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Fair Value and Fair Value Hierarchy of Financial Instruments | 12 Months Ended
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Dec. 31, 2023
Fair Value Disclosures [Abstract] |
Fair Value and Fair Value Hierarchy of Financial Instruments |
31. | FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS
The carrying amounts and fair values of the Group’s financial instruments measured at fair value are as follows:
|  | Fair values |
|  | As of December 31, |
|  | 2021 |  |  | 2022 |  |  | 2023 |
|  | US$ |  |  | US$ |  |  | US$ |
Financial assets |  |  |  |  |  |  |  |  |  |  |  |
Financial assets at fair value through profit or loss |  |  | 357,352 |  |  |  | 195,337 |  |  |  | 79,607 |
Derivative financial asset |  |  | 124,404 |  |  |  | 185,069 |  |  |  | — |
|  |  | 481,756 |  |  |  | 380,406 |  |  |  | 79,607 |
Management has assessed that the fair values of cash and bank balances, restricted cash, accounts receivable, financial assets included in prepayments, deposits and other receivables, amount due from immediate holding company, other assets, accounts payable, financial liabilities included in other payables and accruals and bank borrowings, approximate to their carrying amounts largely due to the short term maturities of these instruments or repayable on demand, or that they are interest-bearing at market rates. The Group’s finance department headed by the finance director is responsible for determining the policies and procedures for the fair value measurement of financial instruments. The finance director reports directly to the chief financial officer. At each reporting date, finance department analyzes the movements in the values of financial instruments and determines the major inputs applied in the valuation. The valuation is reviewed and approved by the chief financial officer. The valuation procedures applied include consideration of recent transactions in the same security or financial instrument, recent financing of the investee companies, economic and market conditions, current and projected financial performance of the investee companies, and the investee companies’ management team as well as potential future strategies to realize the investments. The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values: As of December 31, 2021, 2022 and 2023, the fair values of listed equity investments, including the stock loan, were based on quoted market prices. The valuation methodologies for material unlisted equity securities and movie income right investments are set out in Note 3 to the consolidated financial statements. The fair value of the derivative financial asset in relation the Agreements was estimated using the MCS and was determined based on significant observable and unobservable inputs including the current stock price, dividend yield, risk-free rate, volatility of the underlying equity securities and the credit rating of the counterparty on the valuation date. MCS is a financial model that is commonly used to simulate variables that are highly unpredictable. The valuations performed using the MCS require management to estimate the volatility of the underlying equity securities and the credit rating of the counterparty and hence the valuations are subject to estimation uncertainty. The Group classifies the fair value of derivative financial asset as Level 3. The management believed that the estimated fair values resulting from the valuation technique were reasonable. There is no change in valuation technique and basis of significant unobservable input on Level 3 financial assets and derivative financial asset as of December 31, 2021, 2022 and 2023. Below is summary of significant unobservable inputs to valuation of financial instruments as of December 31, 2023:
|  | Valuation technique |  | Significant unobservable input |  | Range or estimate
Unlisted equity investment Investment E |  | Multiple/ EVA |  | Equity volatility |  | 69.60%
Movie income right investments |  | Income approach |  | Discount rate |  | 10.40%-12.59%
Below is summary of significant unobservable inputs to valuation of financial instruments as of December 31, 2022:
|  | Valuation technique |  | Significant unobservable input |  | Range or estimate
Unlisted equity investment Investment D |  | Net asset value method |  | Net asset value |  | Note (a)
Unlisted equity investment Investment E |  | Multiple/ EVA |  | Equity volatility |  | 69.60%
Movie income right investments |  | Income approach |  | Discount rate |  | 10.40%-12.59%
Derivative financial asset |  | MCS |  | Volatility of Underlying Assets |  | 49.78%
Below is summary of significant unobservable inputs to valuation of financial instruments as of December 31, 2021:
|  | Valuation technique |  | Significant unobservable input |  | Range or estimate
Unlisted equity investment Investment D |  | Net asset value method |  | Net asset value |  | Note (a)
Unlisted equity investment Investment H |  | Multiple/ EVA |  | Equity volatility |  | 75.29%
|  |  |  | Median Forward P/E multiple of peers |  | 2.10
Unlisted equity investment Investment I |  | Multiple/ EVA |  | Equity volatility |  | 48.52%
|  |  |  | Median Forward P/E multiple of peers |  | 18.97
Unlisted equity investment Investment J |  | Multiple/ EVA |  | Average P/E multiple of peers |  | 61.29
|  |  |  | Discount of lack of marketability |  | 45%
Derivative financial assets in relation to the Agreements |  | MCS |  | Volatility of Underlying Assets |  | 35.95%
Derivative financial liability |  | Binomial option pricing model |  | Volatility |  | 46.21%
|  |  |  | Discount rate |  | 12.52%
Note:
| (a) | The fair value is derived from the net asset value of Investment D that is mostly attributable from its underlying property investments with their fair value being measured by income approach. The directors of the Company considered that remaining assets or liabilities in Investment D are not significant to the amount of overall investment and approximated to their fair value.
