Unlocking Value: China Merchants

Last week, we wrote that the cash balance of China Merchants China Direct Investment (the “Fund”, 133) increased significantly to US$ 49m on 31 March 2024. Now we have learned why.

During the first quarter of 2024, the Fund sold down most of its 0.17% shares in China UnionPay (“UnionPay”), the state-owned payment system operator, and recovered US$ 38.69m. Now the Fund is left with 0.05% stake in UnionPay.

This is a significant event. Before the divestment, UnionPay accounted for 8% of the Fund’s total asset, and was the Fund’s third largest investment in terms of carrying value as of 31 December 2023. Now, the remaining stake accounts for 2.2% of total assets as of 31 March 2024.

UnionPay has been an excellent investment. In 2020, the Fund invested US$ 31.12m in UnionPay. Since then, the Fund has received approximately US$ 1.13m of dividends. After the recent US$ 38.69m disposal, the Fund’s remaining stake in UnionPay is worth US$ 16m as of 31 March 2024. That implies absolute return of 79% over approximately 4 years.

We, Argyle Street Management, applaud the Fund’s proactive asset monetization, and encourage the Fund to do more (including selling the listed China Merchants Bank and iFlytek shares). We also encourage the Fund to make timely voluntary announcements on divestments in the future.

The next (much easier) step of maximizing value is to return capital to shareholders. Read our 26-page proposal to find out how that works.

Visit us:  UnlockValueChinaMerchants.com

Write to us:  ChinaMerchants@asmhk.com

上周，我们发布了一篇关于招商局中国基金（“中国基金”，股票代号：133 HK）的现金余额在2024年1季度内显著增加的帖子。现在我们知道了原因。

在2024年第一季度，中国基金成功出售了0.12%中国银联股份，占其0.17%总持股的绝大多数。中国银联是中国金融支付行业的龙头企业，中国基金本次共回收现金3,869万美元。出售完成后，中国基金仍持有中国银联0.05%的股份。

这对于中国基金而言是个重大事项。在本次出售前，中国银联的投资占中国基金总资产的8%，并且是中国基金第三大投资（按照账面值计算，截至2023年12月31日）。出售后，剩余的中国银联投资仅占中国基金总资产的2.2%（截至2024年3月31日）。

中国银联是一项非常成功的投资。2020年，中国基金投资中国银联项目3,112万美元。自此至本次出售，中国基金共收取约113万美元股息。本次回收3,869万美元后，中国基金剩余持有的中国银联账面值为1,600万美元（截至2024年3月31日），意味着本次4年左右的投资的绝对收益为79%。

我们，Argyle Street Management，为中国基金积极的推进资产退出而鼓掌，同时也希望中国基金可以做的更多，包括出售已上市的招商银行及科大讯飞股票。我们也希望中国基金后续可以及时公告被投项目的退出。

为最大化股东利益，下一步也是极其容易的一步就是返还相关资本给股东。如何实现這個目标，请参阅我们准备的26页的提案。

访问我们：UnlockValueChinaMerchants.com

电邮我们：ChinaMerchants@asmhk.com