Securities code: Meihua Holdings Group Co.Ltd(600873) securities abbreviation: Meihua Holdings Group Co.Ltd(600873) Announcement No.: 2022012 Meihua Holdings Group Co.Ltd(600873)
Announcement on carrying out financial derivatives trading business
The board of directors and all directors of the company guarantee that there are no false records, misleading statements or major omissions in the contents of this announcement, and bear individual and joint liabilities for the authenticity, accuracy and completeness of its contents.
Important content tips:
Business scale: the cumulative total amount does not exceed US $1.3 billion or equivalent foreign currency (excluding stock)
Special risk tips: market risk, liquidity risk and operational risk
On March 11, 2022, Meihua Holdings Group Co.Ltd(600873) (hereinafter referred to as "the company") held the 28th meeting of the ninth board of directors, at which the proposal on carrying out financial derivatives trading business was deliberated and adopted. The specific contents are as follows:
1、 Overview
The settlement currency of the company's export business is mainly US dollars, so the fluctuation of RMB exchange rate against US dollars will have a certain impact on the company's production and operation. In 2021, the total export volume of the company was USD 970 million, and at present, the company is still developing new foreign customers, and the sales revenue in foreign regions will continue to increase. Therefore, it is necessary to carry out financial derivatives business to avoid the uncertainty risk of exchange rate fluctuations on the main business income. With the development of the company's business, it is an inevitable choice for the company to carry out multi currency and multi-channel financing. Foreign currency financing also needs to avoid the risk of exchange rate and interest rate fluctuations. Therefore, the company and its holding subsidiaries plan to carry out financial derivatives trading business with a nominal principal of no more than US $1.3 billion (excluding the existing stock of US $130 million) or equivalent foreign currencies in multiple batches in 2022, and operate flexibly within this limit. Financial derivatives include but are not limited to forward, options, swaps, futures and other products. Reasonable operation of financial derivatives business can effectively reduce and avoid risks caused by foreign exchange settlement, exchange rate and interest rate fluctuations.
The matter still needs to be submitted to the general meeting of shareholders for deliberation. The board of directors of the company requests the general meeting of shareholders to authorize the management to organize the implementation within the limit from the date when the proposal is deliberated and adopted by the general meeting of shareholders to the date of the next annual general meeting of shareholders, and the chief financial officer of the company is responsible for guiding the specific operation of the financial department.
2、 Business type
According to the actual business situation of the company, the financial derivatives business carried out by the company and its holding subsidiaries includes but is not limited to financial derivatives trading, forward, swap and option contracts in international and Chinese financial markets.
3、 Business scale
1. Transaction currency: USD, Euro
2. Transaction scale: the total amount does not exceed US $1.3 billion or equivalent foreign currency (excluding the existing stock of US $130 million). IV. possible risks
1. Market risk: the financial derivatives business carried out by the company and its holding subsidiaries is mainly the hedging business related to the main business, and there is a market risk of loss caused by the price change of financial derivatives due to the fluctuation of market prices such as target interest rate and exchange rate.
2. Liquidity risk: because the financial derivatives business carried out are OTC transactions operated by financial institutions, there is a risk that the price difference must be paid to the bank due to the loss of closing positions and cutting positions caused by various reasons.
3. Operational risk: in the specific business, if the operators fail to report and approve according to the specified procedures, or fail to accurately, timely and completely record the information of financial derivatives business, it may lead to the loss of financial derivatives business or the loss of trading opportunities. At the same time, if the traders fail to fully understand the terms of the transaction contract and product information, they will face legal risks and transaction losses.
5、 Measures planned by the company
The development of financial derivatives trading business can avoid the impact of exchange rate fluctuations on the company to a certain extent. In case of large exchange rate fluctuations, the company still maintains a stable profit level, but at the same time, financial derivatives trading has the characteristics of complexity, high leverage, virtuality and high risk. In order to control risks, the company takes the following measures:
1. Strictly perform the examination and approval procedures and timely perform the obligation of information disclosure in accordance with the requirements of the internal control system of the company's financial derivatives business. In practice, financial derivatives with simple structure, strong liquidity and controllable risk are selected to carry out hedging business. In order to prevent the delayed delivery of forward foreign exchange settlement and sales, the company strengthens the management of accounts receivable and actively urges the collection of accounts receivable to avoid the overdue phenomenon of accounts receivable.
2. The company selects financial institutions with legal business qualifications for trading. When engaging in financial derivatives business, the company's trading personnel shall be carefully selected.
3. Strictly implement the principle of separation of post responsibilities and personnel, and trading personnel and accounting personnel shall not concurrently serve each other. 4. Strengthen the management of the company's bank accounts and funds, and strictly abide by the approval procedures for fund allocation and use.
5. The company's internal audit department will regularly and irregularly check the signing and implementation of actual transaction contracts.
6. In case of major changes in the market or major floating losses, a special working group shall be established to establish an emergency mechanism in time, respond actively and deal with it properly.
7. According to the requirements of the company's internal control management manual, select appropriate risk assessment model and monitoring mechanism, continuously monitor and report various risks, increase the reporting frequency in case of severe market fluctuations or increased risks, and formulate response plans in time.
6、 Opinions of independent directors
The independent directors believe that according to the actual business needs of the company, combined with the characteristics of the company's foreign exchange business such as product export and US dollar liabilities, in order to avoid the risks caused by exchange rate fluctuations, the company has carried out financial derivatives trading business, which meets the requirements of relevant systems and regulations, and has fulfilled the necessary approval procedures.
7、 Documents for future reference
1. Resolutions of the 28th meeting of the 9th board of directors
2. Special notes and independent opinions of independent directors on relevant matters considered by the board of directors
It is hereby announced.
Meihua Holdings Group Co.Ltd(600873) board of directors March 11, 2022
