Dongxing Securities Co., Ltd.
Review Opinion on Ganzhou Tengyuan Cobalt Industry New Material Co., Ltd.'s Commodity Futures Hedging Business
As the sponsor of Ganzhou Tengyuan Cobalt Industry New Material Co., Ltd. (hereinafter referred to as "Tengyuan Cobalt" or "the Company") for its initial public offering on the ChiNext market, Dongxing Securities Co., Ltd. (hereinafter referred to as "Dongxing Securities" or "the Sponsor") has conducted a prudent and diligent investigation into the Company's commodity futures hedging business in accordance with the "Administrative Measures for Securities Issuance and Listing Sponsorship Business," the "Shenzhen Stock Exchange ChiNext Stock Listing Rules (2025 Revision)," and the "Shenzhen Stock Exchange Listed Company Self-Regulatory Guidelines No. 2—ChiNext Listed Company Standardized Operation (2025 Revision)," among other relevant regulations. The specific review findings are as follows:
I. Purpose, Necessity, and Feasibility of Conducting Commodity Futures Hedging Business
(I) Purpose Given the significant market price fluctuations of some of the Company's products, the Company intends to utilize the hedging function of futures tools to mitigate the operational risks brought about by price volatility, maintain sustained and stable operating performance, and selectively conduct commodity futures hedging based on its production and operation plans. The Company's commodity futures hedging business will primarily be operated using its own funds, which will not affect the development of its main business, and the capital arrangement is reasonable.
(II) Necessity The Company's main products include bulk commodities such as copper, cobalt, cobalt sulfate, cobalt chloride, and lithium carbonate. To leverage the risk-hedging function of the futures market and reduce the adverse impact of product price fluctuations on the Company's operations, effectively hedge the risks arising from price volatility in production and operation activities, the Company plans to conduct commodity futures hedging business to achieve its stable operating goals, which is necessary.
(III) Feasibility The Company has formulated the "Management System for Commodity Futures Hedging Business," improved relevant internal control systems, and equipped professional personnel for the commodity futures hedging business. The Company will not engage in speculative or arbitrage trading operations. The implemented targeted risk control measures are feasible, and the commodity futures hedging business is viable. The capital arrangement for this business is reasonable.
II. Basic Situation of the Company's Commodity Futures Hedging Business
(I) Traded Varieties The futures varieties for the Company's hedging business are limited to futures varieties traded in the domestic market that are related to the Company's production and operation and raw materials.
(II) Funding Sources The funding sources are the Company's own funds, and do not involve raised funds or bank credit funds.