Fair Value Hierarchy The following tables illustrate the fair value measurement hierarchy of the Group’s financial instruments: Assets measured at fair value :
|  | Fair value measurement using |
|  | Quoted prices in active markets (Level 1) |  |  | Recent transaction price (Level 2) |  |  | Significant unobservable inputs (Level 3) |  |  | Total |
|  | US$ |  |  | US$ |  |  | US$ |  |  | US$ |
As of December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets at fair value through profit or loss |  |  | 135,373 |  |  |  | 2,761 |  |  |  | 219,218 |  |  |  | 357,352 |
Derivative financial asset |  |  | — |  |  |  | — |  |  |  | 124,404 |  |  |  | 124,404 |
|  |  | 135,373 |  |  |  | 2,761 |  |  |  | 343,622 |  |  |  | 481,756 |
As of December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets at fair value through profit or loss |  |  | 110,474 |  |  |  | 4,335 |  |  |  | 80,528 |  |  |  | 195,337 |
Derivative financial asset |  |  | — |  |  |  | 17,681 |  |  |  | 167,388 |  |  |  | 185,069 |
|  |  | 110,474 |  |  |  | 22,016 |  |  |  | 247,916 |  |  |  | 380,406 |
As of December 31, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets at fair value through profit or loss |  |  | 72,053 |  |  |  | 1,813 |  |  |  | 5,741 |  |  |  | 79,607 |
The movements in fair value measurements within Level 3 during the years are as follow:
|  | For the year ended December 31, |
|  | 2021 |  |  | 2022 |  |  | 2023 |
|  | US$ |  |  | US$ |  |  | US$ |
Unlisted equity shares at fair value through profit or loss: |  |  |  |  |  |  |  |  |  |  |  |
At January 1, |  |  | 38,681 |  |  |  | 219,219 |  |  |  | 80,528 |
Addition |  |  | 20,930 |  |  |  | 21,712 |  |  |  | — |
Disposal |  |  | (25,289 | ) |  |  | (45,404 | ) |  |  | (25,539 | )
Transfer |  |  | 143,689 |  |  |  | 1,491 |  |  |  | 4,118 |
Derecognition upon acquisition of subsidiaries |  |  | — |  |  |  | (162,747 | ) |  |  | (66,190 | )
Receipt of investment return |  |  | — |  |  |  | (2,680 | ) |  |  | — |
Total gains in profit or loss |  |  | 41,208 |  |  |  | 49,267 |  |  |  | 12,804 |
Exchange realignment |  |  | — |  |  |  | (330 | ) |  |  | 20 |
At December 31, |  |  | 219,219 |  |  |  | 80,528 |  |  |  | 5,741 |
|  | For the year ended December 31, |
|  | 2021 |  |  | 2022 |  |  | 2023 |
|  | US$ |  |  | US$ |  |  | US$ |
Derivative financial assets in relation to the Agreement (Note 14): |  |  |  |  |  |  |  |  |  |  |  |
At January 1, |  |  | 132,080 |  |  |  | 124,404 |  |  |  | 167,388 |
Net fair value (loss)/gains recognized in profit or loss |  |  | (6,947 | ) |  |  | 44,461 |  |  |  | 34,234 |
Gain related to disposed investment |  |  | — |  |  |  | 486 |  |  |  | — |
Settlement |  |  | — |  |  |  | (1,963 | ) |  |  | (201,411 | )
Exchange realignment |  |  | (729 | ) |  |  | — |  |  |  | (211 | )
At December 31, |  |  | 124,404 |  |  |  | 167,388 |  |  |  | — |
|  | For the year ended December 31, |
|  | 2021 |  |  | 2022 |  |  | 2023 |
|  | US$ |  |  | US$ |  |  | US$ |
Derivative financial liability (Note 26): |  |  |  |  |  |  |  |  |  |  |  |
At January 1, |  |  | 1,662 |  |  |  | 1,764 |  |  |  | — |
Net fair value changes recognized in profit or loss |  |  | — |  |  |  | (1,704 | ) |  |  | — |
Converted into class A shares |  |  | — |  |  |  | (55 | ) |  |  | — |
Exchange alignment |  |  | 102 |  |  |  | (5 | ) |  |  | — |
At December 31, |  |  | 1,764 |  |  |  | — |  |  |  | — |

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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