Sichuan Furong Technology (SH:603327) Zheng Quan Zhi Xing·2025-09-01 16:10Core Viewpoint - The company aims to mitigate operational risks associated with aluminum ingot price fluctuations by engaging in futures hedging activities, which are deemed necessary for stabilizing its business operations [1][4]. Group 1: Necessity of Hedging Business - The company faces significant operational risks due to volatile aluminum ingot prices, which can greatly impact profitability [1]. - The proposed hedging strategy involves using futures contracts to lock in costs and profits, thereby ensuring stable operations [1]. Group 2: Overview of Hedging Business - The hedging will focus on aluminum ingots as the trading commodity [1]. - The maximum margin for trading is set at 4.8 million RMB, which will be used on a rolling basis throughout the hedging period [1]. - The trading will occur on the Shanghai Futures Exchange, utilizing entirely self-owned funds for margin [1]. - The authorization for this hedging business is valid until December 31, 2025 [1]. Group 3: Risk Analysis of Hedging Business - Market risk arises from asymmetric price movements between futures and spot markets, potentially leading to simultaneous losses [2]. - Operational risk may occur if trading procedures are not followed or if personnel lack sufficient understanding of derivatives [2]. - Liquidity risk could arise from insufficient market activity, making it difficult to execute trades [2]. - Internal control risks may stem from an inadequate internal control system [2]. - Technical risks could result from incomplete computer systems [2]. Group 4: Risk Control Measures - The company will align hedging activities with its production needs, ensuring that futures contracts match the timing of physical hedging requirements [3]. - Strict internal controls will be implemented to manage funds used for hedging, adhering to the approved margin limits [3]. - The company will monitor futures trading closely and select contracts with adequate liquidity [3]. - Professional personnel will be employed, and a robust reporting and internal audit mechanism will be established to manage risks effectively [3][4]. - Any trading plans exceeding board authorization must be reported for approval [4]. Group 5: Feasibility Analysis Conclusion - The company has established internal control systems and risk prevention measures, making the proposed aluminum ingot hedging business feasible and necessary [4]. - The hedging strategy is designed to prevent price fluctuation risks while adhering to hedging principles, thus enhancing profit stability and reducing adverse impacts on financial performance [4].