Fujian Nanping Taiyang Cable Co., Ltd. Feasibility Analysis Report on Hedging Operations
I. Background of the Company's Hedging Operations Fujian Nanping Taiyang Cable Co., Ltd. (hereinafter referred to as "the Company") is primarily engaged in the manufacturing of wires and cables. Its main raw materials are copper and aluminum. These raw materials account for approximately 80% of the production cost and have a high unit value. To mitigate the risks of price volatility of copper and aluminum and ensure stable and orderly production and operation, the Company needs to hedge through the futures and spot markets to lock in relatively favorable raw material prices in advance and conduct hedging operations.
II. Overview of the Company's Hedging Operations The hedging operations that the Company plans to carry out are aimed at locking in raw material price risks. They will not involve speculative or arbitrage trading. The trading instruments will be limited to copper and aluminum futures, adhering to prudent and steady risk management principles.
III. Basic Information of the Current Hedging Operations
- Scope of Hedging Futures Contracts: The scope of futures contracts for hedging will be the Company's required raw materials, copper and aluminum.
- Proposed Investment and Business Period: The Company shall establish a hedging trading account in its own name (including its subsidiaries) and shall not use accounts of others for its hedging operations. The funds used for futures hedging shall be the Company's own funds, and raised funds shall not be used directly or indirectly for futures hedging, nor shall it affect the Company's normal operations. Based on the margin ratio stipulated by the futures exchange, and considering the Company's futures trading volume and the needs of closing and delivery, the margin scale for hedging in 2026 shall not exceed RMB 150 million.
- The Company will, based on its actual operating conditions, primarily aim for fair value hedging as stipulated by the "Enterprise Accounting Standards." During actual operations, the effectiveness of hedging will be continuously evaluated to ensure high effectiveness of the relevant hedging operations.