Annual Report 2025

INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) 20 China Merchants China Direct Investments Limited Annual Report 2025 REVIEW OF INVESTMENTS (CONTINUED) Through the end of December 2025, Iflytek IT made investments in twenty-seven projects. Currently, Iflytek IT has entered into the investment exit period. Of these projects, eleven projects have been fully exited and two projects (including below mentioned Xunfei Healthcare) have been partially exited. iFLYTEK Co., Ltd. (“iFLYTEK”) was established in 1999 and is headquartered in Hefei, Anhui. It was listed on the SME Board of the Shenzhen Stock Exchange in May 2008. It is a national key software enterprise dedicated to the research of intelligent speech, language technologies, and AI technologies; the development of software and chip products; the provision of speech information services; and the integration of e-government systems. During the period of November to December 2016, the Fund acquired 4.54 million A shares of iFLYTEK at an average price of RMB19.09 (adjusted) per share on the secondary stock market with an aggregate invested amount of RMB130 million (equivalent to US$18.83 million). As of 31 December 2025, the Fund held a total of 6.81 million A shares of iFLYTEK, as a result of the receipt of 2.27 million new shares via a capitalisation issue from iFLYTEK in 2018, accounting for 0.295% of the issued share capital of iFLYTEK. In July 2025, the Fund received a cash dividend (net of tax) of RMB0.65 million from iFLYTEK for 2024. As of the end of 2025, the carrying value of the Fund’s interest in iFLYTEK was US$48.66 million, representing an increase of 6.41% over US$45.73 million at the end of last year. The Fund’s unrealised gain attributable to its investment in iFLYTEK for 2025 was US$1.87 million, up 0.21% year-over-year. On 21 October 2025, iFLYTEK announced an unaudited net loss of RMB66.67 million for the first three quarters of 2025, representing a narrowing from the net loss of RMB344 million recorded in the corresponding period of the previous year. During the first three quarters of 2025, the industrial ecosystem of “Spark Desk” was further strengthened. The number of developers continued to grow at a rapid pace, with more than 1.22 million new developers added, including 690,000 new large-model developers, thereby accelerating industry empowerment. On 6 November 2025, iFLYTEK launched the “Spark Desk X1.5” model. The model adopts a Mixture-of-Experts (MoE) architecture, with inference efficiency improved by 100% compared to Spark Desk X1. Its six core capabilities, comprising language understanding, text generation, knowledge-based question answering, logical reasoning, mathematical capability, and coding capability, benchmark against leading international large models, with its mathematical capability continuing to rank among the international leaders.