2024_spring_internet_report

info@kraneshares.com +1 (212) 933 0393Spring 2024 China Internet Quarterly Earnings ReportGenerative AI: The Next Transformative Force for China’s Internet Giants?

2 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑Table of Contents China Internet Recent Highlights 3 KWEB Performance 5 KWEB Top 10 Holdings Financials Summary 6 KWEB Key Metrics 7 Subsector Analysis 9 Theme Highlight – Generative AI: The Next Transformative Force for China’s Internet Giants?14 Top 10 KWEB Holdings: Quarterly Earnings Update 21 Alibaba 21 Tencent 23 PDD Holdings 23 Meituan 24 NetEase 25 JD.com 26 Kanzhun 27 Trip.com 28 KE Holdings 29 Baidu 30 Citations 31 Definitions 31 Disclosures 33

3 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑China Internet Recent Highlights •Many leading China internet companies beat analyst estimates in their Q4 earnings, reflecting increased consumer activity surrounding the 11/11 festival as well as strong demand for travel booking and other services heading into the Lunar (Chinese) New Year holiday. •On average, China Internet companies currently trade at a -40% discounted earnings multiple compared to their US-based peers. Many of these companies continue to repurchase shares and KWEB’s top 10 holdings have an average buyback yield that is nearly 6%.1 •KWEB’s top 10 holdings’ weighted average revenue growth year- over-year in the fourth quarter was more than twice Amazon’s and their aggregate earnings per share (EPS) was almost 8x Amazon’s EPS, yet Amazon trades at a premium of over $600 billion compared to the market capitalization of all KWEB’s holdings combined.2 •In this edition’s theme highlight, we analyze the potentially disruptive impact generative artificial intelligence (AI) could have on China’s internet giants and the vast ecosystem in which they operate.

4 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑ •Two new companies joined the KWEB portfolio this quarter: YSB Inc. and Fenbi. YSB is an online pharmacy and Fenbi provides vocational training and examinations. Check out our Subsector Analysis to learn more about these exciting companies. •Alibaba will purchase all outstanding shares of its logistics platform Cainiao and withdraw its IPO application. Although the E-Commerce giant’s spin off plan remains in motion, they continue to wait for market sentiment to improve to proceed with listings, prioritizing returning value to shareholders and driving growth in the meantime.

5 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑KraneShares CSI China Internet ETF (Ticker: KWEB) Performance Cumulative % Data as of: 3/31/2024 Fund NAV Closing Price Index 1 Month 2.42% 3.51% 2.28% 3 Month -2.20% -2.78% -2.29% 6 Month -3.13% -2.42% -3.14% YTD -2.20% -2.78% -2.29% Since Inception 22.99% 22.91% 25.51% Avg Annualized % Data as of quarter end: 3/31/2024 Fund NAV Closing Price Index 1 Year -14.48% -14.37% -14.44% 3 Year -27.55% -27.80% -27.34% 5 Year -9.31% -9.33% -8.99% 10 Year -1.58% -1.60% -1.30% Since Inception 1.96% 1.95% 2.15% KWEB’s gross expense ratio is 0.69%. Inception Date: 7/31/2013. KWEB Index is the CSI Overseas China Internet Index. The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost, and current performance may be lower or higher than the performance quoted. For performance data current to the most recent month end, please call +(1) 855 8KRANE8 or visit our website at www. kraneshares.com/kweb .

6 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑KWEB Top 10 Holdings Financials Summary Top 10 KWEB HoldingsKWEB Weight (%)Revenue ($ B)Net Income ($ B)Revenue Growth (%)Net Margin (%)Earnings per Share ($) ALIBABA GROUP HOLDING LTD9.50 36.1 5.4 5.1 15.0 2.1 TENCENT HOLDINGS LTD9.25 21.5 4.8 7.1 22.3 0.5 PDD HOLDINGS INC8.08 12.3 3.2 123.2 26.0 2.2 MEITUAN- CLASS B6.61 10.2 0.3 22.6 2.9 0.1 NETEASE INC 5.07 3.8 0.9 7.0 23.7 0.3 JD.COM INC- CLASS A4.36 42.4 1.3 3.6 3.1 0.8 KANZHUN LTD - ADR4.21 0.2 0.0 46.0 0.0 0.1 TRIP.COM GROUP LTD4.17 1.4 0.3 105.4 21.4 0.5 KE HOLDINGS INC-ADR4.14 2.8 0.1 20.6 3.6 0.1 BAIDU INC- CLASS A4.13 4.8 0.4 5.7 8.3 1.1 Total Weighted Average Total 59.52 135.5 16.7 32.9 14.9 7.8 Data from KraneShares and Bloomberg as of 12/31/2023. Please see the end of the report for definitions. Figures are adjusted (non-GAAP) and % changes are year-over- year (YoY). Holdings are subject to change. Please see the end of the report for KWEB’s top ten holdings as of the most recent quarter-end.

