The Impact of Hedging Business on Corporate Operations: A Case Study of Arawana

Abstract

Against the backdrop of a complex and volatile global economic environment with frequent fluctuations in commodity prices, the operations of listed companies face significant challenges. Hedging, as a novel risk management tool, has gradually garnered widespread attention. This paper takes Yihai Kerry Arawana Holdings Co., Ltd. (Arawana) as a case study, aiming to explore the impact of hedging activities on the operational performance of listed companies. By analyzing Arawana's historical hedging operations and comparing them with industry peers, the study examines the influence of hedging on corporate performance from both financial and ESG dimensions. The findings indicate that hedging activities positively affect the company in terms of asset-liability management, profit stability, and cash flow, while also presenting potential risks. Finally, it is suggested that hedging business should only be used as a financial tool to assist the company's operation, and it is necessary to flexibly use and adjust hedging positions, strictly follow the principle of risk hedging, optimize internal mechanisms, and avoid excessive financialization of the entity. This paper provides a solid theoretical foundation and practical guidance with operational value for listed companies to reasonably engage in hedging activities.