Key investment events: Recently, Haiyuan Machinery signed a letter of intent with the Yiwu Economic and Technological Development Zone Management Committee. The two parties agreed that Haiyuan New Materials plans to invest and build the “Haiyuan New Materials Yiwu Production Base Project” in the Yiwu Economic and Technological Development Zone and close to Geely New Energy Company. The total investment of the project is estimated to be about 1.2 billion yuan. Big investment, big plans, optimistic about future development prospects. The planned land area of the project is about 240 acres, the first phase is about 104 acres of land, and the second phase is about 136 acres of land. The total investment of the project is about 1.2 billion yuan, making it the largest project investment in the company's history. The first phase of the project is expected to be completed and put into operation within 24 months; construction of the second phase will commence in 2019. The first phase plans to invest in two lightweight composite production lines for vehicles with a standard production capacity of 400 tons/year, and two carbon fiber production lines; the second phase plans to invest in four lightweight product production lines and four carbon fiber production lines. The above production capacity plan is also the highest in the company's history. The project is of great significance, and all-round cooperation with Geely began. The company's current investment in plant construction will further strengthen extensive and in-depth cooperation with Geely Automobile in new energy, new materials, and weight reduction. The implementation of the project will bring win-win results for Haiyuan Machinery and Geely Automobile. Geely will receive stable supply support for lightweight parts, which is beneficial to the development of the new energy business. Haiyuan will also receive more sales channels, which will facilitate the rapid expansion and strengthening of the lightweight business, and lay a solid foundation for becoming the leading lightweight materials leader in China. Cost increases and shipping delays affect short-term performance and do not change long-term growth trends. Affected by the national pollution prevention and control policy, construction and infrastructure projects in the northern region were stopped on a large scale, which delayed the delivery time of the company's orders for lightweight construction products in the northern region. Furthermore, commodity raw material prices have increased a lot since the second half of 2017, causing the company's purchase unit price for 2017Q4 to increase by about 20% month-on-month. Fluctuations in raw material prices and delays in order delivery caused the company's 2017 Q4 business performance to decline compared to 2017 Q3. Profit forecasting and ratings. Based on the company's 2017 performance report forecast, we downgraded the company's 2017-2019 EPS forecast to 0.03 yuan (0.12 yuan), 0.37 yuan (0.42 yuan), and 0.71 yuan (0.80 yuan), respectively. The corresponding PE was 592 times, 46 times, and 24 times, respectively. Considering the industry space and the high growth potential following the company's performance, we gave the company a 50 times valuation for 2018, corresponding to a target price of 18.5 yuan, and adjusted to a “increase in holdings” rating. Risk warning: The promotion of carbon fiber products falls short of expectations; the car market continues to be sluggish, and production and sales fall short of expectations.