Feasibility Analysis Report on the Company and its Subsidiaries Conducting Gold Inventory Hedging Business for 2026
I. Purpose of Conducting Gold Inventory Hedging Business
Guangdong Chaohongji Industrial Co., Ltd. (hereinafter referred to as the "Company") and its subsidiaries aim to conduct hedging operations on their gold inventory. This will primarily be achieved through Shanghai Gold Exchange deferred delivery business, futures company gold futures trading tools, and other hedging tools such as gold leasing, which can achieve the same hedging objectives. The goal is to mitigate the risk of a significant drop in gold prices, which could lead to the net realizable value of gold inventory falling below its cost.
II. Hedging Business Product Categories for Gold Inventory
The gold inventory held by the Company and its subsidiaries is significantly affected by gold price fluctuations. To mitigate the adverse impact of significant gold price volatility on the Company's operations, the Company plans to conduct hedging operations using tools such as Shanghai Gold Exchange deferred delivery business, futures company gold futures trading tools, and gold leasing, among other hedging instruments that can achieve the same hedging objectives, to effectively manage the risks arising from significant gold price fluctuations.