XML 42 R14.htm IDEA: XBRL DOCUMENT

Fair Value Measurement

12 Months Ended

Dec. 31, 2022

Fair Value Measurement

Fair Value Measurement

5. Fair Value Measurement

As of December 31, 2021 and 2022, information about (i) inputs into the fair value measurements of the Group’s assets that are measured at fair value on a recurring basis in periods subsequent to their initial recognition and (ii) investments measured at NAV or its equivalent as a practical expedient is as follows:


				Fair Value Measurements at Reporting Date Using
				(Amount in Thousands)
				Quoted Prices
		As of		in Active		Significant
		December 31,		Markets for		Other		Significant
		2021		Identical		Observable		Unobservable
		(Amounts in		Assets		Inputs		Inputs		NAV
Description		thousands)		(Level 1)		(Level 2)		(Level 3)
		RMB		RMB		RMB		RMB		RMB
Short-term investments
Available-for-sale investments		13,805		—		13,805		—		—
Trading debt securities		14,804		14,804		—		—		—
Equity securities measured at fair value		7,925		7,925		—		—		—
Investments held by consolidated investment fund		26,981		—		26,981		—		—
Long-term investments
Investments held by consolidated investment fund		80,327		—		80,327		—		—
Other long-term investments measured at fair value		376,957		3,766		127,678		217,269		28,244


				Fair Value Measurements at Reporting Date Using
				(Amount in Thousands)
				Quoted Prices
		As of		in Active		Significant
		December 31,		Markets for		Other		Significant
		2022		Identical		Observable		Unobservable
		(Amounts in		Assets		Inputs		Inputs		NAV
Description		thousands)		(Level 1)		(Level 2)		(Level 3)
		RMB		RMB		RMB		RMB		RMB
Short-term investments
Available-for-sale investments		14,941		—		14,941		—		—
Trading debt securities		207,670		207,670		—		—		—
Equity securities measured at fair value		5,265		1,304		3,961		—		—
Investments held by consolidated investment fund		67,443		26,637		40,806		—		—
Long-term investments
Investments held by consolidated investment fund		74,751		—		74,751		—		—
Other long-term investments measured at fair value		631,662		—		242,753		358,351		30,558

Short-term trading debt securities investments are classified as Level 1 because they are valued using quoted prices of the same securities as they consist of bonds issued by public companies and publicly traded. Short-term equity securities measured at fair value are valued based on the quoted stock price of its investees in the active market and are classified within Level 1.

The fair value of available-for-sale investments is measured using discounted cash flow model based on contractual cash flow and a discount rate of prevailing market yield for products with similar terms as of the measurement date, as such, it is classified within Level 2 measurement.

As of December 31, 2022, the Group had several consolidated investment funds whose underlying investments are mainly equity shares of listed companies, bonds or asset management plans. The equity shares of listed companies, whose fair value are determined by their quoted price in active markets, are classified within Level 1 measurement. The bonds have stated maturity and normally pay a prospective fixed rate of return and using discounted cash flow model based on contractual cash flow and a discount rate of prevailing market yield for products with similar terms as of the measurement date, as such, it is classified within Level 2 measurement. The asset management plans measured at recent observable transaction prices are classified within Level 2 as well.

Other long-term investments measured at fair value are (i) equity investments in listed companies whose fair value can be obtained through active markets which is classified within Level 1 measurement, (ii) private equity funds categorized within Level 2 or Level 3 of the fair value hierarchy, and (iii) private equity funds measured at NAV.

With respect to the private equity funds within Level 3 measurement, the Group generally uses a market comparable analysis. The valuation methodology requires a subjective process in determining significant inputs and making assumptions and judgments, for which the Group considers and evaluates including, but not limited to, (1) comparable data wherever possible to quantify or adjust the fair value, (2) quantitative information about significant unobservable inputs used by the third party and (3) prevailing market conditions. The uncertainty of the fair value measurement due to the use of these unobservable inputs and assumptions could have resulted in higher or lower determination of fair value. There is inherent uncertainty involved in the valuation of level 3 investments and therefore there is no assurance that, upon liquidation or sale, the Group could realize the values reflected in the valuations.

A reconciliation of the beginning and ending balances of the investments measured at fair value using significant unobservable inputs (Level 3) for the year ended December 31, 2022, presented as follows:


		RMB
		(Amount in Thousands)
Level 3 investments as of January 1, 2022		217,269
Changes in fair value included in investment income		69,291
Measurement approach change from measurement alternative to fair value measurement		76,280
Settlements		(6,842)
Foreign currency translation adjustments		2,353
Level 3 investments as of December 31, 2022		358,351
Changes in net unrealized gains included in investment income related to Level 3 investments still held as of December 31, 2022		62,449

Total realized and unrealized gains and losses recorded for Level 3 investments are reported in investment income in the consolidated statements of operations.

Fair value measurement on a non-recurring basis for the year ended December 31, 2021 included that used in impairment of investments measured at cost less impairment (see Note 4) which was classified as a Level 3 fair value measurement.

The Group also has financial instruments that are not reported at fair value on the consolidated balance sheets but whose fair value is practicable to estimate, which include cash and cash equivalents, restricted cash, accounts receivable, amounts due from related parties, short-term held-to-maturity investments, loan receivables, other receivables and payables. The carrying amount of these short-term financial instruments approximates their fair value due to the short-term nature.

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 + Details