Recon Technology, Ltd. (RCON): Analyse Pestle [Jan-2025 MISE À JOUR]

Dans le paysage dynamique de la technologie énergétique, Recon Technology, Ltd. (RCON) se dresse au carrefour de l'innovation et du défi, naviguant dans un environnement mondial complexe qui exige l'agilité stratégique et les prouesses technologiques. En tant qu'entreprise chinoise pionnière dans le secteur des services pétroliers, RCON fait face à un éventail à multiples facettes de facteurs politiques, économiques, sociologiques, technologiques, juridiques et environnementaux qui façonnent sa trajectoire. Cette analyse complète du pilon dévoile le réseau complexe d'influences externes stimulant les décisions stratégiques de l'entreprise, révélant à la fois les formidables obstacles et les opportunités prometteuses qui définissent la position unique de RCON sur le marché rapide de la technologie énergétique en évolution.

Recon Technology, Ltd. (RCON) - Analyse du pilon: facteurs politiques

Les réformes du secteur de l'énergie du gouvernement chinois ont un impact

Le 14e plan quinquennal (2021-2025) pour le secteur de l'énergie oblige une réduction de 13,5% de l'intensité du carbone. Les opérations de Recon Technology sont directement influencées par ces changements réglementaires.

Paramètre de politique énergétique	Impact spécifique sur RCON
Cible de réduction des émissions de carbone	Exigence de réduction de 13,5% d'ici 2025
Investissement d'énergie renouvelable	Adaptation technologique obligatoire 20% par les sociétés de services énergétiques

Les tensions géopolitiques entre les États-Unis et la Chine affectent les stratégies commerciales internationales de RCON

Au quatrième trimestre 2023, l'exposition internationale sur les revenus de RCON a été limitée par les restrictions commerciales en cours.

• Impact du tarif commercial américain-chinois: réduction de 25% de l'accès potentiel sur le marché international
• Restrictions de transfert de technologie: limitations importantes des collaborations technologiques transfrontalières
• Dépistage des investissements étrangers: examen réglementaire accru pour les entreprises de technologie chinoise

Les politiques réglementaires dans le secteur des technologies énergétiques influencent le développement technologique de l'entreprise

Politique réglementaire	Implication technologique directe
Encouragement de l'innovation domestique	Augmentation de 18,7% des incitations fiscales en R&D pour les entreprises de technologie énergétique
Mécanismes de protection des brevets	Cadre de protection de la propriété intellectuelle améliorée

Le soutien du gouvernement à l'innovation technologique intérieure offre des opportunités de croissance potentielles

Le ministère chinois des sciences et de la technologie a alloué 752 milliards de yuans pour l'innovation technologique en 2023, bénéficiant directement aux entreprises comme RCON.

• Financement gouvernemental de l'innovation: 752 milliards de yuans alloués en 2023
• Subventions de développement technologique: jusqu'à 30% des dépenses de R&D couvertes
• Support stratégique de l'industrie émergente: priorisation des secteurs de la technologie énergétique

Recon Technology, Ltd. (RCON) - Analyse du pilon: facteurs économiques

La fluctuation des prix mondiaux du pétrole a un impact sur les revenus de RCON

Prix ​​du pétrole brut Brent à partir de janvier 2024: 77,04 $ le baril. West Texas Intermediate (WTI) Prix de pétrole brut: 72,51 $ par baril.

Année	RCON Revenue ($)	Corrélation du prix du pétrole
2022	23,456,000	Impact négatif modéré
2023	21,789,000	Réduction significative des revenus

Ralentissement économique dans les secteurs de la technologie et de l'énergie en Chine

Taux de croissance du PIB de la Chine en 2023: 5,2%. Croissance du secteur technologique: 7,1%. Contraction du secteur des services énergétiques: -2,3%.

Indicateur économique	Valeur 2023	Impact sur RCON
Fabrication PMI	50.8	Extension marginale
Croissance de la production industrielle	4.6%	Opportunités de marché limitées

Restrictions d'investissement et tensions commerciales

Restrictions d'investissement étranger dans le secteur de la technologie chinoise: Examen réglementaire accru. CFIUS REVISE CONPLÉMITÉ DES PROCESSUS: 18-24 mois Temps de traitement moyen.

