Fair-Value Report — China Merchants China Direct Investments Ltd. (0133.HK)

Insider Signal

Verified Snapshot

NAV is reported by the company in USD and translated here at the company's own implied rate (~HK$7.84/US$1, consistent with the HKD peg). All NAV and portfolio figures are company-reported or from licensed news wires; see Sources.

Business

CMCDI is a Hong Kong-incorporated, HKEX Chapter 21 closed-end investment company (listed since 1993) that holds a portfolio of direct and pre-IPO/private investments plus listed securities, mostly China-related. It is externally managed by China Merchants China Investment Management Ltd. ("CMCIM"), a joint venture between China Merchants Group ("CMG", CMCDI's largest shareholder at ~27.6%) and First Eastern Investment Group. Because CMCIM is a connected party, every mandate renewal is a disclosable/connected transaction.

Portfolio composition (most recently disclosed breakdown, ~30 Jun 2026 asset detail and public research): roughly 30% in China Merchants Bank (CMB) A-shares, a listed stake in Chinese short-video/camera maker Insta360 (≈US$148m, ~5.85m shares on the STAR Market), smaller listed positions in Pony.ai, iFlyHealth and robotics firm Flexiv, and a private stake in AI model developer Moonshot AI (~0.67% implied ownership). Roughly 63% of assets are in listed shares or cash; the rest is private/pre-IPO.

H1 2026 Results (six months to 30 Jun 2026)

The swing from a large profit to a loss was driven almost entirely by mark-to-market declines on financial assets held at fair value through profit or loss (FVTPL) — consistent with weakness in listed holdings (CMB A-shares are ~30% of the book) during H1 2026, not an operating/cash problem. This is normal volatility for a fund that marks its book to market every half year, but it also means NAV is not a stable floor: it fell from US$5.312 (HK$41.62, 31 Mar 2026) to US$4.980 (HK$39.06, 31 Aug 2026) even as the company's own research-community followers were expecting an NAV markup from Moonshot AI.

Valuation — Discount-to-NAV

CMCDI is a closed-end/investment-holding vehicle, so the right framework is P/NAV, not a DCF on reported earnings (which are dominated by unrealized mark-to-market swings). We anchor fair value on the last verified NAV (HK$39.06, 31 Aug 2026) and apply a scenario-weighted discount informed by (a) CMCDI's own multi-year discount history, (b) peer discounts at comparable HK-listed China PE/holding vehicles, and (c) the unrecognized optionality in the Moonshot AI stake.

Moonshot AI: real but unbooked optionality

CMCDI's Moonshot AI position is carried at book value of ~US$16.76m, anchored to a 2024 Series A round at a US$2.5bn company valuation. Moonshot has since raised a Series D reported at a US$20bn valuation (an 8x step-up). If CMCDI's ~0.67% implied ownership were marked at the Series D price, the stake would be worth roughly US$134m — an unrecognized gain of ~US$117m, or roughly HK$6/share of potential NAV that has not shown up in the official NAV series to date (NAV actually fell, not rose, between the Mar and Aug 2026 updates, implying CMB/other holdings offset any Moonshot credit, or the markup has not yet been booked). We treat this as a bull-case catalyst, not a certainty — private marks are infrequent, opaque, and this fund has a demonstrated pattern of NOT updating for well-known third-party valuation events in a timely way.

Reverse read

At HK$22.72, the market is already pricing a 41.8% discount to the last published NAV — narrower than CMCDI's own multi-year norm (≈51–60% through 2024–mid-2026) and roughly in line with, not cheaper than, First Pacific's 41–42% discount to book. The price has already absorbed most of the good news: three rounds of insider accumulation since June, two dividend payouts, and rising retail/activist attention around the Moonshot angle. The stock rallied over 10% intraday on 23 Sep 2026 (to HK$26.42) before giving most of it back by 30 Sep (HK$22.72) — a sign the Moonshot re-rating thesis is already being traded, not a secret.

Peer table (median-anchored)

Median of the three reference discounts (China Everbright, First Pacific, CMCDI's own 2-year range) is ≈51–55% — wider than today's 41.8% market-implied discount. On a strict median-peer read CMCDI looks fully valued to slightly rich; it is not "objectively cheap" the way it was in June 2026. Caveat: micro-cap, thin comparable set — AAStocks intraday data could not be retrieved live, so the most recent close (stockanalysis.com, 30 Sep 2026) and the 28 Sep insider print (HK$24.06) are used as cross-checks of each other.

