Core Viewpoint - The company is currently involved in a legal dispute regarding a construction contract, with a recent court ruling requiring it to refund a significant amount to the plaintiff and pay interest, which may impact its financial performance in the short and long term [2][6][7]. Group 1: Lawsuit Background - The lawsuit originated in November 2021 when the company was sued by China Energy Conservation Water Engineering Co., Ltd. for a total claim of approximately RMB 33,178,787.89 [3]. - The company contested the jurisdiction of the initial court, but its appeal was rejected, leading to further legal proceedings [3][4]. - In April 2023, the initial court ruled that the company must refund RMB 26,337,961.95 and pay interest, which the company subsequently appealed [4][5]. Group 2: Recent Developments - The case was sent back for retrial due to unclear factual findings, with the first hearing of the retrial taking place on October 21, 2024 [5][6]. - A quality assessment report indicated that issues with the MBR membrane system were the primary cause of the underperformance in water output, which was below the contractually agreed amount [6]. - On July 28, 2025, the court ruled that the company must refund RMB 19,310,445.68 to Wuxi Huishan Environmental Water Co., Ltd. and pay interest, while rejecting other claims [6][7]. Group 3: Financial Implications - The company has proactively made provisions for potential liabilities and inventory impairments in 2022 and 2023, anticipating that the lawsuit's outcome could affect its profits [2][7]. - The final impact on the company's financials will depend on the ultimate court ruling and the annual audit confirmation by accountants [7].