In the context of high and sharp fluctuations in grain prices, Daodaoquan Grain And Oil Co.Ltd(002852) ( Daodaoquan Grain And Oil Co.Ltd(002852) . SZ) plans to carry out derivatives trading business in 2022.
According to the announcement, the derivatives business to be carried out by the company involves a number of futures varieties outside China, including soybean, soybean meal, rapeseed meal, soybean oil, palm oil, rapeseed oil trading contracts and CBOT American soybean futures varieties through commodity swap trading business.
In fact, when the company started futures business as early as 2020, it lost 270 million yuan due to speculation. For companies whose net profit has declined for three consecutive years, it is even worse. According to public data, the company’s net profit attributable to the parent decreased by 41.3% and 159.3% respectively from 2019 to 2020, and the net profit attributable to the parent is expected to decline by 102.62% ~ 148.37% in 2021.
The Daodaoquan Grain And Oil Co.Ltd(002852) announcement pointed out that the participation in the derivatives business is limited to the raw materials and finished products related to the production and operation of the enterprise. And said that the purpose of derivatives trading business is futures hedging.
plans to invest 20% of net assets in derivatives business
For the invested capital, Daodaoquan Grain And Oil Co.Ltd(002852) said that it is expected that within 12 months from the date of deliberation and approval by the board of directors, the maximum amount of recyclable margin will not exceed 20% of the company’s latest audited net assets (excluding the full margin paid for closing positions). The source of funds is the self owned funds of the company and its subsidiaries.
According to the latest three quarterly reports disclosed by the company, during the reporting period, the owner’s equity attributable to the shareholders of listed companies was about 1.87 billion yuan, and the corresponding derivatives investment was about 370 million yuan.
The company said that as a grain and oil production and sales enterprise, the production and operation needs a large number of oil, oil and other production raw materials, and the price fluctuation of raw materials will have a certain impact on the company. In order to stabilize the company’s operation, better avoid the risks brought by the rise and fall of raw material prices to the company’s operation, and make full use of the hedging function of futures, options and other markets, the company plans to carry out derivatives trading business for the purpose of hedging.
In terms of price performance of relevant varieties, under the background of global inflation and soaring international food prices, the prices of relevant commodities in China have risen. According to Tonglian data, datayes! According to statistics, the main contract of CBOT US soybean futures increased by 37% in 2020 and recently hit a record high of 74.58 cents / pound. In terms of internal trading, the cumulative increases of the main contracts of soybean meal, rapeseed meal and soybean oil futures since 2019 are 44%, 59% and 75% respectively.
Affected by the rise of soybean prices in the international market, the operating cost of corresponding meal increased, and the demand of downstream feed processing enterprises decreased in the short term due to production cost pressure, resulting in the decline of the company’s gross profit margin Daodaoquan Grain And Oil Co.Ltd(002852) 2021 semi annual report shows that the company’s major business revenue increased by 28.43% year-on-year, while the cost increased by 31.18% year-on-year, and the overall gross profit margin decreased by 1.95%.
In addition, international grain prices continued to soar, but import demand remained. Customs data showed that China’s grain imports continued to increase and oil imports decreased slightly in 2021. According to the customs data, China imported 164539 million tons of grain in 2021, a year-on-year increase of 18.1%; A total of 10.392 million tons of edible vegetable oil were imported, a year-on-year decrease of 3.7%.
Based on this, in terms of futures varieties for hedging, the company has increased CBOT American soybean futures through commodity swap trading business compared with the previous one. Since the company cannot open an account directly in the external market, it chooses to cooperate with Citic Securities Company Limited(600030) to carry out commodity swap business.
Industry insiders pointed out that ordinary enterprises use futures instruments for hedging. Futures hedging operation can iron out the impact of material price fluctuations on the company, enable the company to focus on production and operation, and maintain a stable profit level when the price of raw materials fluctuates sharply, but there will be some risks at the same time.
For the risks faced, the company’s announcement mentioned that the futures market changes greatly, which may lead to the risk of price fluctuation. The company may not be able to buy hedging contracts at or below the locked price of materials, resulting in the loss of futures trading; Futures trading is highly professional and complex, which may cause risks due to the imperfect internal control system of the company.
performance declines year after year
From the perspective of performance, Daodaoquan Grain And Oil Co.Ltd(002852) it is estimated that the net loss attributable to the shareholders of the listed company in 2021 will be 155190 million yuan; After deducting non recurring gains and losses, the net loss was 107 million yuan to 142 million yuan, with a profit of 795634 million yuan in the same period of last year. In the first three quarters of 2021, Daodaoquan Grain And Oil Co.Ltd(002852) still achieved a net profit of 94.04 million yuan.
For the expansion of net profit loss in 2021, Daodaoquan Grain And Oil Co.Ltd(002852) gave the reason that the prices of raw materials such as rapeseed, crude oil and soybeans required by the company remained high throughout the year, and the situation of rapid rise again began in the fourth quarter of last year. At the same time, consumer demand was relatively weak and there was de inventory at the terminal; At the same time, the company uses derivative financial instruments to hedge the fluctuation risk of raw material purchase price and spot value, resulting in certain profits and losses; In addition, depreciation reserves and estimated liabilities of loss contracts are accrued for inventories, and debt financing is increased at the same time.
This is the second year in a row that Daodaoquan Grain And Oil Co.Ltd(002852) has recorded large losses. Its net profit attributable to its parent company in 2020 recorded a loss of 764991 million yuan, a year-on-year decrease of 159.38%. It is worth mentioning that the company once attributed the performance loss to the hedging operation, resulting in a closing loss of about 207 million yuan.
At that time, Daodaoquan Grain And Oil Co.Ltd(002852) once said that the loss at the futures end was due to the deviation of the company’s judgment on the unilateral upward market of the raw material market during the reporting period, which led to a closing loss of about 207 million yuan during the reporting period. Shenzhen Stock Exchange has also issued a letter of concern to Daodaoquan Grain And Oil Co.Ltd(002852) requiring it to explain the reasons for closing position losses and relevant accounting treatment during the reporting period in combination with the price of raw materials and the specific situation of the company’s Hedging of raw materials.
Wuchan Zhongda Group Co.Ltd(600704) Futures Co., Ltd. deputy general manager and chief economist Jing Chuan told the first financial reporter that the use of futures tools for enterprise risk management refers to the hedging of enterprises in order to avoid uncontrollable costs or sales caused by market price fluctuations, so as to ensure the smooth operation of enterprises. Therefore, there is no so-called “hedging loss” in the strict sense.
In recent years, in the case of complex and changeable commodity market environment and frequent price fluctuations, using futures hedging tools for risk management has become an important means for enterprises to avoid risks and ensure operation. But at the same time, regulators and industry professionals also remind enterprises to avoid changing “hedging” into “speculation” when participating in the futures market.