Conclusion

Rating: HOLD. The insider signal is genuine — TFI Asset Management has now built a real, repeated, independently-financed 14.03% position through four separate on-exchange purchases since mid-2026, and the Moonshot AI stake is a legitimate, under-recognized call option sitting inside the NAV. But the stock has already re-rated roughly 17% since our June 2026 note (HK$19.44 → HK$22.72) and the NAV discount has compressed from ~51.6% to ~41.8% — most of the "cheap vs. own history" trade has already played out, and on a peer basis (China Everbright at a much steeper 65% discount) CMCDI is no longer the obvious outlier. We see fair value near HK$22.9–23.4, essentially where the stock trades today; total expected return is dominated by the ~5.9% dividend yield plus optional upside if Moonshot's valuation step-up is eventually booked into NAV, offset by real downside if H1 2026's mark-to-market losses continue or governance uncertainty resurfaces. This is "signal real, price now roughly fair" rather than "signal real, price wrong."

Key Risks

• NAV is not a stable floor: H1 2026 swung from a US$140.5m profit to a US$59.8m loss purely on FVTPL mark-to-market moves; a renewed China/HK equity drawdown (CMB A-shares are ~30% of the book) would cut NAV directly.
• Unresolved external-manager governance: CMCIM operates on short, rolling connected-party mandates after shareholders rejected a long-term contract; no confirmed renewal has been identified beyond 30 Jun 2026, and the multi-year activist campaign for reform/internalization has not yet succeeded.
• Private-stake valuation lag: the Moonshot AI markup is a thesis, not a fact on the books — CMCDI's own NAV updates have so far moved against this narrative (down, not up), and there is no disclosed timeline for when/if a formal revaluation occurs.
• Buyer is a client-account manager, not a principal: TFI's conviction is real but is expressed with client capital, which is a weaker signal than a director or founder buying with personal money.
• Micro-cap illiquidity: ~HK$3.46bn market cap, average daily turnover in the low hundreds of thousands of shares; wide spreads and limited float (CMG + TFI + Lazard alone hold well over half the register) make the discount hard to arbitrage.
• FX/translation: NAV is reported and the underlying portfolio is largely denominated in USD/RMB; HKD is pegged to USD, but RMB-denominated assets (CMB A-shares) carry incremental translation risk versus the HKD-quoted share price.

Sources

• HKEX Disclosure of Interests filing, 30 Sep 2026 (event date 28 Sep 2026), filing ID CS20260930E00261
• stockanalysis.com — 0133.HK price, 30 Sep 2026 close (HK$22.72) and dividend yield
• CMCDI company announcement via cmcdi.com.hk / TipRanks — NAV per share, 31 Aug 2026 (US$4.980 / HK$39.06), announced 15 Sep 2026; 31 Mar 2026 NAV (US$5.312 / HK$41.62)
• caiwennews.com and ifeng.com — H1 2026 interim results and 23 Sep 2026 intraday trading commentary
• investing.com / futunn.com — TFI Asset Management (Cayman) Ltd. trade confirmation, 28 Sep 2026, HK$24.06/share
• cfi.net.cn — monthly return of equity issuer movements in securities, 31 Jul 2026 (152,333,013 shares in issue)
• marketscreener.com — CMCDI shareholder structure (China Merchants Group ~27.6%, Lazard Asset Management ~15.9%)
• tipranks.com — CMCIM investment management agreement renewal announcements (16 Jan 2026; term 1 Jan–30 Jun 2026)
• unlockvaluechinamerchants.com — independent shareholder research/activist site tracking CMCDI's discount and governance history (2024–2025 posts)
• fundamentaldeepdive.substack.com (12 May 2026) and gabbyssandbox.substack.com — independent research on CMCDI's Moonshot AI exposure (used as directional, not verified, inputs; NAV estimates in these posts did not materialize in the company's actual 31 Aug 2026 NAV print)
• stockanalysis.com — First Pacific Co. (0142.HK) and reported P/B data for China Everbright Ltd (0165.HK), Sep 2026
• Prior note: wiis.com/hkse-stock-research/0133-china-merchants-cdi-fair-value-2026-06 (published 29 Jun 2026, "Speculative Buy", FV HK$23.4 vs price HK$19.44)