Incident On January 17, 2018, the company issued an announcement. Following a ruling by the TCC court of the British High Court, the company should pay compensation to British Fluor Limited. After deducting the guarantee of €23,409,750 previously paid by Fluor (the profit and loss of the previous year), the company still expects to pay approximately RMB 55 million. Key investment points involve major overseas litigation cases. It is expected that the company will pay 55 million yuan in compensation. The TCC court of the British High Court recently handed down a quantitative partial judgment in the dispute between the company and Fluor UK Ltd. The company should pay Fluor 5,893,591 US dollars, 15,033,681 pounds, 7,165,740 euros, 7,259 Canadian dollars, and 485,346 yuan, but interest, VAT, legal fees and other expenses related to the judgment amount will be reviewed separately by the court (the specific amount of these expenses will be examined separately by the court. decision). Since Fluor withdrew the letter of guarantee issued by the company on March 20, 2014, the guarantee amount of €23,409,750 should be deducted from the amount actually paid by the company for the foregoing judgment. After deducting this portion of the amount based on the exchange rate at the end of 2017, the company still expects to pay approximately RMB 55 million (not including interest, VAT, legal fees and other expenses related to the judgment amount) to be recorded in 2017 profit and loss. However, the actual amount of compensation has been drastically reduced from the £250 million claimed by Fluor in 2014. In 2008, Zhenhua Heavy Industries and Fluor signed a sales and installation agreement for wind power steel pipe pile products for the British wind power project. After settling the final payment for the project in 2011, Fluor filed a quality claim with the company; on March 20, 2014, Flu paid the aforementioned guarantee of €23,409,750 to the bank that issued the guarantee; in September 2014, Fluor filed a lawsuit in the TCC court of the British High Court for compensation for additional testing and repair costs, construction delays and other related losses. The lawsuit involved in the 2008 project came to fruition. There are no worries about other short-term litigation cases. The project involved in this lawsuit was signed by the company in 2008. According to the company's 2017 semi-annual report, in addition to this project, the company's current lawsuits and arbitration include the pipelaying ship project signed with Petrofac in 2013, the acquisition of the former Jiangsu Daoda Offshore Engineering in 2014, two jack-up drilling platforms signed in 2014, and the procurement of two jack-up drilling platform pile legs. On the one hand, the judicial process spans a long period of time. With the exception of 2008 matters, it is expected that other matters will not be implemented until some time; on the other hand, the company has actively depreciated offshore assets to hedge risks. We determine that other litigation cases will not have a significant impact on the company's performance in the short term. To fully develop the HAECO aftermarket, and further strengthen its leading edge, HAECO needs services such as equipment maintenance, equipment maintenance, spare parts supply, and transformation and upgrading. It is expected that the HAECO aftermarket will have market demand comparable to the size of the new market each year. Currently, the HAECO aftermarket industry is loose, and the supply model is backward. The terminal needs to hire a huge maintenance team for a long time, and its spare parts supply also needs to face hundreds of suppliers in the entire market. Meanwhile, Zhenhua's core product Shore Bridge accounts for more than 80% of the global market share. After the company enters the HAECO post-market market, it can provide high-quality and efficient original parts and services to global customers, effectively solving the pain points faced by terminal companies. Therefore, on the new platform, the company will once again use its leading edge to develop and lead the HAECO aftermarket. Profit forecasting and investment advice The company is already in an absolute leading position in the HAECO industry. In addition, the automated terminals and HAECO aftermarket space are vast, and the company has a clear competitive advantage in these fields. Due to the recent impact of major lawsuits in the UK by about 55 million yuan, we lowered our 2017 performance forecast. We expect the company's net profit for 2017/18/19 to be 357 million/1,116 million/1,519 billion yuan, corresponding to EPS 0.08, 0.25, 0.35 yuan, PE 75, 24, and 18X. Continue to maintain a “buy” rating. Risk warning: HAECO's future market development falls short of expectations, global trade recovery falls short of expectations