Shenzhen Topband Co.Ltd(002139)
Feasibility analysis report on carrying out forward foreign exchange trading business
1、 Purpose of carrying out forward foreign exchange trading business
The products of Shenzhen Topband Co.Ltd(002139) (hereinafter referred to as "the company") and its subsidiaries are mainly exported. From 2018 to January June 2021, the company's overseas sales revenue accounted for more than 50% of the total main business revenue. The settlement currency of the company's export business is mainly USD, and the fluctuation of RMB exchange rate against USD will have a certain impact on the company's production and operation. In order to cope with the risk of exchange rate fluctuation and reduce the impact of exchange rate fluctuation on the company's operating performance, the company plans to carry out forward foreign exchange trading business in 2022 to avoid exchange rate risk.
The company does not conduct foreign exchange transactions solely for the purpose of profit or non locking unilateral transactions. All foreign exchange transactions are based on normal production and operation, relying on specific business operations, and for the purpose of hedging, avoiding and preventing exchange rate risks. The forward foreign exchange trading business conducted by the company only deals with financial institutions with forward foreign exchange trading business qualification approved by the State Administration of foreign exchange and the people's Bank of China or the financial and foreign exchange administration authorities of the country and region where the company is located, and does not deal with other organizations or individuals other than the above-mentioned financial institutions. The capital sources of the company's forward foreign exchange trading business are the company's own funds, and there is no use of the raised funds for financial derivatives trading business.
2、 Basic information of forward foreign exchange trading business
The forward foreign exchange transaction business to be carried out by the company is a forward foreign exchange transaction business to avoid and prevent exchange rate risk handled in the bank in order to meet the needs of normal production and operation. It refers to signing a forward foreign exchange transaction 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, and then according to the currency and time limit agreed in the forward foreign exchange transaction contract Amount and exchange rate to handle the business of foreign exchange settlement or sales. The forward foreign exchange transactions of the company are limited to the main settlement currency US dollars used in the import and export business of the company. In 2022, the amount of forward foreign exchange settlement and sales business carried out by the company and its subsidiaries shall not exceed US $250 million.
3、 Analysis on the necessity and feasibility of carrying out forward foreign exchange trading business
Affected by international political and economic uncertainties, the foreign exchange market fluctuates more frequently, and the uncertainty of the company's operation increases. The company's export business is mainly denominated in US dollars. Therefore, when the exchange rate fluctuates greatly, it will have a great impact on the company's operating performance. In order to effectively prevent and reduce the risk of foreign exchange rate fluctuation, it is necessary and feasible to carry out forward foreign exchange trading business matching the actual business scale of the company in combination with the company's foreign exchange assets, liabilities and foreign exchange revenue and expenditure business.
4、 Risk analysis of forward foreign exchange trading business
The forward foreign exchange trading business carried out by the company and its subsidiaries follows the principle of locking exchange rate risk and does not engage in speculative and arbitrage trading operations, but there are still certain risks in the forward foreign exchange trading operations:
1. Exchange rate fluctuation risk: in the case of large changes in exchange rate, if the forward exchange settlement exchange rate agreed in the forward foreign exchange transaction confirmation is lower than the real-time exchange rate on the delivery date, exchange losses will be caused.
2. Internal control risk: forward foreign exchange transactions are highly professional, which may cause risks due to imperfect internal control system.
3. Customer default risk: the customer's accounts receivable are overdue, and the payment cannot be recovered within the predicted collection period, which will cause the delay of long-term foreign exchange settlement and cause losses to the company.
4. Collection forecast risk: the company's sales department forecasts the collection according to the customer's orders and expected orders. In the actual implementation process, the customer may adjust their own orders, resulting in inaccurate collection forecast of the company, resulting in the risk of delayed delivery of forward foreign exchange settlement.
5. Legal risk: due to changes in relevant laws or counterparties' violation of relevant legal systems, the contract may not be executed normally and bring losses to the company.
5、 Risk control measures
1. The company has formulated the internal control system for forward foreign exchange transactions, which clearly stipulates the company's foreign exchange transaction operation principles, approval authority, internal operation process, responsible departments and persons, information isolation measures and risk management of forward foreign exchange transactions. The system can meet the needs of practical operation, The internal control and risk management measures formulated are practical and effective.
2. As the relevant responsible departments, the financial center and the Audit Department of the company have clear management positioning and responsibilities, and the responsibilities are implemented to the posts. Through hierarchical management, the risk of single person or separate department operation is fundamentally eliminated, and the response speed to the risk is also improved on the premise of effective risk control.
3. In order to prevent the delayed delivery of forward foreign exchange transactions, the company attaches great importance to the management of accounts receivable and actively collects accounts receivable to avoid the overdue phenomenon of accounts receivable.
4. The company conducts financial derivatives trading business with large commercial banks with legal qualifications, closely tracks laws and regulations in relevant fields, and avoids possible legal risks.
5. The company's forward foreign exchange transactions must be based on the prudent prediction of the company's foreign currency receipts (payments). The foreign currency amount of the forward foreign exchange transaction contract shall not exceed 90% of the annual planned total amount of foreign currency receipts (payments). The delivery period of forward foreign exchange trading business shall match the foreign currency collection time predicted by the company.
6、 Feasibility analysis conclusion of the company's forward foreign exchange trading business
The company's forward foreign exchange trading business is carried out around the company's main business. It is not a forward foreign exchange transaction solely for the purpose of profit, but based on specific business operations, with hedging as the means, with the purpose of avoiding and preventing exchange rate fluctuation risks and with the goal of protecting normal operating profits; The company has improved relevant internal control processes, and the targeted risk control measures taken by the company are feasible. By carrying out forward foreign exchange trading business, we can lock in the transaction cost or income at the future time point and realize asset hedging for the purpose of avoiding risk. Therefore, it is necessary and feasible for the company to carry out forward foreign exchange trading business, which can effectively reduce the risk of exchange rate fluctuation.
Shenzhen Topband Co.Ltd(002139) board of directors January 15, 2022
