Analysis Report on the Feasibility of Carrying Out Foreign Exchange Hedging Business
I. Purpose of Carrying Out Foreign Exchange Hedging Business
As the company's overseas business scale has continuously expanded in recent years, the scale of foreign exchange settlement has increased. To effectively hedge against foreign exchange market risks, prevent adverse impacts from significant exchange rate fluctuations on the company, and improve the efficiency of foreign exchange fund utilization and reasonably reduce financial expenses, the company and its consolidated subsidiaries plan to carry out foreign exchange hedging business with banks and other financial institutions. This will reduce the impact of exchange rate fluctuations on the company's performance and enhance its financial stability. This business will not affect the development of the company's main business.
II. Basic Situation of Carrying Out Foreign Exchange Hedging Business
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Transaction Currencies and Business Types The company and its subsidiaries will conduct transactions with banks and other financial institutions that have foreign exchange hedging business operating qualifications. The currencies involved are limited to the main settlement currencies used in production and operations, namely US dollars and Euros. The planned foreign exchange hedging business mainly includes forward foreign exchange settlement and sales, foreign exchange swaps, foreign exchange options, and other foreign exchange derivative products.
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Fund Quota and Transaction Period Based on actual business needs, the company and its subsidiaries will conduct foreign exchange hedging business with their own funds, with a maximum contract value not exceeding USD 30 million (or equivalent foreign currency) at any point in time.
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Transaction Period and Authorization Matters The aforementioned quota (including the amount of proceeds from the aforementioned transactions that are re-traded) is valid for 12 months from the date of approval by the company's Board of Directors. It can be used and rolled over within this quota and period.