China Merchants China Direct Investments Limited Delivers Strong 2025 Performance and Announces Major Dividends

Key Highlights from the 2025 Annual Report

• Substantial Profit Growth: The Group reported a profit attributable to equity shareholders of US\$189.94 million for the year ended 31 December 2025, up 57.82% from 2024’s US\$120.35 million. This growth was mainly driven by a significant rise in the value of financial assets at fair value through profit or loss, especially a sharp increase in the value of Arashi Vision Inc. following its listing.
• Net Assets and Shareholder Value: As of year-end 2025, net assets stood at US\$834.65 million, compared to US\$647.38 million a year earlier. Net asset value per share increased to US\$5.479 from US\$4.250.
• Dividend Announcement: The Board declared and paid an interim dividend of US\$0.04 per share and a special interim dividend of US\$0.04 per share (totaling US\$0.08 per share). In addition, the Board recommends a final dividend of US\$0.05 per share and a special dividend of US\$0.20 per share (totaling US\$0.25 per share), subject to shareholder approval at the forthcoming AGM. Total dividends for 2025 will amount to US\$50.27 million, a substantial increase from US\$12.19 million in 2024. These dividends are payable in cash on 24 July 2026, with shareholders able to choose payment in USD or HKD.
• Strong Investment Performance: The net gain on financial assets for the year was US\$230.11 million, up 67.35% from US\$137.50 million in 2024. Gains from listed investments were US\$177.53 million, while unlisted investments contributed US\$52.58 million.
• Major Portfolio Holdings: Key investments as of 31 December 2025 included China Merchants Bank Co., Ltd. (US\$331 million), China Credit Trust Co., Ltd. (US\$188 million), Arashi Vision Inc. (US\$187 million), NBA China, L.P. (US\$39 million), iFLYTEK Co., Ltd. (US\$49 million), Xunfei Healthcare Technology Co., Ltd. (US\$43 million), and Pony AI Inc. (US\$23 million), among others. The portfolio is diversified across financial services, information technology (notably AI, fintech, and healthcare), and cultural/consumption sectors.
• New Investment Management Agreement: On 22 December 2025, a new agreement was signed with the Investment Manager for the period 1 January to 30 June 2026. The total remuneration is capped at HK\$8 million, including a discretionary performance fee of up to HK\$1 million, linked to the performance and exit amounts of investments. The agreement was reviewed and found to be on fair and reasonable terms, aligning management incentives with shareholder interests.
• Post-Year-End Developments: After the reporting period, the Group disposed of 1,083,943 shares in Pony AI Inc. for US\$18.31 million and signed an agreement to sell its 4.98% equity interest in JIC Leasing Co., Ltd. for RMB271.85 million (approx. US\$38.68 million), subject to preconditions. These disposals may result in further realization of investment gains and potentially impact future distributions or capital allocation.

Strategic Focus and Outlook

• The Group maintains a disciplined and diversified investment strategy, focusing on digital finance, AI and emerging technologies, cultural industries (especially tourism), and healthcare.
• Risk management remains robust, with the Group addressing economic, market competition, operational, legal, regulatory, currency, and foreign exchange control risks. The company does not take management control in investee companies, acting only as a strategic investor.
• China’s economic outlook for 2026 remains positive, with continued support for AI and new infrastructure, and policy emphasis on domestic demand, innovation, and high-quality development. These trends are favorable for the Fund’s investment focus.

Governance and ESG

• The company maintains high standards of corporate governance, with strong oversight from the Board, Audit Committee, and adherence to Hong Kong Listing Rules and ESG standards.
• The Fund’s ESG strategy is integrated into its investment process, with regular materiality assessment, focus on responsible investment, and climate-related risk management and disclosure. The company has set climate-related targets despite having low direct emissions due to its investment holding nature.

Important Considerations for Shareholders

• Dividend Windfall: The significant increase in total dividends (including special dividends) is a noteworthy development and potentially price-sensitive. Special dividends reflect the realization of substantial investment gains, directly benefiting shareholders.
• Portfolio Realizations: The post-year-end disposals (Pony AI and JIC Leasing) may result in material impacts on the Group’s future earnings and dividend potential.
• Performance Fee Structure: The new investment management agreement further aligns management incentives with shareholder returns, especially through performance-based remuneration.
• Market and Regulatory Risks: Shareholders should note ongoing risks related to China’s economic and policy environment, legal uncertainties, and foreign exchange controls, which could impact the value and liquidity of investments and future distributions.

Conclusion

China Merchants China Direct Investments Limited delivered an exceptional performance in 2025, with substantial growth in profit, asset value, and shareholder distributions. The company’s strategic focus on high-growth sectors and disciplined risk management, coupled with an enhanced alignment of management incentives and a robust dividend policy, position the Fund favorably for continued success. However, shareholders should remain attentive to market, regulatory, and macroeconomic risks, as well as developments related to major portfolio realizations in 2026.

Disclaimer: The above article is for informational purposes only and does not constitute investment advice or an offer or solicitation to buy or sell any securities. Investors should review the full annual report and consult their professional advisers before making any investment decisions. The information is based on the company’s published 2025 Annual Report and subsequent disclosures, which may be subject to change and interpretation.

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