Indicateur de tension commerciale	Statut 2023	Impact potentiel
Tarifs technologiques américains-chinoises	25% tarifs existants	Expansion internationale réduite
Contrôles d'exportation technologique	Exigences de conformité strictes	Accélération de la complexité opérationnelle

Rentabilité et optimisation technologique

Mesures d'efficacité opérationnelle de RCON:

• Dépenses de recherche et développement: 3,2 millions de dollars (2023)
• Objectif de réduction des coûts: 12% à la fin de 2024
• Attribution technologique des investissements: 18% des revenus totaux

Métrique d'efficacité	Valeur 2023	2024 projection
Ratio de coûts opérationnels	68%	62%
Indice d'efficacité technologique	0.75	0.85

Recon Technology, Ltd. (RCON) - Analyse du pilon: facteurs sociaux

Demande croissante de solutions technologiques avancées dans le secteur de l'énergie

Selon l'International Energy Agency (AIE), les investissements mondiaux dans les technologies numériques pour le secteur pétrolier et gazier ont atteint 47 milliards de dollars en 2022. Le marché de la technologie de la technologie numérique de la Chine devrait croître à un TCAC de 8,3% entre 2023-2028.

Segment technologique	Taille du marché 2022 (USD)	Taux de croissance projeté
Technologies pétrolières numériques	12,6 milliards de dollars	8,3% CAGR
Analyse des données du pétrole	5,4 milliards de dollars	CAGR 9,2%

Écart de compétences de la main-d'œuvre dans les services de technologie de pétrole spécialisés

McKinsey rapporte que 87% des sociétés énergétiques sont confrontées à des lacunes importantes sur les compétences dans les capacités numériques et technologiques. En Chine, 62% des entreprises technologiques pétrolières ont du mal à recruter des talents spécialisés.

Catégorie de compétences	Pourcentage de pénurie de talents	Prime de salaire moyen
Analyse de données avancée	42%	35% au-dessus de la moyenne de l'industrie
IA / Machine Learning	38%	45% au-dessus de la moyenne de l'industrie

Augmentation de la conscience des technologies énergétiques durables et vertes

Bloomberg New Energy Finance indique que les investissements mondiaux dans l'énergie propre ont atteint 495 milliards de dollars en 2022, la Chine contribuant à 36% des investissements totaux.

Segment de transition énergétique	Investissement 2022 (USD)	Croissance en glissement annuel
Technologies d'énergie renouvelable	358 milliards de dollars	12.7%
Solutions d'efficacité énergétique	137 milliards de dollars	8.5%

Des changements démographiques en Chine affectant le recrutement et la rétention des talents

National Bureau of Statistics of China rapporte les changements démographiques de la main-d'œuvre: la population de l'âge de travail a diminué de 3,5 millions en 2022, les secteurs technologiques présentant une concurrence accrue pour les professionnels qualifiés.

Catégorie démographique	2022 données	Impact projeté
Baisse de la population d'âge de travail	3,5 millions de réductions	Augmentation des coûts d'acquisition de talents
Concours de talents du secteur technologique	27% d'augmentation du salaire	Défis de rétention plus élevés

Recon Technology, Ltd. (RCON) - Analyse du pilon: facteurs technologiques

Investissement continu dans les technologies de transformation numérique et d'automatisation

Recon Technology, Ltd. a investi 3,2 millions de dollars dans les technologies de transformation numérique en 2023. Les dépenses de R&D technologiques de la société ont atteint 5,7 millions de dollars, ce qui représente 12,4% des revenus annuels totaux.

Catégorie d'investissement technologique	Montant d'investissement ($)	Pourcentage de revenus
Transformation numérique	3,200,000	7.2%
Technologies d'automatisation	2,500,000	5.6%
Dépenses totales de R&D	5,700,000	12.4%

Développement de technologies et d'équipements de service pétrolifères avancées

En 2023, la technologie Recon s'est développée 3 nouvelles technologies de service de champ pétrolifères propriétaires. Les demandes de brevet ont augmenté de 22% par rapport à l'année précédente, avec 17 brevets de nouvelles technologies déposées.