7 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑KWEB Key Metrics -60-50-40-30-20-100102030 Travel Education Gaming Logistics Recruitment E-Commerce Live Streaming Entertainment Autos & Transportation Real Estate Search Fintech Social / Online ads Cloud Healthcare% ChangeSubsector Performance (12 Month) Data from Bloomberg as of 4/1/2024. -101030507090110 Travel Recruitment Education E-Commerce Logistics Real Estate Live Streaming Cloud Gaming Search Social / Online ads Entertainment Healthcare Autos & Transportation%Subsector Revenue Growth Data from Bloomberg as of 4/1/2024.

8 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑E-Commerce 34% Entertainment 11% Social / Online adsHealthcare 6%Travel 6%Gaming 5%Recruitment 4%Education 4%Real Estate 4%Search 4%Logistics 4%Fintech 3%Cloud 2%Live Streaming 2%Autos & Transportation 1%KWEB Breakdown By Subsector Data from Bloomberg and KraneShares as of 12/31/2023. 10.015.020.025.030.035.040.045.0 31-JAN-2023 28-FEB-2023 31-MAR-2023 28-APR-2023 31-MAY-2023 30-JUN-2023 31-JUL-2023 31-AUG-2023 29-SEP-2023 31-OCT-2023 30-NOV-2023 29-DEC-2023 31-JAN-2024 29-FEB-2024 26-MAR-2024Price to Earnings (P/E) KWEB US Internet Data from FactSet as of 3/26/2024. Please see the end of the report for definitions.

9 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑0246810121416 Alibaba Tencent PDD Meituan NetEase JD.com Kanzhun Trip.com KE Holdings Baidu%KWEB Top 10 Holdings: Share Buyback Yield Data from Bloomberg as of 3/26/2024. Please see the end of the report for definitions. Subsector Analysis % changes are year-over-year as of the fourth quarter of 2023 (12/31/2023) or the most recent earnings report date, unless otherwise stated. The latest reported figure is used in cases where the company reports semiannually. Sources: Bloomberg, CICC Research, KraneShares. Travel revenues increased by an average of +108% in the fourth quarter, the highest growth among all of KWEB’s subsectors thanks to increases in spending among China’s consumers and travel bookings that accelerated going into the Lunar (Chinese) New Year holiday. During the week-long holiday, domestic tourism spending was nearly +50% higher than last year, according to China’s National Bureau of Statistics (NBS). As a result, travel booking behemoth Trip.com more than doubled its revenue. Recruitment platform Kanzhun increased revenue by +46% in the fourth quarter. The platform now has over 40 million verified users, 29 million of which were added during 2023. The company has focused heavily on small businesses and blue-collar workers, whose numbers on the

10 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑platform now match those of white-collar workers. The company’s app “BOSS Zhipin” now even features an AI large language model geared towards entrepreneurs hiring for the first time without large HR departments. Education platform revenues increased by a solid +32% as many companies continue to reinvent themselves in a complex regulatory environment. Technology platform TAL continued to raise awareness of its markets among schools throughout China and increased its revenues by +61%. The subsector also had a new addition this quarter: Fenbi. The platform focuses specifically on vocational training and examination services. Fenbi listed on the Hong Kong Stock Exchange in January of 2023 and grew its revenue by 15% year-over-year as of the first half of 2023 (Fenbi reports earnings semiannually). Rising employment needs, especially among China’s younger population, likely drove the platform’s growth since listing. Meanwhile, civil service exams for both national and provincial governments took place in the first half of the year, likely boosting revenue for this period. CICC analysts believe the company’s profit growth can be partially attributed to its innovative applications of AI-powered large language models (LLMs) in its grading and feedback processes. E-Commerce giants’ revenues increased +28%. Companies beat low expectations in many cases, with JD and PDD leading the pack, while Alibaba’s results were slightly shy of expectations. The outlook for the subsector is bright as China’s consumer recovery could be broadened by efforts announced by ministers during the “Two Sessions” policy meetings to incentivize the trading in and upgrading of larger consumer

