RMB Appreciation B Side: Exchange Gains And Losses Distort A Share Annual Report Profit Export Enterprises Urgently Increase Hedging Amount

"Many enterprises didn't expect the RMB appreciation to be so fast, and many of them were hindsight. They didn't start to take action until the RMB exchange rate reached 6.6. Some enterprises even had a large amount of foreign exchange settlement at the beginning of this year, causing heavy losses." On January 21, Zhang Shen, co-founder of fxexpert, an independent foreign exchange risk management agency, said in an interview with 21st century economic reporter.

Since last year, the exchange rate of RMB against US dollar has risen from the weakest position on May 7.15 to around 6.5 at the end of the year, with an appreciation rate of up to 10%. All bank traders and enterprises are unprepared for the momentum of appreciation. This impact has been reflected in the exchange gains and losses of A-share export enterprises.

The 21st century economic reporter combs wind data and finds that among the listed companies that have announced the performance forecast in 2020, 28 companies have mentioned the impact of exchange loss on net profit, of which 5 enterprises have foreign exchange loss of more than 100 million yuan. NASDA (002180. SZ), the most severe loss, estimates that the exchange loss will be 740 million yuan, ranking first in the list.

Many experts pointed out to reporters that if enterprises only rely on their subjective feelings to bet on the trend of exchange rate, they will often cause large exchange loss due to misjudgment. Therefore, it is not enough to rely on such simple means as early or delayed settlement and sales of foreign exchange. We should learn to use foreign exchange risk management tools to reduce the risk of exchange rate fluctuations.

"After the exchange rate reform in 811, foreign trade enterprises have improved their awareness of risk prevention, but they still face a series of internal and external constraints. From the perspective of internal management, there are some problems, such as insufficient analysis and judgment, rigid internal management, mistakes in cross-border business operation strategy, and insufficient understanding of financial products. From the external environment, the tightening of overseas trade and investment policies in some countries, strict foreign exchange control in some countries and greater national risks in less developed countries have affected the prevention of exchange rate risk. " Wang Youxin, a researcher at the Bank of China Research Institute, said to reporters.

Exchange loss distorts profits

If the effect of exchange rate is excluded, CAMCE International (002051. SZ), which is engaged in overseas project contracting and import and export business, could have made a profit in 2020.

On January 15, CAMCE revised its performance forecast, saying that the exchange rate of the US dollar against RMB will continue to decline in 2020, and the depreciation in the fourth quarter exceeded expectations. Due to the unilateral appreciation of RMB, the company's exchange loss in 2020 will be about 363 million yuan. Excluding the impact of exchange rate, the company will achieve profit in 2020.

Similarly, Dongshan precision (002384. SZ), which accounts for about 70% of its export sales, suffered an exchange loss of 180 million yuan in the first November of last year. According to the performance forecast, the downstream demand of the core product printed circuit board business of the company last year was strong, and the business income and profit scale achieved a significant growth. It is expected to achieve a profit of 1.4-1.6 billion yuan, with a year-on-year growth of 99.24% - 127.71%. If it were not for the impact of exchange rate fluctuations, it would have been possible to achieve greater profit growth.

Huahai Pharmaceutical (600521. SH) is expected to achieve a net profit of 910 million yuan - 1 billion yuan last year, with a year-on-year increase of 60% - 76% due to the sharp increase in sales of domestic preparations and API.

On January 21, a relevant person of the company told reporters, "as an export-oriented enterprise, the company pays special attention to exchange rate changes and will take appropriate instruments to hedge risks according to the actual situation."

However, from last year's situation, exchange rate risk has not been well avoided. Due to the sharp decline in the exchange rate of the US dollar, the company has suffered an exchange loss of about 146 million yuan. In the first half of last year, the company realized 2.029 billion yuan of overseas revenue, accounting for about 60% of its revenue.

NASDA suffered the worst exchange loss. The company is one of the world's top five laser printer manufacturers. Last year's China Daily News showed that the company's overseas business (including export) accounted for 88.64%. Affected by the appreciation of RMB in the second half of last year, the company had a large amount of exchange loss, which is estimated to be 740 million yuan, compared with 65 million yuan in the same period of last year.

Affected by this, NASDA expects the net profit of last year to drop sharply, with a profit of about 50 million yuan to 75 million yuan, with a year-on-year decrease of 89.92% - 93.28%.

In addition to the above-mentioned enterprises, aojiahua (002614. SZ), Haichen Co., Ltd. (300873. SZ), XINGSEN Technology (002436. SZ), Kehua holding (603161. SH) and other A-share enterprises have actually caused exchange losses.

"Since the exchange rate reform in 2015, the RMB has been devalued for three and a half years. In fact, many export enterprises are" lying down to earn money. ". The appreciation of RMB in 2017 is also good for many private enterprises with us dollar liabilities and expansion. Therefore, in the past five years, many enterprises have not really suffered. Until last year's rapid appreciation of the RMB, most enterprises did not even use hedging tools, in a "naked" state. Or the ability reserve, talent allocation and familiarity with derivatives of many enterprises do not meet the requirements of market hedging. " Zhang Shen said.

Emergency increase

In the face of the loss of profits, many companies began to take action to carry out long-term foreign exchange settlement and sales business, and increase the line.

At the end of 2020, CAMCE released the feasibility analysis report on the long-term foreign exchange settlement and sales business.

According to the announcement, in order to prevent exchange rate fluctuation risk, control costs, and lock in engineering and trade profits, the company has agreed to carry out forward foreign exchange settlement and sales business with a total amount of no more than 500 million US dollars. Within the above limit, the funds can be recycled and the business period is one year from the date of deliberation and approval by the board of directors.

In an interview, relevant people of aojiahua said that the company increased the amount of long-term foreign exchange settlement and sales business at the end of last year.

It is understood that the company will hold a relevant meeting at the end of November 2020, and increase the amount of foreign exchange derivatives business of the company by 50 million US dollars on the line of 420 million US dollars in the previous year, and the accumulated amount after the increase is no more than 470 million US dollars, so as to effectively avoid the risk of foreign exchange market.

But at the same time, the 21st century economic reporter found that in many other export-oriented enterprises, there are not many such exchange rate management and risk measures.

With the expectation of RMB appreciation unchanged, it is imperative for enterprises and financial institutions to establish a neutral hedging awareness, just as the central bank calls for.

Zhang Shen put forward, "first of all, we hope that enterprises return to the risk neutral consciousness, not to bet on the trend of exchange rate, but to do hedging in a disciplined and strategic way. Secondly, I hope that the company's finance and business can be opened up. When the financial department offers quotations to customers, it should provide as conservative an exchange rate as possible, not too radical. After the business department has signed the order and quoted the price, it is necessary for the financial department to lock in as soon as possible to avoid the subsequent exchange rate going in a negative direction. Finally, we should also protect the overseas net investment. There are three hedging strategies: fair value hedging, cash flow hedging, and overseas net investment hedging. All three strategies can be used without legs. "

Jiang Shu, chief analyst of Beijing Jinyang mining, said in an interview, "there are two suggestions for enterprises. First, we should change the traditional thinking mode of export-oriented economic growth mode in the past, that is, to protect the economy and to protect exports is bound to weaken the exchange rate. Under the dual circulation pattern, the continuation of the marketization process of RMB exchange rate means that the two-way large fluctuation of exchange rate will be normal. The second is to pay attention to exchange rate risk, less bets on the rise and fall of exchange rate, more exchange rate risk management, and focus on the main business of the company. "

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