Haitong Securities Company Limited(600837) about Xi’An Manareco New Materials Co.Ltd(688550)
Verification opinions on carrying out foreign exchange forward settlement and sales business
Haitong Securities Company Limited(600837) (hereinafter referred to as ” Haitong Securities Company Limited(600837) ” or “sponsor”) as a sponsor of Xi’An Manareco New Materials Co.Ltd(688550) (hereinafter referred to as ” Xi’An Manareco New Materials Co.Ltd(688550) ” or “company”) for initial public offering of shares and listing on the science and innovation board, In accordance with the measures for the administration of securities issuance and listing recommendation business, the Listing Rules of Shanghai Stock Exchange’s science and innovation board, the self regulatory guidelines for listed companies on Shanghai Stock Exchange No. 11 – continuous supervision, the self regulatory guidelines for listed companies on Shanghai Stock Exchange’s science and Innovation Board No. 1 – standardized operation and other laws, administrative regulations, departmental rules and business rules, We have carefully and prudently verified the matters of Xi’An Manareco New Materials Co.Ltd(688550) carrying out forward foreign exchange settlement and sales business. The verification results are as follows:
1、 Purpose of carrying out forward foreign exchange settlement and sales business
The company has overseas procurement and overseas sales, and the main settlement currencies are US dollars and euros. In order to effectively avoid foreign exchange market risks, reduce exchange losses, prevent the adverse impact of exchange rate fluctuations on the company’s operating performance, improve the use efficiency of foreign exchange funds, stabilize foreign currency earnings, reasonably reduce financial expenses, and enable the company to focus on production and sales.
Forward settlement and sale of foreign exchange is a foreign exchange hedging financial product approved by the people’s Bank of China. The transaction principle is: sign the 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. When the foreign exchange income or expenditure occurs on the due date, handle the foreign exchange settlement or sales business according to the currency, amount and exchange rate agreed in the forward foreign exchange settlement and sales contract, so as to lock in the cost of foreign exchange settlement and sales in the current period.
2、 Varieties of foreign exchange forward settlement and sales
The foreign currency varieties of the forward foreign exchange settlement and sales business to be carried out by the company are limited to the main settlement currencies used by the company for production and operation – US dollar and euro.
3、 Business period and business scale
After the deliberation and approval of the fifth meeting of the third board of directors and the fifth meeting of the third board of supervisors, it is proposed to authorize the management of the company to be responsible for the long-term settlement and sales of foreign exchange and sign relevant contract documents (specifically according to the requirements of the bank). The amount of foreign currency for the long-term settlement and sales of foreign exchange shall not exceed the equivalent US $50 million (including this amount), which shall be used in a rolling manner within this limit, and the Finance Department of the company shall assist in handling specific matters. The authorization period is 12 months from the date of deliberation and approval by the general meeting of shareholders.
4、 Feasibility analysis of carrying out foreign exchange forward settlement and sales business
The company has overseas procurement and overseas sales, and the settlement is mainly in US dollars and euros. The sharp fluctuation of exchange rate, especially the exchange loss caused by the appreciation of RMB, will have a great impact on the company’s performance. The company’s foreign exchange forward settlement and sales business with banks is considered from the perspective of locking the cost of foreign exchange settlement and sales, which can reduce the impact of exchange rate fluctuations on the company’s production and operation, enable the company to maintain a relatively stable income level, meet the actual development and operation needs of the company, the risk is controllable, and there is no behavior damaging the interests of the company and minority shareholders.
5、 Risk of foreign exchange forward settlement and sale and risk control measures
(I) risk of foreign exchange forward settlement and sale business
The company’s forward foreign exchange settlement and sales business is based on the principle of locking exchange rate risk and hedging, and does not engage in speculative and arbitrage operations. Therefore, the company will carefully judge the timing and strictly control the risk when signing the forward foreign exchange settlement and sales contract.
The operation of forward settlement and sale of foreign exchange can reduce the impact of exchange rate fluctuation on the company to a certain extent. However, due to the unpredictability and systematic risk of exchange rate fluctuation and the strong professionalism of the business, there are still the following risks in operation: 1. Exchange rate fluctuation risk: under the condition of large exchange rate fluctuation, when the exchange rate agreed in the forward settlement and sale of foreign exchange contract deviates from the exchange rate at the time of actual collection and payment of foreign exchange, the company may suffer exchange losses.
2. Internal control risk: the long-term foreign exchange settlement and sales business is highly professional and complex, which may cause risks due to the imperfect internal control system.
3. Customer default risk: the overseas customer’s collection is overdue, and the relevant collection cannot be recovered within the predicted collection period, which may cause the delay of forward foreign exchange settlement and delivery, resulting in the loss of the company.
4. Collection forecast risk: the company makes collection forecast according to existing orders and expected orders, but in the actual implementation process, there may be inaccurate collection forecast due to the adjustment of customer order demand, resulting in the risk of delayed delivery of forward foreign exchange settlement.
(II) risk control measures
In order to minimize the above risks in the long-term foreign exchange settlement and sales business, the company will actively take relevant risk prevention and control measures:
1. Foreign exchange forward settlement and sales business is only allowed to conduct transactions with financial institutions with legal business qualifications, and shall not conduct transactions with any organization or individual other than the above-mentioned financial institutions.
2. When signing the forward foreign exchange settlement and sales business contract, the transaction shall be carried out in strict accordance with the period and amount of foreign exchange collection and payment predicted by the company. All forward foreign exchange settlement and sales businesses have real transaction background.
3. The company will further strengthen the management of accounts receivable, actively collect accounts receivable, improve the accuracy of collection prediction, and reduce the risk of customer default and default.
4. The company’s forward foreign exchange settlement and sales business transactions must be based on the company’s overseas income or overseas expenditure. The foreign currency amount of the forward foreign exchange settlement and sales contract shall not exceed the predicted amount of overseas income or overseas expenditure.
6、 Opinions of the sponsor
The company’s proposed foreign exchange forward settlement and sales business has been deliberated and approved at the fifth meeting of the third board of directors and the fifth meeting of the third board of supervisors. The independent directors of the company have expressed clear consent to the above matters. The proposal needs to be submitted to the general meeting of shareholders for deliberation, which complies with the provisions of relevant laws and regulations and has fulfilled the necessary legal procedures.
The company has formulated feasible risk response measures according to relevant regulations and actual conditions, and relevant risks can be effectively controlled. The company’s foreign exchange forward settlement and sales business meets the needs of the company’s actual operation and can reduce the impact of exchange rate fluctuations on the company’s performance to a certain extent.
In conclusion, the recommendation institution has no objection to the company’s business of foreign exchange forward settlement and sales this time.
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