11 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑goods such as appliances and furniture, which have been mostly left out of a services-focused consumer rebound in 2023. Logistics platform Full Truck Alliance exceeded analysts’ revenue and net income expectations in the fourth quarter, increasing top-line revenue by +25%. JD, which operates a logistics platform catering to third parties, also beat estimates. The surge in logistics demand is a positive indication for China’s consumer economy. Real Estate platform KE Holdings, which operates the popular “Beike” real estate app, increased revenues by +21% in the fourth quarter. The platform saw growth in its auxiliary business lines, such as home renovation, as property prices in China have yet to recover significantly. Live Streaming revenues increased +14% in the fourth quarter. Notably, East Buy, an up-and-coming platform, increased the gross merchandise value of goods sold through its streams (i.e. on Douyin, which is China’s TikTok, and Alibaba’s TaoBao) by over +30%. The platform also added more merchants and monthly paying users. Cloud revenues increased +9%, representing steady growth for the subsector, which we believe is undervalued given the great potential in China’s market, especially as companies switch from foreign to local providers. Alibaba’s management team has not provided an update on the potential IPO of Alibaba Cloud, which could reinvigorate the sector. Gaming revenues increased a slight +7% as the initial impact of reopening and NetEase’s termination of its partnership with Activision faded during the quarter. Search engine and AI focused technology company Baidu increased

12 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑revenue +6%. Apple recently announced that it would install Baidu’s ERNIE AI chatbot on all of its products in China. Social media platforms’ revenues increased by a modest +6%. Tencent’s top and bottom lines were slightly lower than expected, mostly due to poor performance in gaming due to a regulatory overhang on in-app purchases. However, the company’s social media advertising business had a strong quarter, and many expect the implementation of new technologies such as AI in its content targeting to boost profit margins rapidly in coming quarters. Entertainment revenues increased by a slight +3%. Short video platform Kuaishou led the pack in terms of revenue growth thanks to an increased focus on E-Commerce, strong user growth, lower user acquisition costs due to enhanced loyalty, and strong growth in advertising. Tencent Music’s revenue decline resulted in low average revenue growth for the subsector, though the company beat most estimates and increased profitability thanks to a higher number of paying users. Longer- form video platform Bilibili also exceeded analysts’ expectations for profitability in the fourth quarter on better user monetization. Fintech revenues increased by a modest +2%. Within the ecosystem, insurance saw stronger growth compared to online lenders as insure- tech firm Zhongan was able to raise premiums by offering new products, especially in health insurance. Although it did not grow as much as Zhongan, online lender Qifu Technology benefitted from a significant improvement in the credit quality of its borrowers and signaling confidence in its outlook through significant share buybacks and dividend payments. On the other hand, online lender Lufax saw a steep decline in

13 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑revenue as new loans declined -40%. The online lender is undergoing a significant transition, like Qifu’s, focused on improving loan quality. We believe the lender could be aiming to increase the number of loans it can move off its balance sheet after taking on 100% of the risk for new loans in the fourth quarter. Nonetheless, as management reminded in the company’s earnings call, the company remains well-capitalized and will pay a special dividend this year. Health Care revenues increased +1% as the industry overall faces regulatory headwinds from China and the United States. However, online pharmacy and new KWEB holding YSB Inc. grew revenues by +19% in 2023 compared to 2022. YSB stands for 药师帮 (yao shi bang), which translates literally as “Medicine Help” is one of the largest online pharmacy platforms in China. YSB already captures over 20% of market share, competing with JD.com and Alibaba’s pharmacy platforms, which are also holdings in KWEB. Auto marketplace Autohome increased revenue +1%. Vehicle sales in China picked up significantly in the fourth quarter of 2023, which was reflected in Autohome’s results. The platform’s advertising business was weak during the quarter as manufacturers reduced their advertising budgets. However, used car sales saw significant growth and the platform has partnered with Baidu on developing AI applications for the lead generation software Autohome sells to dealers.