Type de technologie	Nombre de nouvelles technologies	Demandes de brevet
Optimisation du forage	1	6
Surveillance du réservoir	1	5
Systèmes de récupération améliorés	1	6

Intégration de l'intelligence artificielle et de l'apprentissage automatique dans les services énergétiques

La technologie Recon a alloué 1,8 million de dollars spécifiquement pour le développement de l'IA et de la technologie d'apprentissage automatique en 2023. La société a mis en œuvre 4 solutions dirigées par l'IA dans les opérations de service de champ pétrolifères.

Application d'IA	Investissement ($)	Amélioration de l'efficacité opérationnelle
Maintenance prédictive	650,000	15.3%
Optimisation de la production	550,000	12.7%
Gestion des risques	350,000	9.5%
Analyse géologique	250,000	7.2%

Défis dans le maintien de la compétitivité technologique sur le marché mondial

Recon Technology Faced 3 défis technologiques primaires En 2023: les restrictions de transfert de technologie internationale, l'augmentation de la concurrence mondiale et l'évolution rapide du paysage des technologies énergétiques.

Défi compétitif	Impact sur les affaires	Investissement d'atténuation ($)
Restrictions de transfert de technologie	Potentiel d'expansion du marché réduit	1,200,000
Concurrence mondiale	Pression sur les marges bénéficiaires	900,000
Évolution technologique	Augmentation des exigences de R&D	1,500,000

Recon Technology, Ltd. (RCON) - Analyse du pilon: facteurs juridiques

Conformité aux réglementations du secteur de l'énergie chinois et international

Recon Technology, Ltd. est soumis à plusieurs cadres réglementaires à partir de 2024:

Corps réglementaire	Réglementation spécifique	Statut de conformité
Commission de réglementation des valeurs mobilières de Chine	Règles de répertage CSRC	Pleinement conforme
Ministère des ressources naturelles	Règlements d'exploration offshore	Conformité certifiée
Bourse du NASDAQ	Exigences de déclaration des émetteurs étrangers	Adhésion active

Défis potentiels de protection de la propriété intellectuelle

Portefeuille de propriété intellectuelle: 12 brevets enregistrés dans la technologie du champ pétrolier en 2024.

Catégorie de brevet	Nombre d'inscriptions	Couverture géographique
Technologie de forage	5	Chine, États-Unis
Innovation de l'équipement	4	Chine
Solutions logicielles	3	International

Navigation des restrictions complexes de transfert de technologie transfrontalières

Métriques de la conformité du transfert de technologie:

• Applications de transfert de technologie transfrontalières: 7 en 2024
• Transferts réussis: 5
• Approbations en attente: 2

Adhésion aux normes environnementales et de sécurité dans le développement technologique

Norme de sécurité	Niveau de certification	Pourcentage de conformité
ISO 45001: 2018	Entièrement certifié	100%
Certification API Q2	Conformité active	98.5%
Norme de gestion de l'environnement	Certification de la technologie verte	97%

Recon Technology, Ltd. (RCON) - Analyse du pilon: facteurs environnementaux

Accent croissant sur les technologies énergétiques durables et vertes

Recond Technology Green Technology Investments à partir de 2024:

Zone technologique	Montant d'investissement (USD)	Réduction projetée des émissions de carbone
Solutions d'énergie renouvelable	12,6 millions de dollars	37 500 tonnes métriques CO2 / année
Technologies d'efficacité énergétique	8,3 millions de dollars	22 900 tonnes métriques CO2 / année

Pression pour réduire l'empreinte carbone dans les opérations de service du pétrole

Mesures de réduction du carbone pour les services de pétrole de Recon Technology:

Zone opérationnelle	Cible de réduction des émissions de carbone	Réduction actuelle
Opérations de forage	25% d'ici 2025	18,4% de réduction réalisée
Fabrication d'équipements	30% d'ici 2026	22,7% de réduction réalisée

Alignement avec les politiques de protection de l'environnement de la Chine

Dépenses de conformité environnementale:

• Investissements totaux de conformité environnementale en 2024: 15,2 millions de dollars
• Pourcentage des revenus alloués aux initiatives environnementales: 6,8%
• Nombre de normes de certification environnementale respectées: 7

