Kanglongda (Beijing) New Drug Technology Co., Ltd. Feasibility Analysis Report on Carrying Out Hedging Product Transactions in 2026
I. Overview of Hedging Product Situation in 2026
-
Investment Objective Given that Kanglongda (Beijing) New Drug Technology Co., Ltd. (hereinafter referred to as the "Company") has extensive international business, the significant fluctuations in the exchange rate of foreign currencies such as USD against RMB in recent years have had a certain impact on the Company's financial situation. To hedge against the risk of foreign exchange rate fluctuations against RMB and prevent adverse effects from large exchange rate swings, enhance capital utilization efficiency, and strengthen financial stability, the Company and its subsidiaries fully utilize hedging instruments to reduce foreign exchange losses and hedge against foreign exchange market rate fluctuations. This is necessary. The Company has formulated the "Management System for Futures and Derivatives Trading," which clarifies the responsibilities of the Finance Department, Internal Control and Audit Department, Securities Affairs Department, and all subsidiaries in overseeing hedging product transactions before, during, and after execution. The Company has also equipped the hedging business with professional personnel, and its cooperative institutions are all reputable financial institutions with sound risk control measures. The targeted risk control measures adopted by the Company are practical and feasible, making the hedging business viable. Without affecting the Company's main business development and under the premise of reasonable capital allocation, the Company and its subsidiaries plan to carry out foreign exchange hedging product transactions opportunistically. The types of hedging products include: forward foreign exchange transactions, swap transactions, foreign exchange options, and other financial derivative transactions. The primary foreign currency involved is USD. The risks hedged by the 2026 hedging transactions include exchange rate risk and interest rate risk, primarily including: exchange rate risk of export revenue denominated in USD and corresponding accounts receivable, off-balance sheet foreign exchange risk, exchange rate risk of foreign currency borrowings and intercompany accounts, and interest rate risk of floating rate borrowings. The Company's hedging product transactions will help hedge the risk exposure arising from fluctuations in interest rates/exchange rates of expected foreign currency receipts and payments under foreign currency contracts, foreign currency funds, and foreign currency loans.
-
Transaction Amount Based on the Company's export revenue, scale of overseas operations, overseas financing situation, and industry practices, the Company and its subsidiaries estimate that the transaction limit for hedging product transactions in 2026 will be USD 1.8 billion or its equivalent in other foreign currencies. This transaction limit can be used repeatedly within the transaction period, and the transaction amount at any point within the transaction period (including amounts related to the reinvestment of profits from hedging product transactions) shall not exceed this limit.