Xintai Pharmaceutical Plans to Launch $40 Million Forex Hedging Business to Strengthen Exchange Rate Risk Management

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[Shenzhen, March 20, 2026] Shenzhen Xinlitai Pharmaceutical Co., Ltd. (Stock Code: 002294, hereinafter referred to as “Xinlitai”) announced today that the company’s board of directors has reviewed and approved a proposal to engage in hedging-type financial derivatives trading, intending to use no more than $40 million (or the equivalent in other currencies) of its own funds to hedge against currency and interest rate fluctuation risks through forward foreign exchange contracts, foreign exchange swaps, and other instruments.

The announcement indicates that the business quota may be jointly used by the company and its consolidated subsidiaries, with a term of 12 months from the date of the board’s approval, and the transaction amount at any point in time shall not exceed the aforementioned quota. The board has authorized the management team to implement related matters specifically.

Business Operation Framework Clarified

The financial derivatives trading that Xinlitai is undertaking will be strictly limited to hedging purposes, prohibiting any speculative trading. The trading varieties include but are not limited to forward foreign exchange contracts in USD and other currencies, foreign exchange swaps, currency swaps, interest rate swaps, and foreign exchange options, with underlying assets covering exchange rates, interest rates, and currency combinations. Transactions will be conducted through domestic on-market transactions, using either maturity delivery or differential settlement methods.

The company emphasizes that all derivatives transactions are closely aligned with actual operational needs, maintaining consistency in variety, scale, direction, and duration with the underlying business, adhering to prudent and robust risk management principles. The funding source is its own funds and does not involve raised funds or bank credit funds.

Risk Control System Enhanced

In response to potential market risks, liquidity risks, performance risks, and other risks associated with financial derivatives trading, Xinlitai has established a multi-tiered risk control mechanism:

• Formulating a specialized “Financial Derivatives Trading Management System” to standardize decision-making procedures and operational processes.
• Selecting well-qualified and reputable financial institutions as trading counterparts.
• The finance department continuously tracks market price fluctuations and submits risk analysis reports regularly.
• The audit department reviews trading execution quarterly and reports to the board’s audit committee.
• Establishing an emergency response mechanism for abnormal situations to fulfill information disclosure obligations in a timely manner.

Financial Stability Improvement

Xinlitai states that the purpose of engaging in foreign exchange hedging business is to effectively avoid risks from currency and interest rate fluctuations, reasonably control foreign exchange gains and losses, and enhance the company’s financial stability. This business is closely related to the company’s main operations and will not impact normal business activities, in compliance with the relevant provisions of “Enterprise Accounting Standard No. 24 - Hedging Accounting.”

According to the announcement, the company will conduct accounting treatment for financial derivatives trading in accordance with relevant provisions of the “Enterprise Accounting Standards,” determining fair value based on prices provided by banks and other pricing service institutions, and the related asset, liability, and profit and loss situations will be accurately reflected in the financial statements.

This transaction amount is within the decision-making authority of the board and does not need to be submitted for shareholder meeting review, nor does it constitute a related party transaction. Xinlitai emphasizes that it will strictly comply with relevant laws and regulations, ensure the business operates in compliance, and effectively safeguard the interests of the company and all shareholders.

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Editor: Xiao Lang Express