I. Background of Conducting Foreign Exchange Financial Derivative Trading Business
Shenzhen Kaizhong Precision Technology Co., Ltd. (hereinafter referred to as "the Company") intends to engage in financial derivative trading aimed at foreign exchange hedging to effectively avoid foreign exchange and interest rate risks, and to reasonably control the impact of exchange gains and losses on the Company's operating performance, in line with capital management requirements and daily operational needs.
II. Necessity and Feasibility of the Company's Foreign Exchange Financial Derivative Trading Business
The Company's product exports are primarily settled in euros, US dollars, and Japanese yen. Due to factors such as international political and economic conditions, the volatility of exchange rates and interest rates has increased significantly, leading to heightened foreign exchange market risks. To lock in costs and mitigate and prevent foreign exchange and interest rate risks, the Company plans to moderately engage in foreign exchange financial derivative trading based on specific circumstances. This trading is closely related to the Company's daily operations and investment needs, and based on the Company's foreign currency assets, liabilities, and foreign exchange income and expenditure, it can enhance the Company's ability to respond to foreign exchange volatility risks, better avoid foreign exchange and interest rate fluctuations, and strengthen the Company's financial stability. The Company has established and improved relevant internal control systems in accordance with applicable laws and regulations and has equipped professional personnel for conducting foreign exchange financial derivative trading. The targeted risk control measures taken by the Company are practical, making the foreign exchange financial derivative trading business feasible.