Unlocking Value

We, Argyle Street Management (ASM), congratulate China Merchants China Direct Investments (the “Fund”, 133 HK) on its profitable turnaround in 2023.

On 27 March 2024, the Fund announced cash dividends of US$0.08 per share (the sum of US$ 0.07 final dividend and US$ 0.01 special dividend), which is higher than the US$0.07 dividend per share in the previous year. The increase of dividends is a first step towards maximizing value for shareholders.  

On the other hand, we feel that the Fund can do better than that.

China Merchants Bank Co., LTD (“CMB”, 3968 HK and 600036 SH), which is the Fund’s single largest investment, will soon pay all CMB shareholders cash dividends of RMB 1.972 per share.  Based on our calculations, the Fund expects to receive approximately RMB 109 million (equivalent to US$ 15 million).

Adding this US$ 15 million upcoming CMB dividends to the Fund’s cash balance of US$ 8.6 million on 31 December 2023, we project that the Fund will perhaps hold approximately US$ 24 million cash by July (minus expenses), which translates to US$ 0.16 per share.  This is far higher than the proposed US$0.08 dividend per share.

We recommend that the Fund shall pay another special dividend.

To celebrate the 25^th anniversary of its listing in 2018, the Fund paid a special interim dividend.  Shareholders (including ASM) will definitely welcome a long-overdue celebration of the 30^th anniversary with another special dividend.

We re-iterate our proposal which we published on 8 January 2024, and urge the Fund to sell assets and return capital for the benefit of all shareholders.

Visit us:  UnlockChinaMerchants.com

Write to us:  ChinaMerchants@asmhk.com

我们Argyle Street Management (ASM)恭喜招商局中国基金（简称“中国基金“，133 HK）2023年扭亏为盈。

2024年3月27日，中国基金宣布预计每股派发0.08美元现金分红（0.07美元末期股息及0.01美元特别股息），高于2022年的0.07美元。

增加现金分红是最大化股东权益的第一步。另一方面，我们感觉中国基金可以做的更好。

中国基金的单一最大投资公司招商银行股份有限公司（简称「招行」，3968 HK和600036 SH）预计将向所有股东派发每股现金分红人民币1.972元（含税）。根据我们的测算，中国基金预计将收到约1.09亿人民币（约1,500万美元）的现金分红。

结合中国基金截至2023年12月31日的现金余额约860万美元，我们预计在今年7月时中国基金的现金储备约为2,400万美元（减营运开支），对应每股现金价值为0.16美元，远超本次预计派息的0.08美元。

因此，我们建议中国基金增派特别股息。

此外，中国基金为庆祝上市25周年之际于2018年派发了特别中期股息。中国基金的股东（包括ASM）将非常欢迎中国基金再次通过派发特别股息的方式庆祝2023年为上市30周年。

我们重申于 2024 年 1 月 8 日发布的建议，希望中国基金能够出售资产，并向股东返还资金，以维护所有股东的利益。

UnlockChinaMerchants.com

电邮我们：ChinaMerchants@asmhk.com