S.F. Holding Co., Ltd. (SF Holding, 06936) disclosed that its board has authorised the group and its subsidiaries to conduct derivatives hedging transactions of up to RMB26.50 billion (c.US$3.70 billion) or equivalent foreign currency over the coming 12 months. The ceiling includes an existing outstanding position of RMB7.70 billion.
The mandate, passed at the seventh Board meeting on 30 March 2026, does not require further shareholder approval. At any point within the one-year validity period, the combined notional value of outstanding contracts and reinvested gains must remain within the approved RMB26.50 billion limit, while total credit lines or margin usage is capped at RMB5.00 billion.
Hedging Objective The programme aims to curb earnings volatility arising from: 1) exchange-rate swings as overseas revenue expands; 2) interest-rate fluctuations linked to financing activities; and 3) sharp moves in fuel prices, which are a key component of the group’s cost base. Transactions will be executed strictly for risk-mitigation rather than speculative gain.
Instruments and Counterparties Permitted underlying assets cover foreign-exchange rates, interest rates and commodities (primarily fuel), either individually or in combination. Tools include forwards, swaps, options and related structured products, to be traded mainly with large state-owned and international banks that are not related parties.
Risk Management Framework • Market, liquidity, counterparty and policy risks have been identified, with risk limits and real-time monitoring in place. • Only simple, highly liquid contracts will be used, and trading, accounting and settlement responsibilities are segregated. • Dedicated professionals oversee transaction execution, valuation, and compliance in accordance with China’s Accounting Standards (CAS 22/24/37) and the company’s internal derivatives policy.
Funding and Accounting The hedging activities will be financed by internal resources or self-arranged funds; no A-share proceeds or bank loans are earmarked. All contracts will be measured at fair value using market quotes from banks and data providers such as Reuters and Bloomberg.
Governance The board has delegated implementation authority to the Chief Financial Officer, supported by documented procedures and a risk-alert regime. Relevant board resolutions, feasibility analyses and the company’s Derivatives Trading Management System have been filed for inspection.
The announcement underscores SF Holding’s intent to stabilise cash flow and protect profit margins amid heightened currency, rate and commodity price volatility.
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