Securities code: Beijing Dabeinong Technology Group Co.Ltd(002385) securities abbreviation: Beijing Dabeinong Technology Group Co.Ltd(002385) Announcement No.: 2022041
Beijing Dabeinong Technology Group Co.Ltd(002385)
Announcement on continuing to carry out commodity futures hedging business
The company and all members of the board of directors guarantee that the information disclosed is true, accurate and complete without false records, misleading statements or major omissions.
Beijing Dabeinong Technology Group Co.Ltd(002385) (hereinafter referred to as “the company”) on April 21, 2022
The 35th meeting of the 5th board of directors was held, and the proposal on continuing to carry out commodity futures hedging business was deliberated and passed. It was agreed that the company would continue to carry out commodity futures hedging business with its own funds within the limit of no more than 260 million yuan within one year from the date of deliberation and approval of the proposal by the general meeting of shareholders.
1、 Purpose of continuing hedging business
The company held the 16th meeting of the 5th board of directors on March 29, 2021 and May 21, 2021 respectively
The 2020 general meeting of shareholders deliberated and approved the proposal on developing commodity futures hedging business, and agreed that within one year from the date of deliberation and approval of the proposal by the general meeting of shareholders, the company will carry out commodity futures hedging business with its own funds within the limit of no more than 260 million yuan. For details, see the announcement on cninfo.com (Announcement No.: 2021033).
At present, the validity period of the hedging business will expire. In addition, due to the impact of macroeconomic situation and changes in market environment in recent years, the prices of Chinese pigs and feed raw materials continue to fluctuate sharply, and the company’s main business faces certain market risks. In order to lock the cost of raw materials and the sales price of pigs and effectively avoid the risks caused by the price fluctuations of raw materials and inventory products in production and operation activities, The company (including its subsidiaries) will continue to use commodity futures for hedging operations.
According to the articles of association, the proposal needs to be submitted to the 2021 annual general meeting of shareholders of the company for deliberation and approval. 2、 Basic information of the proposed hedging business
1. Varieties to be invested: the company’s futures hedging business is limited to Shenzhen Agricultural Products Group Co.Ltd(000061) futures varieties listed and traded in domestic futures exchanges related to the company’s production and operation, such as pig, corn, wheat, soybean, soybean meal, soybean oil, rapeseed meal, oil and other products.
2. Amount of capital to be invested: according to the company’s business objectives, the maximum amount of margin required by the company to carry out commodity hedging business shall not exceed RMB 260 million (excluding the physical delivery of futures subject matter), and the period of validity
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3. Proposed hedging period: within one year from the date of deliberation and approval by the general meeting of shareholders of the company.
4. Source of funds: the company’s own funds.
3、 Feasibility analysis of hedging business
The purpose of the company’s futures hedging business is to avoid the risk of sharp fluctuations in the prices of raw materials and pigs, and does not carry out speculation and arbitrage transactions. In the actual operation process, affected by the relationship between supply and demand, the prices of raw materials and pigs fluctuate greatly. In order to avoid the impact of price fluctuation on the company’s production and operation, the company plans to hedge in the futures market according to the principle of the same spot variety, similar month, opposite direction and equivalent quantity, so as to lock in the prices of raw materials and pigs and ensure the stability and sustainability of the company’s operating performance.
The company has formulated the management system of commodity futures hedging business, which has been deliberated and approved by the board of directors of the company. The commodity futures hedging business management system has made clear provisions on the approval authority, internal audit process and risk handling procedures of hedging business, and has been equipped with professionals and teams such as market research and judgment, investment decision-making, business operation and risk control. The company’s existing self owned capital scale can support the margin required by the company to engage in commodity futures hedging business. Therefore, it is feasible for the company to carry out commodity futures hedging business. 4、 Risk analysis of hedging business
1. Price fluctuation risk: theoretically, the futures market price and spot market price of various trading varieties will return to the same in the delivery period, but in a very few irrational market situations, the futures and spot prices may still not return in the delivery period, so there are systemic risk events, which will affect the company’s hedging operation plan and even cause losses.
2. Capital risk: in accordance with the operation instructions issued by the company, if the investment amount is too large, it may cause capital liquidity risk, and even be forced to close the position because it is too late to supplement the margin, resulting in actual losses.
3. Technical risk: technical risk may be caused by incomplete computer system.
4. Policy risk: the risk caused by major changes in laws, regulations and other policies of the futures market that may cause market fluctuations or inability to trade.
5、 Risk control measures taken by the company
1. Match the hedging business with the company’s production and operation, and strictly control the futures position.
2. Strictly control the capital scale of hedging, reasonably plan and use the margin, issue operation instructions in strict accordance with the provisions of the company’s futures trading management system, and operate only after approval according to the provisions. The company will reasonably allocate funds for hedging business and shall not use the raised funds for hedging directly or indirectly.
3. in accordance with the guidelines for the standardized operation of listed companies of Shenzhen Stock Exchange and other relevant provisions, ensure that this hedging business establishes a hedging transaction account in the name of the company (including its subsidiaries), uses its own funds, and does not use raised funds to hedge directly or indirectly, and that this hedging business is only for the purpose of avoiding commodity price risks in production and operation, and does not involve speculation and arbitrage transactions, At the same time, strictly abide by the provisions of on-site trading, and the varieties of hedging business are limited to the products related to the company’s production and operation or the raw materials required. The quantity shall not exceed the actual quantity of spot trading, and the futures position shall not exceed the spot quantity of hedging.
4. The company has formulated the commodity futures hedging management system, which clearly stipulates the hedging business. The company will set up a special futures operation team, futures operation monitoring team and corresponding business processes to control through authorization, post restraint, internal audit and other measures.
6、 Fair value analysis of derivatives
The trading varieties of pig and feed raw material futures hedged by the company are the mainstream varieties in China’s main futures market. The market is transparent and the transaction is active. The transaction price and the settlement unit price on that day can fully reflect the fair value of derivatives.
7、 Opinions of independent directors
Due to business needs, the company only uses its own funds to carry out futures hedging business in the futures market, does not use the raised funds to hedge directly or indirectly, and does not carry out speculative arbitrage transactions. The relevant approval procedures comply with the provisions of relevant national laws and regulations. The company has formulated the management system of commodity futures hedging business, established and improved the organizational structure, business process, approval authority and risk control measures. On the premise of ensuring normal production and operation, the feasibility analysis report issued by the company’s management on hedging transactions meets the provisions of laws and regulations and the needs of the company’s business development, which is feasible. At the same time, it is conducive to the company to avoid the risks caused by the fluctuation of raw material purchase price, improve the company’s ability to resist the impact of raw material price fluctuation on the company’s operation, and is conducive to the long-term and steady development of the company.
To sum up, we believe that the company’s futures hedging business does not harm the interests of the company and all shareholders, and agree to the company’s futures hedging business.
8、 Documents for future reference
1. Resolutions of the 35th meeting of the 5th board of directors of the company;
2. Independent opinions of the company’s independent directors on matters related to the 35th meeting of the Fifth Board of directors;
Beijing Dabeinong Technology Group Co.Ltd(002385) board of directors April 22, 2022