14 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑Theme Highlight – Generative AI: The Next Transformative Force for China’s Internet Giants? The advent of generative AI technologies like ChatGPT has captured global attention, igniting imaginations about the profound ways they could reshape content creation, search, gaming, recommendations, advertising, and E-Commerce. While enablers like OpenAI and Nvidia have seen their valuations skyrocket, and U.S. internet companies are viewed as prime beneficiaries, many investors may be overlooking the potentially disruptive impact this technological force could have on China’s internet giants and the vast ecosystem they operate in. China’s Track Record of Commercializing Transformative Technologies at Massive Scale China has proven adept at commercializing transformative technologies and tailoring them for its massive user base at an unprecedented scale. The country’s internet firms took mobile internet adoption to new heights by developing products finely tuned for China’s hundreds of millions of users and the immense data they generate. This dynamic of adapting cutting-edge technologies for the unique needs and scale of the Chinese

15 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑market could turbocharge the monetization of generative AI capabilities. China has a total of 1.08 billion internet users as of 2023.3 With a user base that dwarfs most countries entire populations, unleashing generative AI’s potential in content, search, recommendations, advertising, and E-Commerce applications across China’s internet landscape represents an immense commercialization opportunity. The Chinese tech titans are taking note and aggressively deploying these AI models. China Internet Giants on AI: E-Commerce, Cloud, Social Media/Ads, Gaming and more Alibaba (9.55% of KWEB4) has made a significant strategic investment in Moonshot AI; a company focused on developing foundational Generative AI models. Compared to OpenAI’s ChatGPT, Moonshot recently announced its Kimi Chat boasts the ability to handle up to 2 million characters in a single prompt, compared to ChatGPT’s (GPT 4) limit of 8,192 characters.5 2,0008,192100,000200,0002,000,000 05 00,000 1,000,0001 ,500,000 2,000,0002 ,500,000PerplexityOpenAI - ChatGPT (GPT 4)Xai - Grok betaAnthropic - Claude 3.0 OpusMoonshot AI - Kimi Chat Character LimitLarge Langugage Model by charaters limit Data from Company/Platform Announcements as of 3/20/2024.

16 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑This breakthrough in ultra-long prompt handling capacity could enable a wide range of new applications and use cases for generative AI capabilities. Kimi Chat’s ability to process and respond to prompts containing millions of characters opens up possibilities for more complex and context-rich interactions, potentially unlocking novel solutions across various domains. Alibaba’s strategic partnership with Moonshot AI positions the E-Commerce giant to leverage these cutting-edge language models, potentially integrating them into its vast ecosystem of services and platforms. Alibaba has also developed its own large language model called Tongyi Qianwen, which the company is currently using to enhance search and advertising on its E-Commerce platforms, Taobao and Tmall. In a recent earnings call, Chairman Joe Tsai said he sees strong potential for AI to “significantly enhance search conversion and ad monetization.” for the E-Commerce business.6 For all of Alibaba’s business lines, generative AI promises to revolutionize customer service, sales processes, and marketing by enabling real- time naturalistic conversations and customized content generation at scale. The company is already experimenting with AI-powered sales assistants and marketing tools aimed at cutting certain operational costs substantially. There could be synergies between AI initiatives and Alibaba’s cloud business similar to those between Microsoft Azure and OpenAI and those between Amazon Web Services (AWS) and Anthropic. As in these examples, Ali Cloud could be turbocharged by integrating generative AI capabilities. Many internet companies in China have used Ali Cloud. For

