Feasibility analysis report on carrying out forward foreign exchange settlement and sales business
1、 Purpose of carrying out forward foreign exchange settlement and sales business
The products of Xiamen Intretech Inc(002925) (hereinafter referred to as "the company") and its subsidiaries are mainly exported. From 2017 to January June 2021, the proportion of the company's overseas sales revenue in the total main business revenue is more than 90%. The settlement currency of the company's export business is mainly USD, and the fluctuation of RMB exchange rate against USD will have a certain impact on the company's production and operation. In order to cope with the risk of exchange rate fluctuation and reduce the impact of exchange rate fluctuation on the company's operating performance, the company plans to carry out forward foreign exchange settlement and sales business in 2022 to avoid exchange rate risk.
The company does not conduct foreign exchange transactions solely for the purpose of profit or non locking unilateral transactions. All foreign exchange transactions are based on normal production and operation, relying on specific business operations, and for the purpose of hedging, avoiding and preventing exchange rate risks. The company's forward foreign exchange settlement and sales business only deals with financial institutions approved by the State Administration of foreign exchange and the people's Bank of China or the financial and foreign exchange administration authorities of the country and region where it is located and qualified for the operation of forward foreign exchange settlement and sales business, and does not deal with other organizations or individuals other than the above-mentioned financial institutions. The capital sources of the company's long-term foreign exchange settlement and sales business are the company's own funds, and there is no use of the raised funds for financial derivatives trading business.
2、 Basic information of forward foreign exchange settlement and sales business
The forward foreign exchange settlement and sales business proposed by the company is a forward foreign exchange settlement and sales business conducted in the bank to avoid and prevent exchange rate risk in order to meet the needs of normal production and operation. It refers to signing a forward foreign exchange settlement and sales contract with the bank to agree on the foreign exchange currency, amount, exchange rate and time limit for foreign exchange settlement or sales in the future, and then according to the currency, amount Exchange rate to handle the business of settlement or sale of foreign exchange. The company's forward settlement and sales of foreign exchange are limited to the main settlement currency of the company's import and export business, USD. In 2022, the amount of forward foreign exchange settlement and sales business carried out by the company and its subsidiaries shall not exceed US $1 billion.
3、 Necessity and feasibility analysis of carrying out forward foreign exchange settlement and sales business
Affected by international political and economic uncertainties, the foreign exchange market fluctuates more frequently, and the uncertainty of the company's operation increases. The company's export business is mainly denominated in US dollars. Therefore, when the exchange rate fluctuates greatly, it will have a great impact on the company's operating performance. In order to effectively prevent and reduce the risk of foreign exchange rate fluctuation, it is necessary and feasible to carry out forward foreign exchange settlement and sales business matching the actual business scale of the company in combination with the company's foreign exchange assets, liabilities and foreign exchange revenue and expenditure business.
4、 Risk analysis of forward foreign exchange settlement and sales business
The forward settlement and sales of Foreign Exchange carried out by the company and its subsidiaries follow the principle of locking exchange rate risk and do not engage in speculative and arbitrage transactions, but there are still certain risks in the forward settlement and sales of foreign exchange:
1. Exchange rate fluctuation risk: when the exchange rate changes greatly, if the forward exchange rate agreed in the confirmation of forward exchange settlement and sales is lower than the real-time exchange rate on the delivery date, exchange losses will be caused.
2. Internal control risk: forward foreign exchange settlement and sales transactions are highly professional, which may cause risks due to imperfect internal control system.
3. Customer default risk: the customer's accounts receivable are overdue, and the payment cannot be recovered within the predicted collection period, which will cause the delay of long-term foreign exchange settlement and cause losses to the company.
4. Collection forecast risk: the company's sales department forecasts the collection according to the customer's orders and expected orders. In the actual implementation process, the customer may adjust their own orders, resulting in inaccurate collection forecast of the company, resulting in the risk of delayed delivery of forward foreign exchange settlement.
5. Legal risk: due to changes in relevant laws or counterparties' violation of relevant legal systems, the contract may not be executed normally and bring losses to the company.
5、 Risk control measures
1. The company has formulated the management system for long-term settlement and sales of foreign exchange, which has made clear provisions on the company's operation principles, approval authority, internal operation process, responsible departments and persons, information isolation measures and risk management of long-term settlement and sales of foreign exchange. The system can meet the needs of actual operation, and the formulated internal control and risk management measures are practical and effective.
2. As the relevant responsible departments, the financial center and the Audit Department of the company have clear management positioning and responsibilities, and the responsibilities are implemented to the posts. Through hierarchical management, the risk of single person or separate department operation is fundamentally eliminated, and the response speed to the risk is also improved on the premise of effective risk control.
3. In order to prevent the delayed delivery of forward foreign exchange settlement and sales, the company attaches great importance to the management of accounts receivable and actively collects accounts receivable to avoid the overdue phenomenon of accounts receivable.
4. The company conducts financial derivatives trading business with large commercial banks with legal qualifications, closely tracks laws and regulations in relevant fields, and avoids possible legal risks.
5. The company's forward foreign exchange settlement and sales transactions must be based on the prudent prediction of the company's foreign currency receipts (payments). The foreign currency amount of the forward foreign exchange settlement and sales contract shall not exceed 90% of the annual planned total amount of foreign currency receipts (payments). The delivery period of forward foreign exchange settlement and sales business shall match the foreign currency collection time predicted by the company.
6、 Feasibility analysis conclusion of the company's long-term foreign exchange settlement and sales business
The company's forward foreign exchange settlement and sales business is carried out around the company's main business. It is not a forward foreign exchange transaction solely for the purpose of profit, but based on specific business operations, with hedging as the means, with the purpose of avoiding and preventing exchange rate fluctuation risk and the goal of protecting normal operating profits; The company has improved relevant internal control processes, and the targeted risk control measures taken by the company are feasible. By carrying out forward foreign exchange settlement and sales business, we can lock in the transaction cost or income at the future time point and realize asset preservation for the purpose of avoiding risks. Therefore, it is necessary and feasible for the company to carry out forward foreign exchange settlement and sales business, which can effectively reduce the risk of exchange rate fluctuation.
Xiamen Intretech Inc(002925) board of directors
January 4, 2022
