Core Viewpoint - The company plans to conduct hedging activities to mitigate risks associated with price fluctuations of raw materials and foreign exchange rates, thereby enhancing operational stability and sustainability [1][5]. Summary by Sections Purpose and Necessity of Hedging Activities - The company aims to reduce the adverse impact of significant price fluctuations in raw materials on its operations through commodity hedging [1]. - With the growth of the business and increasing foreign currency settlement needs, the company intends to engage in foreign exchange hedging to better manage related currency and interest rate risks [1]. Basic Situation of Hedging Activities - For commodity hedging, the maximum transaction margin and premium will not exceed RMB 200 million or its equivalent in other currencies, with a maximum contract value of RMB 500 million on any trading day [2]. - For foreign exchange hedging, the maximum transaction margin will not exceed RMB 100 million or its equivalent in other currencies, with a maximum contract value of RMB 200 million on any trading day [2]. - The total limit for margin and premium for both hedging activities will not exceed RMB 300 million or its equivalent in other currencies, with a maximum contract value of RMB 700 million on any trading day [2]. Principles for Hedging Operations - Commodity hedging will be based on actual demand for spot business, ensuring that the volume of futures and other derivatives does not exceed the quantity of actual purchases, inventory, or expected production or sales [3]. - Foreign exchange hedging will follow a prudent principle, aligning with normal business operations to mitigate currency or interest rate risks [3]. Risk Analysis and Control Measures - The company acknowledges potential risks in hedging operations, including market liquidity risks and operational risks due to system failures [4]. - To mitigate these risks, the company has established clear organizational structures, responsibilities, and risk management procedures, ensuring compliance with internal controls [4]. Feasibility Analysis - The company has developed a comprehensive management system for hedging activities and has sufficient self-owned funds or bank credit lines to support the required transaction margins [5]. - The feasibility of conducting hedging activities is affirmed, as it aims to control operational risks and ensure stable and sustainable performance [5]. Approval Procedures - The company's board of directors and supervisory board have both approved the proposal for hedging activities, confirming that it aligns with the company's operational needs and does not harm the interests of the company or its shareholders [6].