Investments

12 Months Ended

Dec. 31, 2022

Schedule of Investments [Abstract]

Investments

 

4.   INVESTMENTS

Short-term Investments

As of December 31, 2021 and 2022, the Group’s short-term investments comprised of only debt securities. Short-term held-to-maturity securities were mainly deposits in commercial banks with maturities less than one year and wealth management products issued by commercial banks and other financial institutions for which the Group has the positive intent and ability to hold those securities to maturity. The short-term available-for-sale securities include wealth management products issued by commercial banks and other financial institutions which are not classified as trading securities or as held-to-maturity securities.

During the years ended December 31, 2020, 2021 and 2022, the Group recorded interest income from its short-term investments of RMB4.7 billion, RMB4.5 billion and RMB4.5 billion (US$647 million) in the consolidated statements of comprehensive income, respectively.

Short-term investments classification as of December 31, 2021 and 2022 were shown as below:

	As of December 31, 2021
	Cost or Amortized cost less allowance for credit losses		Gross unrecognized holding gains		Gross unrecognized holding losses		Gross unrealized gains		Gross unrealized losses		Fair value
	RMB		RMB		RMB		RMB		RMB		RMB
	(In millions)
Held-to-maturity debt investments		140,686		898		—		—		—		141,584
Available-for-sale debt investments		2,547		—		—		10		—		2,557

	As of December 31, 2022
	Cost or Amortized cost less allowance for credit losses		Gross unrecognized holding gains		Gross unrecognized holding losses			Gross unrealized gains		Gross unrealized losses		Fair value
	RMB		RMB		RMB			RMB		RMB		RMB		US$
	(In millions)
Held-to-maturity debt investments		119,984		631		(151	)		—		—		120,464		17,466
Available-for-sale debt investments		847		—		—			8		—		855		124

Long-term Investments

The following table sets forth a breakdown of the categories of long-term investments held by the Group as of the dates indicated:

	As of December 31,
	2021		2022		2022
	RMB		RMB		US$
	(In millions)
Equity investments at fair value with readily determinable fair value		16,375		12,100		1,754
Equity investments without readily determinable fair value using the NAV practical expedient		957		945		137
Equity investments without readily determinable fair value using the measurement alternative		10,788		9,249		1,341
Available-for-sale debt investments		2,262		2,447		355
Equity method investments		24,808		25,940		3,761
Investments accounted for at fair value		4,228		4,616		669
Total long-term investments		59,418		55,297		8,017

Equity investments at fair value with readily determinable fair value

Equity investments at fair value with readily determinable fair value represent investments in the equity securities of publicly listed companies, for which the Group does not have significant influence.

Equity investments without readily determinable fair value

The Group accounted for private equity funds of which the Group does not have the ability to exercise significant influence using the NAV practical expedient in accordance with ASC 820. For equity investments without readily determinable fair value and do not qualify for the NAV practical expedient, the Group elected to use the measurement alternative to measure such investments at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer, if any in accordance with ASC 321. Impairment charges recognized on equity investments without readily determinable fair value were RMB2,310 million, RMB4,259 million and RMB2,456 million (US$356 million) for the years ended December 31, 2020, 2021 and 2022, respectively.

The total carrying value of equity investments without readily determinable fair value that do not qualify for the NAV practical expedient held as of December 31, 2021 and 2022 were as follows:

	As of December 31, 2021			As of December 31, 2022			As of December 31, 2022
	RMB			RMB			US$
	(In millions)
Initial cost basis		13,016			13,741			1,992
Cumulative unrealized gains		3,910			4,026			584
Cumulative unrealized losses (including impairment)		(6,138	)		(8,518	)		(1,235	)
Total carrying value		10,788			9,249			1,341

Total unrealized and realized gains and losses of equity securities without readily determinable fair values that do not qualify for the NAV practical expedient for the years ended December 31, 2020, 2021 and 2022 were as follows:

	For the years ended December 31,
	2020			2021			2022			2022
	RMB			RMB			RMB			US$
	(In millions)
Gross unrealized gains		4,396			1,062			218			32
Gross unrealized losses (including impairment)(i)		(2,679	)		(4,424	)		(2,418	)		(351	)
Net unrealized gains (losses) on equity securities held		1,717			(3,362	)		(2,200	)		(319	)
Net realized gains on equity securities sold		266			—			90			13
Total net gains (losses) recognized		1,983			(3,362	)		(2,110	)		(306	)

(i) Gross unrealized losses (downward adjustments excluding impairment) were RMB378 million, RMB165 million and nil for the years ended December 31, 2020, 2021 and 2022, respectively.

Equity method investments

The carrying amount of the Group’s equity method investments were RMB24.8 billion and RMB25.9 billion (US$3.8 billion) as of December 31, 2021 and 2022, respectively. For the years ended December 31, 2020, 2021 and 2022, the impairment recognized for equity method investments were RMB297 million, RMB57 million and RMB569 million (US$82 million), respectively.

Equity Investment in Trip.com International, Ltd. (“Trip”) (formally known as Ctrip)

As of December 31, 2018, the Group held approximately 19% of Trip’s outstanding shares. The Group was considered to have significant influence over Trip and accounts for such investment as an equity method investment in accordance with ASC 323. 

During 2019, the market value of Trip had significantly declined and remained below the carrying value of the investment for a prolonged period of time. Therefore, the Group concluded that the decline in market value of the investment in Trip was other-than-temporary as of September 30, 2019 and an impairment charge of RMB8.9 billion was recorded in the third quarter of 2019. The Group made a corresponding RMB8.9 billion downward adjustment to the equity method goodwill arising from its acquisition of the Trip investment.

In October 2019, the Group disposed an aggregate of 36 million American Depositary Shares of Trip for cash consideration of US$988 million and recognized a disposal loss of RMB43 million in the year ended December 31, 2019.

After the partial disposal of the investment in Trip, the Group held approximately 12% equity interest in Trip, and the Group can actively participate in the operating and financing policies of Trip through its two seats on Trip’s board of directors with a total of nine members. Accordingly, the Group continues to have significant influence over Trip and accounts for its remaining investment as an equity method investment in accordance with ASC 323. As of December 31, 2022, the Group’s investments in Trip had a fair value of RMB16.4 billion (US$2.4 billion), based on the closing share price.

The following tables set forth the summarized financial information of Trip:

	As of September 30, (i)
	2021		2022		2022
	RMB		RMB		US$
	(In millions)
Current assets		76,596		67,045		9,422
Non-current assets		124,268		127,253		17,883
Current liabilities		73,517		61,708		8,672
Non-current liabilities		16,418		21,647		3,042
Noncontrolling interests		924		713		100

	For the twelve months ended September 30, (i)
	2020			2021			2022			2022
	RMB			RMB			RMB			US$
	(In millions)
Total revenues		21,704			20,313			19,706			2,769
Gross profit		16,838			15,916			15,261			2,145
Loss from operations		(827	)		(723	)		(376	)		(53	)
Net (loss) income		(2,236	)		1,198			(1,596	)		(224	)
Net (loss) income attributable to Trip		(2,243	)		1,288			(1,488	)		(209	)

(i) The Group adopted a one-quarter lag in reporting its share of equity income (loss) in Trip.

Equity Investment in Jidu Auto Inc. (“Jidu”)

In January 2021, the Group entered into an agreement with Zhejiang Geely Holding Group (“Geely”) to established Jidu to produce intelligent electric vehicles. In 2022, the Group purchased the ordinary shares with

amount of US$371 million including common stock of US$171 million and in-substance common stock of US$200 million, and preferred shares with amount of US$193 million. After which, the Group holds an equity interest of 52.30% as of December 31, 2022.

