Annual Report 2025

INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) China Merchants China Direct Investments Limited Annual Report 2025 31 REVIEW OF INVESTMENTS (CONTINUED) 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 2025, the carrying value of the Fund’s interest in Hwagain was US$2.92 million, representing an increase of 17.74% from the value at the end of last year of US$2.48 million. In 2025, Hwagain’s factory experienced prolonged machine maintenance downtime with post-restart production below expectations, which has significantly affected its performance. The company plans to focus on eliminating safety hazards, improving production efficiency, and enhancing environmental governance to ensure sustainable development. In 2025, Hwagain recorded an unaudited net loss of RMB 43.89 million, compared with a net profit of RMB 3.16 million in the previous year. Wuhan Rixin Technology Co., Ltd. (“Wuhan Rixin”) was established in Wuhan, Hubei in 2001 and is a state- accredited high technology enterprise engaged in the design, production and installation of solar modules and Building Integrated Photovoltaic (BIPV) products, as well as in the operation, maintenance and management of solar powered electric systems. The stock of Wuhan Rixin was listed for trading on the New Third Board in February 2016. The Fund invested RMB15 million (equivalent to US$2.20 million) in Wuhan Rixin in July 2009. As of 31 December 2025, the Fund held a total of 4.95 million shares in Wuhan Rixin, as a result of the receipt of 1.65 million new shares via a capitalisation issue from Wuhan Rixin in May 2019, accounting for 3.90% of the issued share capital of Wuhan Rixin. As of the end of 2025, the carrying value of the Fund’s interest in Wuhan Rixin was US$0.99 million, representing a decrease of 4.81% from the value at the end of last year of US$1.04 million. On 15 September 2025, Wuhan Rixin issued an announcement stating that on 11 September 2025, Mr. Xu Jinming, the company’s controlling shareholder and actual controller, and Wuhan Baishide New Energy Equity Investment Center (Limited Partnership) reached a settlement on the investment contract dispute between the two parties. On 13 October 2025, Wuhan Rixin issued an announcement stating that the company received the “Civil Mediation Letter” issued by the People’s Court of Wuchang District, Wuhan City, on 10 October 2025, and the company and the Wuchang Branch of Hankou Bank Co., Ltd. reached a settlement in terms of the dispute case of the letter of credit.