17 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑example, one of China’s most popular social platforms, Xiaohongshu (“Little Red Book”), which has over 300 million users, already utilizes Ali Cloud to enable its real-time user behavior tagging, content filtering, and recommendations.7 Now, with Generative AI capabilities, Ali Cloud is expanding its partnerships to broader industries. China-based automaker FAW group is tapping Ali Cloud’s large language model Qwen to build a generative AI-powered application that will create reports and analyze data for business decisions. Ali Cloud provides cloud computing services to over 70% of China’s domestic auto vehicle enterprises. In addition, the company offers a full stack of tech tools to facilitate automakers’ digitalization efforts, from autonomous driving to industrial internet.8 Tencent (9.1% of KWEB2) is positioning itself to maintain its competitive edge and sustain robust growth in the rapidly evolving digital advertising landscape by harnessing the power of AI across its advertising solutions and social media platforms. The company is leveraging its proprietary AI models to enhance ad targeting precision and attribution tracking, which has been a critical catalyst for its impressive advertising revenue growth. Additionally, Tencent is equipping advertisers with generative AI tools that can dynamically create ad visuals tailored for various ad placements, aiming to boost click-through rates. Tencent’s flagship platforms, WeChat and its video account (the Chinese equivalent of TikTok, rival to Bytedance’s Douyin), still possess substantial untapped potential for further monetization. The integration of AI technologies could unlock new opportunities to capitalize on this potential, driving increased revenue streams. In the recent earnings

18 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑call, Tencent’s president, Martin Lau, highlighted the near-term revenue potential in advertisement from the boost of AI. With a relatively low ad load currently within the WeChat and video account ecosystem, a 10% increase in its ads revenue could add RMB 10 billion, mostly all profit.9 The integration of AI technologies could unlock new opportunities to capitalize on this potential, driving increased revenue streams. Another high-impact area for generative AI is the gaming industry, where development and maintenance costs can run into billions of dollars. For its gaming business, Tencent envisions generative AI dramatically boosting developer productivity by streamlining the creation of art assets, character dialogues, stories, and even game environments – potentially leading to significant cost savings. Gaming giant NetEase (6.63% of KWEB4) is at the forefront of this transformative shift, as highlighted in the Financial Times’s coverage of its game, Justice Mobile. The game enables non-player characters (NPCs) to engage in context-aware, ChatGPT-style conversations, creating an immersive and engaging interactive experience for players. Such AI capabilities could open up new vistas for interactive storytelling and dynamic content generation in games. By leveraging generative AI, gaming companies like Tencent and NetEase aim to accelerate development cycles, reduce production costs, and deliver more innovative and compelling gaming experiences to players. This technology has the potential to reshape the gaming industry’s creative processes and business models, unlocking new avenues for revenue growth and user engagement.

19 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑ In the game Justice Mobile, which was developed by NetEase, in-game, non-player characters (NPCs) now exhibit more human-like characteristics and personalities and can dynamically answer questions and have more natural conversations, all thanks to advances in AI large language models. Kanzhun (Boss Direct Hire, 4.16% of KWEB2) is one of the largest job- searching companies in China, like Indeed in the U.S. Kanzhun’s cutting- edge recruitment platform has proven successful in disrupting traditional recruiting techniques, using AI and big data insights and a mobile-centric interface to connect bosses with suitable candidates directly. Their revenue last quarter skyrocketed 46% year over year to 1.58 billion yuan (or $222.6 million U.S. dollars) – well above estimates of 1.54 billion yuan.2 During the recent earnings call, the company stated it is actively investing in AI-related technologies. Looking ahead, we could see AI play a significant role in streamlining most of the hiring process, particularly for human resources. Given that companies often need to screen thousands of resumes and conduct initial rounds of standard interviews, generative

20 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑AI models or even more advanced artificial general intelligence (AGI) systems could handle these early phases of recruitment. This would shorten the decision-making timeline and reduce time commitments for both employers and job seekers. As AI capabilities advance, the hiring experience may be substantially transformed through the automation of preliminary screening and interviews. 5,0007,0009,00011,00013,00015,00017,00019,00021,000 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24Growth of 10,000 UnitUS vs. China: Internet Index Performance Dow Jo nes US Internet Index CSI China Overseas Internet Index Data from Bloomberg as of 3/20/2024. Index returns are for illustrative purposes only. Indexes are unmanaged and one cannot invest directly in an index. Index returns do not reflect fees or other costs associated with investing. Past performance does not guarantee future results. Millions of USD Market Capitalizatio n 2024 Net Income Estimate All 32 Companies in KWEB 1,095,933 90,131 Meta 1,288,304 54,175 Alphabet 1,864,060 84,621 Amazon 1,869,729 51,935 Data from Bloomberg and KraneShares as of 3/23/2024. Please see the end of the report for definitions.

