Since April, the RMB exchange rate has depreciated rapidly. The offshore exchange rate fluctuated more than 29% last week and the offshore exchange rate of the RMB continued to fluctuate sharply this week.
The sharp fluctuation of the RMB exchange rate has triggered concerns about the performance of import and export A-share companies. The performance of many A-share companies was eroded by exchange rate fluctuations last year. According to the data, in 2021, more than 2600 A-share companies generated exchange losses of nearly 35.8 billion yuan, 818 A-share companies generated exchange gains of about 20.5 billion yuan, and the overall total net exchange loss was about 15.3 billion yuan.
However, different from the trend of RMB appreciation in 2021, export-oriented A-share companies generally expressed a positive impact against the background of recent RMB depreciation. Whether relevant enterprises are expected to realize performance reversal of different ranges by virtue of exchange gains and losses is worth tracking and attention.
export-oriented enterprises increased exchange gains
“The downward exchange rate of RMB against the US dollar is good for export enterprises, which must also have a positive impact on our company.” The relevant person in charge of Henan Rebecca Hair Products Co.Ltd(600439) company has continued to pay attention to the fluctuation of exchange rate in recent days.
The above person in charge said that the company will have a cycle from the delivery of goods to the collection of payment. Generally, according to the L / C cycle, it will take one or two months. Under the same pricing of wig products abroad, the decline of RMB exchange rate will increase the company’s spot income and boost profits accordingly. In addition, the company has some foreign currency claims. Accounts receivable denominated in US dollars will also increase their income and generate exchange gains at the time of foreign exchange settlement at the current exchange rate.
As the largest professional hair products company in China, Henan Rebecca Hair Products Co.Ltd(600439) products are sold to overseas markets such as North America, Western Europe, Asia, Africa and many cities in China, with exports accounting for more than 80%.
According to reports, Henan Rebecca Hair Products Co.Ltd(600439) to American customers, most of the products are produced in China, and only a few are produced outside Cambodia and other countries. At the same time, the company’s imported products account for a small proportion. “In the past two years, the company has a certain reserve of raw materials and will make reasonable adjustments in combination with the inventory, so the import will not increase in the short term.” The person in charge said.
The export enterprise Kennede Electronics Mfg.Co.Ltd(002723) of small household appliances and mobile lighting is continuing to layout the overseas market. At present, the export business of the company’s electrical sector accounts for about 70%, which is settled in US dollars and has no import business. “The recent devaluation of the RMB against the US dollar has a positive impact on the company’s performance. We believe that the recent devaluation of the RMB will benefit the company’s home appliance business in terms of income gains and losses, exchange gains and losses and long-term national competitiveness.” Kennede Electronics Mfg.Co.Ltd(002723) relevant person in charge also told the reporter of securities times · e company.
With the recent sharp decline of the RMB against the US dollar, a number of A-share companies with large export business also frankly said that they would increase exchange earnings.
“The export sales of the company’s products account for more than 85%, and the export sales are mainly settled in US dollars. Recently, affected by the depreciation of the exchange rate of RMB against the US dollar, it will bring a certain amount of exchange income to the company and a certain positive impact on the company’s operating performance.” Shenzhen Laibao High-Tech Co.Ltd(002106) indicates.
Hl Corp (Shenzhen)(002105) believes that the recent devaluation of RMB is a great benefit to the company’s export business. “It can reduce the purchase cost of foreign customers, help the company win more orders from foreign customers, increase the market share, and increase the exchange income of the company.” Hl Corp (Shenzhen)(002105) indicates.
in Huapont Life Sciences Co.Ltd(002004) 2021, the overseas sales revenue was 4.66 billion yuan, accounting for 37.7% of the total revenue. The company’s related products are widely exported to European and American countries, covering 58 countries and regions around the world. The company believes that in the short term, the depreciation of RMB can bring certain exchange gains to export enterprises; In the long run, the devaluation of RMB means that the export price of export enterprises will be reduced, which will increase their price advantage in the international market and benefit the operation of the company to a certain extent.