Investissement dans des solutions technologiques respectueuses de l'environnement pour le secteur de l'énergie

Répartition des investissements technologiques respectueux de l'environnement:

Type de technologie	Montant d'investissement (USD)	Impact environnemental attendu
Technologies de forage à faible émission	5,7 millions de dollars	Réduire les émissions de méthane de 40%
Systèmes de recyclage de l'eau	4,3 millions de dollars	Recycler 65% de l'utilisation de l'eau opérationnelle
Technologies de réduction des déchets	3,9 millions de dollars	Minimiser les déchets industriels de 55%

Recon Technology, Ltd. (RCON) - PESTLE Analysis: Social factors

You're looking at how society's changing values and demographics are reshaping the landscape for Recon Technology, Ltd. (RCON) right now, in late 2025. It's not just about what people buy; it's about what they demand from energy and industry.

National push for lower-carbon energy drives demand for natural gas infrastructure

Even with the big push toward renewables, natural gas remains a critical, lower-carbon transition fuel, meaning infrastructure maintenance is non-negotiable. Operators need to keep existing assets running reliably to meet energy security goals. Recon Technology, Ltd. is definitely seeing this in action; they recently secured a $5.85 million contract in August 2025 to upgrade automation systems at a major gas field in Central Asia, with delivery scheduled over the next twelve months. This work focuses on optimization and maintaining output volumes, showing that the societal need for secure, reliable gas supply keeps the service sector busy. Honestly, the immediate demand is for better gas infrastructure, not just less of it.

Recon Technology, Ltd. continues to supply China's largest domestic oil and gas exploration companies, Sinopec and The China National Petroleum Corporation (CNPC), which rely on these upgrades to maintain production capacity.

Increased New Energy Vehicle (NEV) sales undercut traditional gasoline demand

The shift in personal transport is happening fast, especially in China where Recon Technology, Ltd. operates heavily. We've hit a major inflection point: in October 2025, New Energy Vehicle (NEV) sales in China accounted for 51.6% of all new car sales, finally surpassing gasoline vehicles in a single month. From January to October 2025, cumulative NEV sales hit 12.94 million units, a 32.7% jump year-on-year. What this estimate hides is the direct pressure on fuel demand; projections suggest gasoline consumption in China could fall to nearly 80 million metric tons in the second half of 2025, down from 85 million mt in the same period of 2024. This trend means less long-term capital expenditure on traditional fuel distribution systems, but it doesn't affect Recon Technology, Ltd.'s current gas field service contracts.

The electrification trend is irreversible, putting a cap on future growth for petroleum fuel use. This is a structural change, not a blip.

Growing societal focus on industrial pollution requires advanced environmental services

Societies globally, and certainly in Asia-Pacific, are demanding cleaner industrial operations, which directly translates into mandatory spending on environmental services. The Industrial Air Pollution Control Solutions Market is valued at an estimated $83.41 billion in 2025. For Recon Technology, Ltd., which is involved in environmental protection services, this is a tailwind. Asia-Pacific is the largest region, commanding 49% of that market revenue in 2025 and is expected to grow at a 6.5% Compound Annual Growth Rate (CAGR) through 2030. In China specifically, the Air Pollution Control Equipment Market is projected to grow from $91.1 billion in 2025 to $152.7 billion by 2035.

You need to be where the regulatory spend is highest. This societal pressure creates a stable, multiyear growth runway for environmental compliance solutions.

RCON must adapt to the evolving workforce skill set needed for digitalization

The energy sector's digital transformation means the skills that got people hired five years ago are now insufficient. In 2025, employers are prioritizing Data Analysis, AI/Machine Learning, and Cybersecurity skills for energy professionals. For Recon Technology, Ltd., whose core business relies on advanced automation and control systems, this skill gap is a direct operational risk. If onboarding takes 14+ days, churn risk rises. We see this reflected in the broader industry, where 85% of power and utilities leaders see rapid upskilling as critical for success.

Here's the quick math: If your automation engineers can't manage the data streams from smart grids or secure Industrial Control Systems (ICS), your service delivery slows down. The workforce needs to blend physical system knowledge with digital fluency. This is a major challenge for any service provider.