However, considering the substantive participating rights held by Geely, the Group accounts for its investment of the ordinary shares as an equity method investment in accordance with ASC 323. Furthermore, the Group accounts for its investment of the preferred shares as an equity investment without a readily determinable fair value in accordance with ASC 321.

Disposal of financial services business

After finishing a series of legal restructuring and recapitalization of the financial services business (“Du Xiaoman”), the Group retained 41% of Du Xiaoman’s shares on a fully diluted basis, and accounted for it as an equity method investment in accordance with ASC 323, as the Group retained significant influence over Du Xiaoman. The carrying amount of the Du Xiaoman investment in excess of the Group’s proportionate interest in Du Xiaoman was recognized as equity method goodwill of RMB3.5 billion, intangible assets of RMB851 million and related deferred tax liabilities of RMB213 million.

As of December 31, 2021 and 2022, in addition to the aforementioned equity method investments, the Group held other equity method investments through its subsidiaries or VIEs and over which had significant influence.

For the year ended December 31, 2022, equity method investments excluding Trip held by the Group in aggregate have met the significance criteria as defined under Rule 4-08(g) of Regulation S-X. Financial information for the Group’s equity method investments other than Trip are summarized as a group as follow:

	As of September 30, (i)
	2021		2022		2022
	RMB		RMB		US$
	(In millions)
Current assets		125,266		163,889		23,031
Non-current assets		18,512		19,781		2,780
Current liabilities		90,744		117,811		16,556
Non-current liabilities		9,218		15,750		2,213
Noncontrolling interests		1,662		1,721		242

	For the twelve months ended September 30, (i)
	2020			2021		2022		2022
	RMB			RMB		RMB		US$
	(In millions)
Total revenues		13,981			21,380		22,417		3,150
Gross profit		5,083			7,624		8,664		1,218
(Loss) income from operations		(1,282	)		1,238		993		140
Net (loss) income		(832	)		2,065		304		43
Net (loss) income attributable to the investees		(891	)		2,040		249		35

(i) The Group adopted a one-quarter lag in reporting its share of (loss) income in majority of its equity investees.

Investments accounted for at fair value

Long-term equity investments in unlisted companies held by consolidated investment companies are accounted for at fair value in accordance with ASC 946-320. These investments are carried at fair value with realized or unrealized gains and losses recorded in “Others, net” in the consolidated statements of comprehensive income.

The methodology used in the determination of fair values for held-to-maturity debt investments, available-for-sale debt investments, equity investments with readily determinable fair values and other investment securities accounted for at fair value are disclosed in Note 26.

Long-term investments classification, excluding equity method investments and equity investments without readily determinable fair value, as of December 31, 2021 and 2022 are shown as below:

	As of December 31, 2021
	Cost or Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
	RMB		RMB		RMB			RMB
	(In millions)
Equity investments at fair value with readily determinable fair value		15,046		6,046		(4,717	)		16,375
Available-for-sale debt investments		2,820		216		(774	)		2,262
Investments accounted for at fair value		1,974		2,653		(399	)		4,228

	As of December 31, 2022
	Cost or Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
	RMB		RMB		RMB			RMB		US$
	(In millions)
Equity investments at fair value with readily determinable fair value		15,835		2,731		(6,466	)		12,100		1,754
Available-for-sale debt investments		3,735		283		(1,571	)		2,447		355
Investments accounted for at fair value		2,331		2,855		(570	)		4,616		669

Available-for-sale debt investments

Available-for-sale debt investments are convertible debt instruments issued by private companies and an investment in preferred shares that are redeemable at the Group’s option, which are measured at fair value. Investments in preferred shares that are redeemable at the Group’s option have no contractual maturity date.

The following table summarizes the estimated fair value of available-for-sale debt investments with stated contractual dates, classified by the contractual maturity date of the investments:

	As of December 31,
	2021		2022		2022
	RMB		RMB		US$
	(In millions)
Due in 1 year		—		—		—
Due in 1 year through 5 years		1,685		1,581		229
Not due at a single maturity date		577		866		126
Total		2,262		2,447		355