Feasibility analysis report on carrying out foreign exchange hedging business
1、 The purpose of the company's foreign exchange hedging business
The company is involved in import and export business in the daily operation process. Due to the influence of international political and economic uncertainties, the foreign exchange market fluctuates more frequently, which increases the uncertain factors faced by the company's operation. In order to effectively avoid the risk of price fluctuations in the foreign exchange market, prevent the adverse impact of large exchange rate fluctuations on the company, improve the use efficiency of foreign exchange funds and reduce the risk of exchange rate fluctuations in future debt repayment, the company and its holding subsidiaries plan to use their own funds to carry out foreign exchange hedging business.
2、 Overview of foreign exchange hedging business to be carried out by the company
1. It mainly involves currency and business types
The foreign exchange hedging business to be carried out by the company is limited to the same currency as the main settlement currency used by the company, and the main foreign currency is US dollar. The types of foreign exchange hedging business include forward settlement and sales of foreign exchange, foreign exchange swaps, RMB futures, etc.
2. Capital scale and term
In 2022, the company plans to carry out foreign exchange hedging business, with the maximum transaction amount of US $231 million or equivalent currency. The term of validity is from the date of adoption of the resolution of the board of directors to the date of convening the board of directors to consider the matter in the next year (no more than 12 months). Within the above time and limit, the funds can be recycled.
3. Source of funds
The source of funds is the company's own funds, which does not involve raised funds or bank credit funds.
3、 Feasibility of the company's foreign exchange hedging business
The foreign exchange hedging business carried out by the company is closely related to the company's business based on the company's foreign exchange assets, liabilities and foreign exchange revenue and expenditure business. Carrying out foreign exchange hedging business can further improve the company's ability to deal with foreign exchange fluctuation risk, better avoid and prevent the risk of foreign exchange rate and interest rate fluctuation faced by the company, and enhance the company's financial stability.
The company has formulated the foreign exchange hedging business management system as the internal control and risk management system for foreign exchange hedging business, which clearly stipulates the business variety and scope, approval authority, internal operation process, responsible department, information confidentiality and isolation measures, internal risk reporting system and risk handling procedures of foreign exchange hedging business, It can effectively ensure the smooth progress of foreign exchange hedging business and effectively control risks.
4、 Risk analysis of the company's foreign exchange hedging business
The company's foreign exchange hedging business follows the principle of locking in exchange rate risk and does not engage in speculative and arbitrage transactions to ensure the normal operation of the company's foreign exchange business, but the foreign exchange hedging business itself may face certain risks. These include:
1. Market risk: exchange rate fluctuation risk caused by large changes in foreign exchange market.
2. Credit risk: the overdue of accounts receivable is inconsistent with the foreign exchange lock period, or the inaccurate collection forecast is caused by the customer's adjustment of orders, resulting in the delayed delivery of forward foreign exchange settlement and sales.
3. Operational risk: foreign exchange hedging business is highly professional and may cause losses due to staff operation errors, system failures and other reasons.
4. Legal risk: due to the change of relevant laws and regulations or the counterparty's violation of relevant laws and regulations, the contract may not be executed normally and bring losses to the company.
5、 Risk control measures for the company to carry out foreign exchange hedging business
In order to control the risk of foreign exchange hedging business, the company has formulated the management system of foreign exchange hedging business to control the risk points of each link. It mainly includes:
1. Pay close attention to the dynamic changes of the international foreign exchange market, strengthen the research and analysis of the exchange rate, and timely adjust the foreign exchange hedging strategy in case of major changes in the foreign exchange market to avoid exchange losses to the greatest extent.
2. In order to prevent delayed delivery of foreign exchange hedging, the company will attach great importance to the management of accounts receivable to avoid credit risk caused by overdue accounts receivable.
3. According to the internal control system, strengthen the monitoring process of the company's foreign exchange hedging business, strengthen the control of bank accounts and funds, and strictly implement the approval procedures for fund allocation and use.
4. Carefully choose to conduct business with commercial banks or other financial institutions with legal qualifications and strong strength. Based on specific business operations and for the purpose of avoiding and preventing exchange rate risks, select foreign exchange hedging products with clear product structure and market liquidity. At the same time, closely follow relevant laws and regulations to avoid possible legal risks.
6、 Accounting policies and accounting principles
The company conducts corresponding accounting and disclosure of foreign exchange hedging business in accordance with relevant provisions and guidelines such as accounting standards for Business Enterprises No. 22 - recognition and measurement of financial instruments, accounting standards for Business Enterprises No. 24 - hedge accounting and accounting standards for Business Enterprises No. 37 - presentation of financial instruments issued by the Ministry of finance.
7、 Conclusion of feasibility analysis on the company's foreign exchange hedging business
The company carries out foreign exchange hedging business in order to make full use of foreign exchange hedging tools to avoid and prevent exchange rate risks caused by exchange rate fluctuations, effectively reduce exchange losses and control business risks. According to the requirements of relevant laws and regulations, the company has formulated the management system of foreign exchange hedging business. By strengthening internal control and implementing risk prevention measures, the company has formulated specific operating procedures for the company to engage in foreign exchange hedging business. The company's foreign exchange hedging business is based on specific business and carried out on the premise of ensuring normal operation, It is necessary and feasible.
Zjamp Group Co.Ltd(002758) board of directors February 28, 2022