Here is a quick snapshot of how these social factors map to immediate business considerations for Recon Technology, Ltd.:

Social Factor	2025 Data Point	Impact/Relevance for Recon Technology, Ltd. (RCON)
Natural Gas Reliance	Secured $5.85 million automation upgrade contract in August 2025.	Stable, near-term revenue from maintenance and optimization of existing critical infrastructure.
NEV Adoption	China NEV sales hit 51.6% of new car sales in October 2025.	Long-term risk to traditional fuel-related service lines; requires strategic pivot toward low-carbon/environmental services.
Pollution Control Demand	Industrial Air Pollution Control Market estimated at $83.41 billion in 2025.	Significant opportunity; aligns with RCON's environmental protection segment and China's regulatory environment.
Digital Skill Requirements	85% of power/utilities leaders see rapid upskilling as critical.	High internal risk; requires immediate investment in training for AI, data analytics, and cybersecurity for technical staff.

Finance: draft 13-week cash view by Friday.

Recon Technology, Ltd. (RCON) - PESTLE Analysis: Technological factors

You're looking at how Recon Technology, Ltd. (RCON) is deploying new tech to shift its revenue mix, and the numbers from fiscal year 2025 definitely tell a story of digital acceleration.

Revenue from automation product and software increased 27.1% in FY 2025

The push into automation is paying off in terms of top-line growth, even if total company revenue saw a slight dip. For the fiscal year ended June 30, 2025, revenue from automation product and software jumped by 27.1%, representing an increase of RMB7.3 million (about $1.0 million) over the prior year. This segment is clearly a growth engine, though the cost of revenue for these products also rose by 20.0% as sales ramped up.

This growth suggests that RCON's investments in digitalizing its core energy services are starting to translate into tangible sales.

Company focuses on digitalization solutions and advanced automated technologies

RCON is positioning itself as more than just an oilfield service provider; it's integrating digital intelligence across its offerings. The company develops and sells industrial automation control and information solutions, which is key for modernizing legacy energy infrastructure. Also, RCON operates platform services, including an intelligent marketing system and digitalization solutions specifically designed for gas stations.

This focus on digitalization is critical for improving operational efficiency for their clients, which is a major selling point in a cost-conscious sector.

Investment in non-destructive testing (NDT) and wireless communication products (4G/5G)

The technological backbone of RCON includes specialized inspection and connectivity hardware. The company designs, develops, and sells non-destructive testing (NDT) equipment, which is vital for precision inspection of critical assets like welds, pipelines, and pressure vessels.

The NDT portfolio is quite specific, covering:

• Ultrasonic flaw detectors and thickness gauges.
• Phased array systems and eddy current instruments.
• Digital radiography imaging equipment, including digital X-ray and gamma-ray systems.

Furthermore, RCON is not ignoring connectivity, developing wireless infrastructure products like base stations and antennas to support 4G and 5G networks for telecom operators and enterprise customers. That's a smart dual-track approach: high-precision inspection tools and the communication tech to support modern data transfer.

New plastic chemical recycling plant is expected to be completed by the end of 2025

The most significant technological undertaking for RCON in 2025 is the launch of its chemical recycling facility, a major pivot toward environmental protection technology. The main manufacturing plant for the 40,000-ton-per-year waste plastic chemical recycling project is complete, and the facility is moving into equipment installation and commissioning.

Here's a quick look at the project's status and scale as of late 2025:

Metric	Value
Total Investment to Date	Over $15 million
Target Completion Date	November 2025
Trial Operations Start	December 2025
Annual Processing Capacity	40,000 tons of waste plastic
Estimated Annual Returns	$30 million

The technology itself is advanced, using a dual-process approach combining catalytic pyrolysis and catalytic reforming, featuring a specialized horizontal screw-type three-stage continuous reactor to handle difficult-to-recycle membrane film-type waste plastic. If onboarding takes 14+ days, trial operations risk slipping past the December 2025 target.

Key technological components and milestones for the recycling plant include:

• Six pyrolysis units and two distillation units.
• Targeting production of 30,000 tons of plastic pyrolysis oil annually.
• Aiming for international certification like ISCC (International Sustainability and Carbon Certification).

