunities, with intensive due diligence and the rigorous screening of many prospects. Consequently, the Group completed direct investments in two new information technology projects in 2023, namely Beijing Hanwei Innovation Technology Co., Ltd. and Moonshot AI Ltd., with an aggregate investment amount of US$17.02 million.