Jincheng Pharmaceutical Approved to Conduct 400 Million Yuan Forward Foreign Exchange Trading Business to Strengthen Exchange Rate Risk Management

[Finance News] Shandong Jincheng Pharmaceutical Group Co., Ltd. (Stock code: 300233,简称 “Jincheng Pharma”) announced on March 27 that the company held the 21st meeting of the sixth board of directors on March 25, during which it approved the proposal to carry out forward foreign exchange trading business. According to the proposal, the company and its controlling subsidiaries will engage in forward foreign exchange transactions with a total amount not exceeding 400 million yuan or equivalent foreign currency. The authorization period is 12 months from the date of board approval, and the quota can be rolled over within the validity period.

The announcement states that the main purpose of Jincheng Pharma engaging in this business is to effectively prevent and hedge against foreign exchange market risks, reducing the impact of exchange rate fluctuations on the company’s operating performance. The company emphasizes that all forward foreign exchange transactions will be entirely based on its own foreign currency assets, liabilities, and actual foreign exchange income and expenditure needs, with no speculative or arbitrage operations.

Specific Business Arrangements

The approved forward foreign exchange trading business mainly includes the following points:

Risk Control Mechanisms

Jincheng Pharma detailed six major risks associated with this business in the announcement, including exchange rate fluctuation risk, operational risk, client or supplier default risk, performance risk, payment and receipt forecast risk, and legal risk. The company has also formulated multiple risk control measures:

First, the company stipulates that all foreign exchange transactions must match the underlying business in currency, scale, direction, and term; second, counterparties are limited to qualified financial institutions; third, the company has established the “Management System for Forward Foreign Exchange Business” to specify operational procedures and approval authority; additionally, the company will strengthen exchange rate research and analysis, monitor international market changes in real-time, and adjust trading strategies accordingly.

The announcement emphasizes that the company’s forward foreign exchange trading activities will strictly adhere to principles of legality, prudence, safety, and effectiveness, aiming to further enhance its ability to manage foreign exchange risk and strengthen financial stability. This business falls within the decision-making authority of the board of directors and does not require shareholder approval.

According to relevant accounting standards, Jincheng Pharma will conduct standardized accounting and reporting for its forward foreign exchange transactions, with specific details subject to annual audit results.

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