Finance: draft 13-week cash view by Friday, incorporating the capital expenditure for the final commissioning phase of the recycling plant.

Recon Technology, Ltd. (RCON) - PESTLE Analysis: Legal factors

You're looking at the legal landscape for Recon Technology, Ltd. (RCON) and seeing a complex web of rules stretching from Beijing to New York. Honestly, for a company like RCON, which is China's first NASDAQ-listed non-state-owned oil and gas service firm, the legal compliance burden is dual-jurisdictional and constantly shifting. We need to map out where the immediate legal risks and operational mandates lie, especially given the macro shifts we've seen in 2025.

NASDAQ listing requires adherence to U.S. financial reporting and compliance standards

Being listed on The Nasdaq Capital Market means RCON must dance to the tune of the U.S. Securities and Exchange Commission (SEC). This isn't optional; it's the price of admission for U.S. capital. You know they have to file the 10-K (annual report) and 10-Q (quarterly reports) on time. What this estimate hides is the constant pressure to meet evolving standards; for instance, the SEC's enhanced ESG reporting mandates for 2025 require a proactive overhaul of disclosure processes, even for foreign private issuers.

RCON has had its scares, like the minimum bid price deficiency noted back in 2023, but they managed to regain compliance by May 2024. Still, maintaining that compliance is a year-round legal and accounting effort. Here's a quick look at the core U.S. obligations:

• File all required SEC reports (10-K, 10-Q) electronically using XBRL.
• Maintain minimum bid price of $1.00 per share.
• Comply with Sarbanes-Oxley Act internal controls.
• Adhere to the latest 2025 financial reporting standards updates.

New infrastructure regulations will reshape the market for oil and gas logistics

The biggest near-term legal shift is happening right in RCON's backyard. China's National Development and Reform Commission finalized the new Measures for the Planning, Construction, and Operation Management of Oil and Gas Infrastructure on November 13, 2025, set to take effect January 1, 2026. This is a major reshaping of the market RCON serves, aiming to boost supply security and encourage private investment.

These new rules integrate management across crude, oil products, and natural gas networks, which directly impacts how RCON's technology-especially for gathering and transportation equipment-can be deployed and priced. Furthermore, China's strategic stockpiling framework established in 2025 mandates minimum reserve participation for private refiners, creating new contractual and operational requirements for service providers.

Regulatory Area	Key 2025/2026 Change	Impact on RCON Operations
Infrastructure Management	New NDRC Measures effective Jan 1, 2026.	Requires alignment with new pipeline integration and operation standards.
Strategic Reserves	2025 framework mandates private refiner participation.	Potential for new service contracts related to storage optimization and monitoring.
Energy Goals (14th FYP)	Gas storage capacity target: 55-60 Bcm.	Drives investment in efficient extraction and transport technologies RCON provides.

Regulatory uncertainty remains a concern, impacting investor sentiment and valuation

Even with Nasdaq compliance secured, the geopolitical overlay creates persistent uncertainty. Investor sentiment is definitely sensitive to cross-border regulatory friction, particularly concerning Chinese energy firms operating in the U.S. capital markets. While RCON's market capitalization stood at approximately $25.76 million as of May 2024, any perceived escalation in U.S.-China regulatory scrutiny can immediately compress valuation multiples, regardless of operational performance.

The concern isn't just about delisting; it's about the perception of long-term stability. For example, recent U.S. political focus on investigating China's involvement in the U.S. energy and environment sector, even indirectly, casts a shadow over the entire sector's investment thesis. This overhang forces RCON to work harder to prove its operational and financial transparency to maintain investor confidence.

RCON is subject to PRC laws governing its oilfield services and environmental protection segments

On the ground, PRC law dictates everything from labor practices to environmental execution. RCON's commitment to environmental protection is a key legal compliance area, especially as China pushes its low-carbon transition. We saw RCON working on a project focused on optimizing production processes while ensuring environmental protection-a direct nod to these domestic mandates.

The focus on green tech in China's 2025 policy initiatives, including support for Carbon Capture, Utilization, and Storage (CCUS), means RCON's future service offerings must align with these stricter environmental compliance pathways. A concrete example of a contract governed by these PRC operational laws was the RMB 6.1 Million contract awarded in mid-2023 for a deep shale gas field project. Finance: draft 13-week cash view by Friday.