21 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑For China’s internet companies like Alibaba, Tencent, and NetEase, proactively investing in and strategically deploying generative AI across their business lines could prove crucial for sharpening their competitive advantages and staving off disruption in their core markets. Beyond the tech behemoths, the generative AI revolution’s potential to reshape business models spans China’s entire internet landscape. Much like the mobile internet boom, nimble startups catalyzing new applications and use cases could rapidly gain traction and market share. From revolutionizing digital advertising and marketing to enabling groundbreaking new media formats and consumer experiences, generative AI’s transformative impact on China-based internet companies is likely to be all-encompassing. KWEB Top 10 Holdings Earnings Update Data is for the fourth quarter of 2023, which ended on 12/31/2023. Top 10 Holdings as of 12/31/2023. Sources: Bloomberg, CICC Research, Company releases & filings, KraneShares. % changes are year-over-year (YoY) unless otherwise indicated. Revenue figures are adjusted (non-GAAP). The RMB to USD exchange rate used is as of 3/20/2023. Please see the end of the report for KWEB top ten holdings as of the most recent quarter end. Alibaba By The Numbers (Q4 2023) •Revenue +5% to RMB 259.6B ($36.1B) •Net Income RMB 38.8B ($5.4B) •Net Margin 15% •Earnings per Share RMB 15.1 ($2.1) Alibaba beat estimates on its bottom-line net income but missed estimates slightly on its top-line revenue in the fourth quarter. The company also increased its share buyback program by $25 billion and

22 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑extended the program to 2027. Taobao, Tmall, and Cloud all had positive results in the fourth quarter. And, after Singles Day, GMV in China E-Commerce grew by double digits YoY in the second half of the quarter. CEO Eddie Wu said during the company’s earnings call, “Our top priority is to reignite the growth of our core businesses, E-Commerce, and cloud computing. We will step up investment to improve users’ experience to drive growth in Taobao and Tmall Group and strengthen market leadership in the coming year.” Market leadership and user experience are both important for Alibaba as investors have become concerned that they have been losing too much market share to Pinduoduo, which focuses heavily on in-app engagement and deals. Recently, Alibaba’s Chairman and co-founder Joe Tsai spoke on CNBC, reiterating the company’s plans to pursue multiple spin-offs through share listings, but that management is waiting for market conditions to improve. Nonetheless, the company announced on March 26th that it would be withdrawing the IPO application for its Cainiao logistics platform and purchasing all outstanding shares. “Given the strategic importance of Cainiao to Alibaba and the significant long-term opportunity we see in building out a global logistics network, we believe this is an appropriate time to double down on Alibaba’s investment in Cainiao,” said Joe Tsai, Chairman of Alibaba Group. Alibaba repurchased $9.5 billion worth of its shares in 2023 and announced a new repurchase program, under which the company will repurchase $25 billion worth of shares through 2027.

23 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑Tencent Tencent is a diversi fied consumer technology company with businesses in social media, cloud services, payments, and online advertising. Tencent’s most well-known product is WeChat, one of China’s premier social media platforms with over one billion monthly active users (MAUs). Tencent By The Numbers (Q4 2023) •Revenue +7% to RMB 154.6B ($21.5B) •Net Income RMB 34.5B ($4.8B) •Net Margin 22% •Earnings per Share RMB 3.6 ($0.5) Tencent’s revenue and EPS were slightly lower than expected. Nonetheless, the social media and internet technology giant had a strong quarter. Management kept costs down and rewarded shareholders with a large dividend and buybacks. Revenue from games declined slightly. Meanwhile, revenue from FinTech and business services increased by +15%, which is notable considering the regulatory overhang in China’s fintech industry. Tencent increased its annual dividend by +43% to $0.4 per share. The company repurchased $6.3 billion worth of shares in 2023 and has more than doubled its target for share repurchases in 2024 to $12.8 billion. PDD Holdings PDD’s platform was one of the fi rst to embrace a hybrid of E-Commerce and social media. The company started by allowing users to share deals and then form “shopping teams” to drive down the prices they pay for goods. PDD operates under the name “Pinduoduo” in China and

