Core Viewpoint - The company, Shandong Jindi Precision Machinery Technology Co., Ltd., plans to conduct commodity futures and foreign exchange hedging to mitigate risks associated with raw material price fluctuations and foreign exchange rate volatility, thereby enhancing financial stability and operational performance [1][6]. Group 1: Commodity Futures Hedging - The company and its subsidiaries intend to invest a maximum of RMB 10 million in trading margins and rights for commodity futures hedging, with a maximum contract value of RMB 100 million on any trading day [2][3]. - The hedging activities will focus on materials relevant to the company's operations, such as hot-rolled sheets, copper, and aluminum, and will be conducted in approved domestic futures markets [2][3]. - The hedging strategy aims to reduce the adverse impact of price volatility on the company's performance, adhering to principles of legality, prudence, safety, and effectiveness [1][4]. Group 2: Foreign Exchange Hedging - The company plans to engage in foreign exchange hedging activities with a total amount not exceeding USD 2 million or equivalent foreign currency, with the ability to roll over this amount within the approval period [3][6]. - The foreign exchange hedging will include various instruments such as forward foreign exchange contracts, swaps, options, and other derivatives, focusing on normal operational needs [3][6]. - The company will only conduct transactions with qualified financial institutions to mitigate risks associated with exchange rate fluctuations and ensure compliance with relevant regulations [5][6]. Group 3: Risk Management and Control Measures - The company has established a comprehensive risk management framework for both commodity and foreign exchange hedging, including clear decision-making authority, approval processes, and risk control measures [4][6]. - Specific risks identified include price volatility, liquidity risks, internal control risks, and technical risks for commodity hedging, as well as exchange rate volatility and operational risks for foreign exchange hedging [4][5]. - The company will implement strict monitoring and reporting mechanisms to address potential risks and ensure adherence to established policies [5][6]. Group 4: Impact on Company Operations - The hedging activities are expected to enhance the company's ability to manage risks associated with raw material prices and foreign exchange rates, ultimately improving financial stability and operational resilience [6][8]. - The company will follow relevant accounting standards for the financial reporting of hedging activities, ensuring compliance with applicable regulations [7][8]. Group 5: Approval and Oversight - The company's board of directors and supervisory board have approved the proposal for commodity and foreign exchange hedging, confirming that it aligns with the company's operational needs and does not harm shareholder interests [6][9]. - The sponsor, Guosen Securities, has conducted a thorough review and supports the company's hedging initiatives, affirming that they are necessary and beneficial for the company's operations [9].