Huatai United Securities Co., Ltd
About Ninestar Corporation(002180) and its subsidiaries
Verification opinions on carrying out financial derivatives trading business in 2022
Huatai United Securities Co., Ltd. (hereinafter referred to as “Huatai united” or “independent financial consultant”) as an independent financial consultant of Ninestar Corporation(002180) (hereinafter referred to as ” Ninestar Corporation(002180) ” or “company”) in 2021, issued shares, paid cash to purchase assets, raised supporting funds and related party transactions, In accordance with the relevant provisions of the Listing Rules of Shenzhen Stock Exchange, the self regulatory guidelines for listed companies of Shenzhen Stock Exchange No. 1 – standardized operation of listed companies on the main board and other relevant provisions, the matters of Ninestar Corporation(002180) and its subsidiaries carrying out financial derivatives trading business in 2022 have been verified. The details are as follows:
1、 Purpose of carrying out financial derivatives trading business
In order to effectively avoid and deal with the risks brought to the company by exchange rate and interest rate fluctuations and reduce the impact on the company’s operation, the company and its subsidiaries plan to carry out financial derivatives trading business with banks and other financial institutions. On the premise of ensuring normal operation, using its own funds to carry out financial derivatives trading business is conducive to avoiding the risk of changes in RMB exchange rate and interest rate, improving the company’s ability to resist fluctuations in exchange rate and interest rate, and there is no damage to the interests of the company and all shareholders.
2、 Types of financial derivatives trading business to be carried out
The company and its subsidiaries intend to carry out financial derivatives trading business, including but not limited to forward, swap (SWAP) and option, as well as mixed financial instruments with one or more characteristics of forward, swap (SWAP) and option.
3、 Proposed financial derivatives trading business plan
According to the requirements of the company’s financial derivatives trading management system and other relevant laws and regulations, and in combination with the company’s business needs, the maximum amount of static position contracts of the proposed financial derivatives trading shall not exceed the equivalent of US $5.5 billion. The types of business involved mainly include:
1. Forward foreign exchange settlement and sales business. The company and its subsidiaries handle the business of foreign exchange settlement or sales by signing forward foreign exchange settlement and sales contracts with banks to agree on the currency, amount and exchange rate agreed in the future foreign exchange sales contracts.
2. Foreign exchange option portfolio business. According to the actual demand of foreign exchange settlement in the future, the company and its subsidiaries carry out the trading of call options or put options and their combinations according to the exposure of foreign exchange, and lock the exchange rate within a certain range at a certain time (within one year) in the future, so as to reduce the risk of forward foreign exchange settlement.
The forward settlement and sales of foreign exchange and foreign exchange option portfolio business to be carried out by the company this time are limited to the main settlement currencies used by the company’s production and operation. The delivery period is consistent with the predicted collection period, and the amount matches the predicted collection amount. The proposed financial derivatives trading business is funded from the company’s own funds, and the company’s management is authorized to decide and sign relevant transaction documents. The authorization period is valid within 12 months from the date of deliberation and approval of the third extraordinary general meeting of shareholders in 2022.
4、 Risk analysis of financial derivatives trading business
1. Market value change risk: if the fair value of financial derivatives at the end of the reporting period changes compared with that at the beginning of the reporting period, it will have an impact on the current profits and losses of the company.
2. Delivery risk: according to the contract to be signed, both parties to the transaction of financial derivatives can choose to exchange the full principal. The company will ensure that it has sufficient funds for liquidation at the time of delivery through an effective capital plan.
3. Credit risk: refers to the risk to the company caused by the counterparty’s failure to perform its contractual obligations to pay product income. In view of the fact that the company will choose to cooperate with banks or other financial institutions that have established long-term business contacts with the company or have high credit rating, the financial derivatives transactions to be carried out by the company this time basically do not have credit risk.
4. Other risks: the contract of the financial derivatives transaction to be carried out by the company has not been signed, so there is a risk that it can not be executed; When conducting business, if the operators do not operate according to the specified procedures or do not fully understand the information of trading products, it will bring operational risks; If the terms of the transaction contract are not clear, it may face legal risks.
5、 Risk control measures for financial derivatives trading
1. The company will conduct strict risk review and risk tracking on the financial derivatives trading business, and the trading limit shall not exceed the upper limit of the authorized limit approved by the board of directors or the general meeting of shareholders.
2. The company has formulated the financial derivatives trading business management system, which clearly stipulates the transaction approval process. The company and its subsidiaries will set up a special working group to be specifically responsible for financial derivatives business and implement it within the scope authorized by the board of directors or the general meeting of shareholders.
3. The company plans to sign contracts with trading institutions with accurate and clear terms and strictly implement the risk management system to prevent legal risks.
4. The company’s special working group is responsible for the formulation of financial derivatives trading business plan, fund raising, business operation and daily contact and management, and timely submit analysis report and solution to the company’s management in case of major risk or possible major risk, and report to the company’s securities department.
5. The internal audit department of the company is responsible for monitoring and auditing the trading business of financial derivatives, reviewing the approval, actual operation, product delivery and profit and loss of financial derivatives trading, verifying the accounting treatment, forming corresponding reports and submitting them to the audit committee of the board of directors.
6. The legal department of the company is responsible for the compliance review of the specific scheme of the company’s financial derivatives trading and the evaluation, prevention and resolution of relevant risks.
6、 Analysis of the impact on the company’s operation
The purpose of the company and its subsidiaries to carry out financial derivatives transactions this time is to help the company and its subsidiaries effectively deal with the risks caused by exchange rate and interest rate fluctuations, improve the ability of the company and its subsidiaries to resist exchange rate and interest rate fluctuations, reduce the impact of interest rate and exchange rate fluctuations on the company and its subsidiaries, and maintain a stable level of financial expenses, This financial derivatives transaction is not for the purpose of speculative profit.
The proposed financial derivatives trading business will not affect the company’s daily operating capital needs and the normal development of its main business, which is conducive to improving the company’s capital use efficiency and in line with the interests of the company and all shareholders. 7、 Review procedures for implementation
The financial derivatives trading business of the company and its subsidiaries in 2022 has been deliberated and approved at the 29th meeting of the sixth board of directors and the 23rd Meeting of the sixth board of supervisors, and will be submitted to the third extraordinary general meeting of shareholders in 2022. After deliberation, the company has fulfilled the approval procedures except for the shareholders’ meeting. The independent directors of the company expressed clear consent to this matter.
8、 Verification opinions of independent financial advisor
After verification, the independent financial adviser believes that the company and its subsidiaries’ financial derivatives trading business in 2022 has been deliberated and approved at the 29th meeting of the sixth board of directors and the 23rd Meeting of the sixth board of supervisors, and the independent directors have also expressed their explicit consent. In addition to the deliberation of the general meeting of shareholders, the company has fulfilled the approval procedures. This matter meets the actual needs of the company’s operation and development, will not have an adverse impact on the company’s daily operation, and will not infringe on the interests of the company and shareholders. The independent financial advisor has no objection to the financial derivatives trading business of the company and its subsidiaries in 2022.
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(there is no text on this page, which is the signature page of the verification opinions of Huatai United Securities Co., Ltd. on Ninestar Corporation(002180) and its subsidiaries’ financial derivatives trading business in 2022) financial advisor sponsor:
Luo Bin Zhang hydrocarbon
February 28, 2022 Huatai Securities Co., Ltd
