Shantui Construction Machinery Co.Ltd(000680)
Feasibility analysis report on financial derivatives business
1、 Background of financial derivatives business
With the continuous development of the company's international business and the further deepening of the internationalization process, the company's overseas revenue continues to grow. In recent years, the exchange rate of the US dollar against the RMB has been in a state of appreciation, and the two-way fluctuation trend during the period is significant, which has affected the operation of the company to a certain extent. In order to avoid risks and prevent the adverse effects of exchange rate fluctuations on the company's production and operation and product cost control, the company needs to carry out financial derivatives business to avoid foreign exchange risks.
2、 Overview of financial derivatives business carried out by the company
1. Transaction purpose
Carrying out financial derivatives business can avoid the risk of foreign exchange market and reduce the cost of foreign exchange settlement. Therefore, the company has carried out financial derivatives business for the purpose of risk prevention.
2. Limit and term
The total amount of financial derivatives transactions to be carried out by the company and its holding subsidiaries shall not exceed 1 billion yuan, with a service life of one to two years.
3. Transaction business type
The types of financial derivatives business to be carried out by the company include forward foreign exchange settlement and sales, options and swaps.
4. Counterparty
The counterparties of the company's financial derivatives business are state-owned banks, joint-stock banks listed in China or foreign banks listed overseas.
3、 Feasibility of the company's financial derivatives business
The financial derivatives business carried out by the company is closely related to the company's business. All financial derivatives businesses correspond to the normal and reasonable import and export business background, match the collection and payment time of import and export, and will not affect the liquidity of the company. At the same time, affected by the interest rate difference between China and the United States, the far end price can be locked at a better price than the near end by signing the derivative contract, so as to ensure that the established contract profit will not be reduced.
4、 Risk analysis of the company's financial derivatives business
Carrying out financial derivatives business can avoid the risk of foreign exchange fluctuation and is conducive to the stable operation of the company, but there are also certain risks.
1. Market risk: the fluctuation of foreign exchange price will directly lead to the change of the value of financial derivatives, and sometimes there will be large fluctuations. Price fluctuations during the duration of the transaction may lead to losses.
2. Liquidity risk: because financial derivatives contracts cannot be transferred or pledged, and during the duration of the contract, it may be necessary to freeze the corresponding funds as margin, thus affecting the liquidity of funds.
3. Credit risk: before carrying out financial derivatives business, the company will make corresponding prediction on subsequent payments according to the company's order execution and expected payment collection. However, in the actual implementation process, credit risk may occur due to the influence of various uncertain factors.
4. Operational risk: when conducting financial derivatives business, if it fails to report and approve in accordance with the specified procedures or fails to lock the price in time and accurately, it may lead to trading losses or loss of trading opportunities.
5. Legal risk: during the operation of financial derivatives business, violation of national laws and regulations will produce legal risks.
The investment risk of financial derivatives mainly comes from the investment loss caused by the change of market exchange rate and the locked exchange rate, as well as the performance risk caused by the non performance of counterparties. The above risks will be disclosed in the transaction process, and the investment working group and expert team will formulate relevant preventive measures and strategies for the above risks to reduce and transfer the risks.
5、 Risk control measures for the company's financial derivatives business
1. Before the company carries out financial derivatives business, the financial management department of the company or a consulting agency shall be responsible for assessing the business risk of derivatives, analyzing the feasibility and necessity of the business, and reporting the emergencies and changes in risk assessment in time.
2. Before investing in financial derivatives, the company shall establish an investment working group, which shall be equipped with professionals such as investment decision-making, business operation and risk control.
3. The board of directors of the company shall examine and approve the investment of financial derivatives within the authority specified in the articles of association, and the investment of financial derivatives beyond the specified authority shall be submitted to the general meeting of shareholders for deliberation. The management of the company is responsible for the operation of financial derivatives investment business within the scope of authorization of the resolutions of the board of directors and the general meeting of shareholders. Within the maximum amount approved by the general meeting of shareholders or the board of directors, the management of the company shall determine the specific amount and time.
4. The Legal Affairs Department of the company is responsible for reviewing the terms of contracts and relevant texts of financial derivatives business and analyzing the legal risks involved.
5. The company shall strictly control the type and scale of financial derivatives business, shall not invest in complex financial derivatives beyond the actual needs of operation, and shall not engage in financial derivatives speculation under the pretext of hedging.
6、 Conclusion on the feasibility of the company's financial derivatives business
The company's financial derivatives business is carried out according to the company's actual foreign exchange revenue and expenditure business, starting from the actual business and aiming at avoiding foreign exchange risk, so as to meet the needs of the company's normal operation. At the same time, it has formulated a perfect business management system, internal control management system and supporting risk control measures, so it is feasible for the company to carry out financial derivatives business Shantui Construction Machinery Co.Ltd(000680) board of directors March 28, 2002