According to the Research Report of Kaiyuan securities, through the correlation between the three rounds of RMB devaluation and the exchange gains and losses in the same period, it is found that the correlation coefficients of the exchange gains and losses and exchange rate changes in the same period of each company with a large proportion of export are positive, indicating that when the exchange rate of the US dollar against the RMB rises, each company has a high probability of benefiting from the depreciation of the RMB and generating exchange gains.
However, the specific impact remains to be verified over time Yotrio Group Co.Ltd(002489) just at the recent performance briefing, he said that the depreciation of RMB has a positive impact on the company. The specific impact on the profit is related to the time of foreign exchange collection, the time of sales confirmation and the situation of foreign exchange locking of the company.
more than 2600 A-share companies had exchange losses last year
Foreign currency assets and liabilities created by enterprises in financing and operating activities will generate exchange gains and losses due to exchange rate changes in the process of converting RMB. This is also the most direct reason why exchange rate fluctuations affect the performance of listed companies.
“Exchange gains and losses arising from exchange rate fluctuations are mainly reflected in exchange gains and losses under financial expenses.” The aforementioned person in charge of Kennede Electronics Mfg.Co.Ltd(002723) told reporters.
As of the press release on April 29, in 2021, 2601 A-share companies had generated exchange losses of nearly 35.8 billion yuan, 818 A-share companies had generated exchange gains of about 20.5 billion yuan, and the overall total net exchange loss was about 15.3 billion yuan.
From the perspective of exchange rate trend, in 2021, the appreciation rate of RMB against the US dollar was about 2.5%, while reviewing the annual report data, the enterprises with large exchange losses were mainly concentrated in export-oriented enterprises.
Specific to individual stocks, capital construction, equipment and other industries with large overseas income frequently appear companies with large exchange losses. According to the data, the five companies with the largest exchange losses are Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) , China Communications Construction Company Limited(601800) , Zte Corporation(000063) , Longi Green Energy Technology Co.Ltd(601012) and Adama Ltd(000553) , which generated exchange losses of 1.513 billion yuan, 1.101 billion yuan, 848 million yuan, 832 million yuan and 813 million yuan respectively last year.
Among them, Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) 2020 and 2021 are the companies with the highest A-share exchange loss for two consecutive years. However, the company’s net exchange loss last year has narrowed compared with the 2020 level (2.3 billion yuan).
In terms of the degree of impact, Adama Ltd(000553) last year’s exchange loss seriously eroded the company’s profitability Adama Ltd(000553) 2021 net profit was 157 million yuan, and the exchange loss of the company accounted for 518% of the net profit.
Hytera Communications Corporation Limited(002583) , known as the “little Huawei” of private network communication, has businesses all over the world, accounting for more than half of the overseas sales revenue, and is mainly settled in US dollars, euros, pounds sterling and local currencies. The company’s foreign currency monetary items need to be converted into the functional currency according to the exchange rate on the balance sheet date, resulting in exchange gains and losses, and has a certain impact on the company’s RMB accounting income.
“In 2021, the company’s exchange loss reached 149 million yuan, which was mainly due to the large exchange loss of accounts receivable and other receivables settled in Euro and US dollar due to the impact of exchange rate fluctuations. Among them, the exchange rate of euro to RMB decreased from 8.025 at the beginning of the year to 7.22 at the end of the year, with a relative decrease of nearly 10%, which had a great impact on the assets settled in Euro.
” Hytera Communications Corporation Limited(002583) introduction.
Some industries also benefited significantly from the strong RMB exchange rate last year, such as the air transportation sector. The “three major airlines” China Eastern Airlines Corporation Limited(600115) , China Southern Airlines Company Limited(600029) , Air China Limited(601111) achieved exchange gains of 1.619 billion yuan, 1.575 billion yuan and 1.235 billion yuan respectively last year.