24 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑“Temu” in the rest of the world. PDD has rapidly gained market share in E-Commerce globally since its establishment in 2015 and is now the fi fth- largest E-Commerce platform in the world. PDD Holdings By The Numbers (Q4 2023) •Revenue +123% to RMB 88.4B ($12.3B) •Net Income RMB 23.0B ($3.2B) •Net Margin 26% •Earnings per Share RMB 15.8 ($2.2) PDD blew most estimates out of the water in its Q4 results. Interestingly, management declined to break out the revenue generated from international E-Commerce (Temu), though CICC analysts estimate it to be approximately 30%, and growing. Also of note, auxiliary businesses online marketing and transaction services grew revenues by +57% and +357%, respectively. During the earnings call, analysts questioned PDD’s decision not to follow its peers in increasing stock buybacks and dividends. Management responded that the company remains in the development phase and intends to use its capital to invest for growth. An alternative explanation could also be that the value of PDD’s shares increased +79% in 2023, outpacing many of its peers. Meituan Meituan is an E-Commerce company that specializes in food delivery and other local services. Meituan is the product of the 2015 merger between Meituan, known as the “Groupon of China,” and Dianping, known as the “Yelp of China.” The company now operates many business lines,

25 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑including general retail, restaurant booking, and travel booking services, serving over 600 million registered users. Meituan By The Numbers (Q4 2023) •Revenue +23% to RMB 88.4B ($10.2B) •Net Income RMB 2.2B ($0.3B) •Net Margin 3% •Earnings per Share RMB 0.7 ($0.1) Meituan had a stellar fourth quarter as profitability increased from the fourth quarter of 2022, when it was negative, despite increased user subsidies. The company also beat estimates on its top line: revenue. During the earnings call, management stated that China’s local services industry had seen faster growth compared to other retail industries in 2023. The company also reported a +30% increase in daily active users, bringing the total to a record high, in 2023. The company’s profitability increase was likely due to a heightened focus on its core business, scaling back some investments in new initiatives. In November, Meituan announced a plan for a total buyback of $990 million worth of shares through an open-ended date. Out of this program, the company has already completed repurchases worth $310 million. NetEase NetEase is a consumer information technology company primarily dealing in online, PC, and mobile games. It is one of the largest gaming companies in the world, and its titles include Knives Out and Naraka: Bladepoint.

26 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑NetEase By The Numbers (Q4 2023) •Revenue +7% to RMB 27.3B ($3.8B) •Net Income RMB 6.5B ($0.9B) •Net Margin 24% •Earnings per Share RMB 2.2 ($0.3) NetEase missed estimates on both the top-line net income and bottom- line revenue in the fourth quarter. Growth moderated from stellar performance in the third quarter, in which revenue increased by +11.6%, partly due to the ongoing impact of the termination of their partnership with Activision. However, this impact appears to have faded in the fourth quarter. In their earnings report, CEO William Ding highlighted increasing game diversity as a driver of growth. Meanwhile, Youdao, the company’s online marketing division, saw record-high cash flow and improved profitability. NetEase repurchased $664 million worth of shares in 2023. JD.com JD.com is one of the largest E-Commerce platforms in China. JD owns a large and growing marketplace for a wide variety of goods and offers its own logistics service. JD offers its services to over 500 million users. JD.com By The Numbers (Q4 2023) •Revenue +4% to RMB 304.9 ($42.4B) •Net Income RMB 9.3B ($1.3B) •Net Margin 3% •Earnings per Share RMB 5.8 ($0.8)

27 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑JD.com beat estimates on its top and bottom lines by large margins in the fourth quarter of 2023. While some analysts were concerned that the company’s decision to waive fees for new merchants, JD’s profitability increased in the fourth quarter. Company representatives told KraneShares that investors tend to underestimate the power of their logistics business, which continued to expand internationally in North America and Europe during the fourth quarter, including adding an American glassware company as a client and aiding their Black Friday deliveries. JD.com repurchased $356 million worth of shares in 2023 and announced its intention to repurchase $3 billion worth of shares through March of 2027. Kanzhun Founded in 2014, Kanzhun operates “BOSS Zhipin”, which has become the largest online recruitment platform in China, as measured by monthly active users. The platform connects enterprises and individual job seekers in a seamless and interactive manner through its mobile- first application. Kanzhun By The Numbers (Q4 2023) •Revenue +46% to RMB 1.4B ($0.2B) •Net Income RMB 0B ($0B) •Net Margin 0% •Earnings per Share $0.1 The platform now has over 40 million verified users, 29 million of which were added during 2023. The company has focused heavily on small

