Securities code: Suzhou Chunxing Precision Mechanical Co.Ltd(002547) securities abbreviation: Suzhou Chunxing Precision Mechanical Co.Ltd(002547) Announcement No.: 2022021 Suzhou Chunxing Precision Mechanical Co.Ltd(002547)
Announcement on carrying 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.
Suzhou Chunxing Precision Mechanical Co.Ltd(002547) (hereinafter referred to as “the company”) held the 9th meeting of the 5th board of directors on April 24, 2022, deliberated and approved the proposal on developing commodity futures hedging business, and agreed that the company and its subsidiaries should carry out raw material futures hedging business. The relevant information is hereby announced as follows:
1、 Purpose of commodity futures hedging business
The company and its subsidiaries carry out raw material futures hedging business mainly to lock in product sales price and product cost, effectively prevent and resolve market risks caused by raw material price changes, reduce product cost fluctuations caused by raw material price fluctuations, and reduce the impact of raw material price fluctuations on the normal operation of the company. 2、 Development of futures hedging business
The board of directors authorizes the management of the company to carry out the hedging business of raw material futures and operate in accordance with the relevant provisions and processes of the management system of commodity futures hedging business established by the company.
3、 Hedging business
1. Types of hedging transactions
The futures hedging business proposed by the company and its subsidiaries is limited to the raw materials required for production. At present, it is mainly the aluminum, copper and silver futures contracts and related futures derivatives listed and traded in domestic and foreign futures exchanges. If the raw materials change due to the change of the production and business scope of the company and its subsidiaries, it can be adjusted according to the actual raw materials required.
2. Estimated investment
(1) Business period: one year from the date of deliberation and approval by the board of directors.
(2) The total amount of idle self owned funds invested by the company and its subsidiaries in commodity futures hedging business shall not exceed RMB 200 million.
4、 Feasibility analysis of hedging
The hedging business of raw material futures conducted by the company and its subsidiaries follows the principle of locking in the fluctuation risk of raw material price and hedging, and does not engage in speculative and arbitrage trading operations. Therefore, strict risk control shall be carried out when signing hedging contracts and closing positions, and the corresponding futures contracts shall be purchased with its own funds in a timely manner according to the operating conditions of the company and its subsidiaries and the price and quantity of materials locked with customers, When the spot purchase contract takes effect, close the corresponding number of futures positions. Futures hedging business can avoid the impact of raw material price fluctuations on the company and its subsidiaries to a certain extent.
5、 Hedging risk analysis
The futures hedging business conducted by the company and its subsidiaries has risks in terms of price fluctuation, capital, internal control, technology, customer default, policy, etc., as follows:
1. Price fluctuation risk: when the futures market changes greatly, the company and its subsidiaries may not be able to lock in the price of raw materials or buy hedging contracts below it, resulting in losses.
2. Capital risk: futures trading issues operation instructions according to the authority specified in the management system of commodity futures hedging business of the company. If the investment amount is too large, it may cause capital liquidity risk. In addition, when the futures price fluctuates greatly, the company and its subsidiaries may even have the risk of forced closing positions without timely replenishing margin, resulting in actual losses.
3. Internal control risk: futures trading is highly professional, which may lead to risks due to imperfect internal control system.
4. Technical risk: risks caused by the abnormal operation of the trading system due to uncontrollable and unpredictable system, network, communication and other failures, resulting in the delay and interruption of trading instructions.
5. Customer default risk: when the futures price fluctuates unfavourably, the customer may violate the relevant provisions of the contract and cancel the product order, resulting in losses to the company and its subsidiaries.
6. Policy risk: the risk that major changes in futures market laws and regulations may cause market fluctuations or inability to trade.
6、 Risk control measures taken by the company
1. Match the hedging business with the production and operation of the company and its subsidiaries to hedge the risk of raw material price fluctuation to the greatest extent. The futures hedging business of the company and its subsidiaries is limited to the futures contracts of the company and its subsidiaries for the production of raw materials traded in domestic and foreign futures exchanges, and any speculative trading for the purpose of profit is strictly prohibited. In principle, the quantity of hedging shall not exceed the quantity of materials locking the price with the customer, and the position holding time shall match the pricing period required for spot hedging.
2. Strictly control the capital scale of hedging, and reasonably plan and use margin. The operation instructions shall be issued in strict accordance with the authority specified in the commodity futures hedging business management system, and the operation can be carried out only after being approved according to the regulations. The company and its subsidiaries will reasonably allocate their own funds for hedging business, which shall not affect the normal operation.
3. In accordance with the relevant provisions of the Shenzhen Stock Exchange Stock Listing Rules, the articles of association and other relevant provisions, and in combination with the actual situation, the commodity futures hedging business management system is formulated, which clearly stipulates the hedging business quota, variety range, approval authority, internal audit process, responsible departments and persons, information isolation measures, internal risk reporting system and risk handling procedures, information disclosure, etc. The company and its subsidiaries will control all links in strict accordance with the management system of commodity futures hedging business.
4. Set up computer systems and related facilities that meet the requirements to ensure the normal operation of transactions. In case of failure, corresponding treatment measures shall be taken in time to reduce losses.
5. According to the needs of production and operation and taking the customer order cycle as the futures operation period, reduce the risk of futures price fluctuation.
6. Strengthen the grasp and understanding of relevant policies of the state and relevant regulatory institutions, and timely and reasonably adjust hedging ideas and schemes.
7、 Accounting policies and accounting principles
The company meets the relevant conditions for applying hedging accounting methods specified in the accounting standards for business enterprises.
8、 Independent opinions expressed by independent directors
The company and its subsidiaries carry out the hedging business of raw material futures in order to effectively prevent and resolve the market risk caused by the price change of raw materials, reduce the fluctuation of product cost caused by the price fluctuation of raw materials, and reduce the impact of the price fluctuation of raw materials on the normal operation of the company, which is a necessary means to protect the normal operating profits. The company has formulated the management system of commodity futures hedging business and improved relevant internal control processes, and the targeted risk control measures taken by the company are feasible and effective; Meanwhile, the margin of commodity futures hedging business to be carried out by the company and its subsidiaries will use its own funds and strictly comply with the provisions of relevant laws and regulations, normative documents and relevant systems of the company.
We agree that the company and its subsidiaries shall carry out futures hedging business, and the total amount of idle self owned funds invested in commodity futures hedging business shall not exceed RMB 200 million. The business development period shall be one year from the date of deliberation and approval by the board of directors.
9、 Documents for future reference 1. Resolutions of the 9th meeting of the 5th board of directors; 2. Independent opinions of independent directors on matters related to the ninth meeting of the Fifth Board of directors. It is hereby announced.
Suzhou Chunxing Precision Mechanical Co.Ltd(002547) board of directors
April 26, 2002