For the air transport industry, aircraft and aviation fuel purchased by airlines are mostly settled in US dollars. The appreciation of RMB is strongly related to the cost of airlines. The appreciation of exchange rate will reduce the operating cost of the company, and higher foreign currency liabilities will bring exchange gains. However, due to the covid-19 epidemic, the rise in international oil prices and other factors, the “three major airlines” all suffered huge losses of more than 10 billion yuan.
It should be noted that the impact of exchange rate fluctuations is not limited to the currency settlement end.
The recent research report of Guosheng Securities pointed out that the indirect impact is mainly caused by operating activities. In the process of product export, the rising (falling) value of RMB may weaken (thicken) the enterprise’s profit from the dimension of product sales or single product profit; During the import of raw materials, the rising (falling) value of RMB corresponds to the reduction (increase) of the cost of raw materials.
Referring to the impact of exchange rate fluctuations on the company’s sales side, the aforementioned Kennede Electronics Mfg.Co.Ltd(002723) relevant person in charge said that China’s home appliance supply chain has global leading advantages in R & D and design, manufacturing cost and response speed. In the long run, if the RMB exchange rate continues to decline, it will help to improve the price competitiveness of China’s home appliance export products, drive the steady growth of export orders of home appliance enterprises, and the company’s small home appliance business is also expected to benefit.
actively hedging risks
Jiangsu Changhai Composite Materials Co.Ltd(300196) recently, the reception organization said that the main settlement currency of the company’s export business is US dollars. Adhering to the neutral attitude of exchange rate risk, the company will flexibly use financial market instruments and make appropriate use of forward foreign exchange settlement, forward foreign exchange trading and other hedging products in the foreign exchange market to lock in the risk of exchange rate fluctuation. In the future, the company will pay close attention to the changes in the international market environment and exchange rate changes to minimize the adverse impact of exchange rate fluctuations on the company’s operation.
Facing the impact of exchange rate, many listed companies have adopted forward foreign exchange transactions, hedging and other means to hedge risks.
Hytera Communications Corporation Limited(002583) relevant persons told the reporter of securities times · e company that the forward foreign exchange trading business can hedge and reduce the impact of some exchange. At the same time, the business has strong professional requirements, and the company will carry out it carefully on the premise of ensuring safety and liquidity.
Joyvio Food Co.Ltd(300268) Chilean subsidiary australis mainly purchases and sells in Chilean pesos and US dollars. The subsidiary Qingdao Guoxing business involves settlement in US dollars and euros. In order to cope with the exchange rate risk, jiawo shares reduced its exposure to US dollars and reduced the impact of future exchange rate fluctuations by means of spot exchange procurement, early collection of foreign exchange, forward settlement and sales of foreign exchange, and striving for RMB pricing and settlement. At the same time, the sales price or purchase price shall be adjusted appropriately. In terms of export, the exchange rate loss is amortized into export commodities to pass on the exchange rate risk. In terms of import, the possible losses caused by exchange rate changes are excluded from the price of imported commodities to pass on the exchange rate risk.
Xiamen Intretech Inc(002925) the experience in foreign exchange management is to reduce the exposure to exchange rate fluctuations by actively carrying out forward foreign exchange settlement in 2021. The company said it had achieved remarkable results. The gross profit margin in recent four quarters, including the first quarter of 2022, remained stable at about 28%, and the exchange loss after deducting the forward exchange settlement income decreased from 86.4 million in 2021 to 6.32 million.
Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) said in the annual report that in order to mitigate the impact of exchange rate fluctuations, the company continued to assess exchange rate risks and used derivative financial instruments to hedge some risks. In 2021, some subsidiaries of the company used forward foreign exchange contracts to conduct transactions with banks to hedge exchange rate risks related to foreign currencies such as US dollars and euros in their individual transactions.