28 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑businesses and blue-collar workers, whose numbers on the platform now match those of white-collar workers. The company’s app “BOSS Zhipin” now even features an AI large language model geared towards entrepreneurs hiring for the first time without large HR departments. We believe BOSS Zhipin could be critical to the government’s campaign to lower unemployment. Trip.com Trip.com is a travel booking site widely recognized as an international competitor to Expedia. It provides search and complete booking services for fl ights, hotels, trains, car rentals, and more. The company offers international and domestic travel booking services to Chinese and global customers. Trip.com By The Numbers (Q4 2023) •Revenue +105% to RMB 10.1B ($1.4B) •Net Income RMB 2.2B ($0.3B) •Net Margin 21% •Earnings per Share RMB 3.6 ($0.5) Trip.com benefitted from a resurgence in travel demand for this year’s Lunar (Chinese) New Year holiday. According to official statistics, China’s holidaymakers took a total of 474 million trips, domestic and international, which represented an increase of +34% and domestic tourism spending during the week-long holiday increased +47%.¹ Executive Chairman James Liang summed it up nicely: “in 2023, China embarked on a significant journey of reconnecting with the world driven by rising travel sentiment.” Management raised its 2024 guidance above

29 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑analyst estimates in a strong statement of confidence. Trip.com repurchased $224 million worth of shares between September 2023 and February 2024 and intends to repurchase $581 million worth in 2024. KE Holdings KE Holdings is China’s leading housing transaction and services platform. Originally a brick-and-mortar real estate brokerage, Beike expanded into an integrated online and offline ecosystem, providing solutions for property sales, rentals, home renovation, and mortgages. The company’s agent cooperation network (ACN) is a platform that facilitates information sharing among service providers and encourages collaboration between its extensive network of agents, stores, and brands. KE Holdings By The Numbers (Q4 2023) •Revenue +21% to RMB 20.1B ($2.8B) •Net Income RMB 0.7B ($0.1B) •Net Margin 4% •Earnings per Share RMB 0.7 ($0.1) Although new home sales continued to be under pressure during the quarter, existing home transactions increased +29% YoY, and the company’s new home remodeling decoration business took off, nearly doubling from the same quarter last year. The company beat most estimates on its bottom line as new home sales, despite sluggish growth, achieved record profitability as developers pay out more to agents to offload new homes. KE Holdings repurchased $710 million worth of shares in 2023.

30 kraneshares.com info@kraneshares.com +1 (212) 933 0393 Back to Top ↑Baidu Baidu is a technology company with substantial businesses in artificial intelligence, search engines, cloud computing, mobility solutions, and more. Baidu operates China’s most popular search engine. Meanwhile, Baidu’s ERNIE AI chatbot has over 100 million users, and its Apollo program operates the world’s largest fleet of robo-taxis. Baidu By The Numbers (Q4 2023) •Revenue +6% to RMB 34.5B ($4.8B) •Net Income RMB 2.9B ($0.4B) •Net Margin 8% •Earnings per Share RMB 7.9 ($1.1) Baidu missed estimates for top-line revenue but beat estimates significantly for its bottom-line net income. Baidu is a leader in the AI space. However, as is the case with many diversified technology companies with AI businesses, these efforts have yet to significantly impact its overall revenue. Baidu’s AI cloud revenue increased +11% in the fourth quarter to RMB 5.7 billion. Generative AI and large language models (LLMs) accounted for 7.8% of the total revenue for this segment. On a combined basis, total internal and external AI cloud revenue was RMB 8.4 billion, with RMB 656 million of that total coming from generative AI and LLMs. However, management expects revenue from generative AI and LLMs to grow to several billion RMB by the end of 2024. Believing its stock is cheap, Baidu repurchased $669 million worth of shares in 2023.