Annual Report 2025

INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) 28 China Merchants China Direct Investments Limited Annual Report 2025 REVIEW OF INVESTMENTS (CONTINUED) In October 2025, Xinyi was approved in the seventh batch of specialised and new “Little Giant” enterprises by the Shanghai Municipal Commission of Economy and Informatisation. Rizhao Azuri Technologies Co., Ltd. (“Azuri”) was established in Rizhao, Shandong in August 2016. It is a company that develops and manufactures laser diode chips, optical devices and optical module products for high- speed optical communications, mainly targeting the fiber to the home (FTTH), 5th generation mobile communications (5G), enterprise networking and data centre markets. The Fund invested RMB30 million (equivalent to US$4.72 million) in December 2021 for a 2.50% equity interest in Azuri. As of the end of 2025, the carrying value of the Fund’s interest in Azuri was US$1.49 million, representing an increase of 98.67% from the value at the end of last year of US$0.75 million. In 2025, Azuri’s 10G-EPON modules and BOSA components continued to ship both domestically and to North America, and its business with leading domestic and overseas customers continued to advance. The low-power consumption modules of DML XGS have been introduced in small-batch production for certain customers. The high- power CW-DFB laser with a novel waveguide structure, targeting silicon photonics-based applications, has completed its first tape-out and is now engaging with downstream customers. Azuri’s self-built epitaxial production line, which can further reduce chip costs while accelerating the speed of research and development, has now begun full-scale tape-out. 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. Hanwei completed a new round of equity financing in February 2025. As this round of equity financing has triggered the anti-dilution protection clause as stipulated in the investment agreement, the Fund is then compensated with some shareholding and the equity interest held by the Fund in Hanwei has increased from 6.42% to 8.85%, accordingly. As of the end of 2025, the carrying value of the Fund’s interest in Hanwei was US$5.08 million, representing a decrease of 4.33% from the value at the end of last year of US$5.31 million.