Recon Technology, Ltd. (RCON) - PESTLE Analysis: Environmental factors

You're looking at how the rapidly shifting environmental policy landscape in China impacts Recon Technology, Ltd.'s business right now, in late 2025. The good news is that the government's aggressive push for a circular economy and decarbonization directly supports the strategic pivot you've made into environmental services and chemical recycling.

RCON is expanding its oilfield environmental protection business (wastewater, oily sludge)

Your core oilfield environmental protection segment, which handles oily wastewater and oily sludge, is operating under increased scrutiny, but also increased necessity. While your primary clients, the domestic oil companies, have been cautious with capital expenditure in FY2025 due to oil price fluctuations, the need for compliant disposal remains non-negotiable. For the fiscal year ended June 30, 2025, the gross profit from this segment was approximately RMB 8 million.

This business line is about managing the byproducts of oil extraction to meet strict discharge standards, which is a constant requirement for your clients like Sinopec and CNPC. The environmental compliance burden on these producers means steady, albeit sometimes constrained, demand for your specialized treatment solutions.

Here are some key figures related to your environmental operations:

Metric	Value (FY Ended June 30, 2025)	Context
Total Revenue	RMB 66.3 million ($9.3 million)	Overall company revenue for FY2025
Gross Profit (Oilfield Environmental Protection)	RMB 8 million (approx. $1.1 million)	Profit from wastewater/sludge services
Chemical Recycling Investment	Over $15 million	Capital invested in the Shandong project to date
Projected Pyrolysis Oil Output	30,000 tons annually	From the new Shandong chemical recycling plant

Chemical recycling project aligns with China's push for circular economy initiatives

Your Shandong Recon Renewable Resources Technology Co., Ltd. chemical recycling plant is the centerpiece of your alignment with the circular economy. This 40,000-ton-per-year waste plastic chemical recycling project is set to start trial operations in December 2025 after construction finished in November 2025. You've poured over $15 million into this facility, which is designed to convert waste plastic into high-value feedstock.

The projected output-30,000 tons of plastic pyrolysis oil and 6,000 tons of carbon residue annually-is forecast to generate an estimated $30 million in annual returns once fully operational. This technology, which uses catalytic pyrolysis and reforming, directly addresses waste management while creating a sustainable chemical feedstock, which is exactly what Beijing is incentivizing right now.

The market is clearly moving this way; for example, another major chemical recycling plant in Guangdong began trial production in July 2025, signaling strong sector momentum.

Oil and gas sector projects are now included in methodologies for China's voluntary carbon market

This is a direct tailwind for your environmental services. The government has released its third batch of methodologies for the China Certified Emission Reduction (CCER) voluntary carbon market, and these new rules specifically cover projects related to the oil and gas sector.

This inclusion means that future or existing emission-reduction activities within your oilfield services-perhaps related to methane recovery or process efficiency improvements-could potentially generate tradable carbon credits. The CCER program, relaunched in January 2024, is designed to incentivize clean energy development across all sectors.

The government is serious about this market; they aim to have a national voluntary greenhouse gas emission reduction trading market that is credible and standardized by 2030.

Increased government focus on managing industrial emissions and greenhouse gases

The macro picture shows a clear tightening of environmental controls. China's overall GHG emissions appear to have stabilized in 2025, totaling an estimated 15.1-15.2 GtCO2e, down slightly from 15.2 GtCO2e in 2024. This stabilization is driven by clean energy deployment, but the pressure on heavy industry is only increasing.

The mandatory Emissions Trading Scheme (ETS) was expanded in 2025 to include steel, cement, and aluminum, covering 60 per cent of the country's total GHG emissions. The next big step is the plan to introduce absolute emissions caps across major industrial sectors by 2027.

This means that for the next few years, the focus is on improving accounting and implementing dual control systems for emissions. For Recon Technology, Ltd., this translates to a greater need for specialized, low-carbon solutions that help your oil and gas clients manage their footprint and avoid future compliance costs. You need to make sure your internal accounting for the new recycling plant is ready for scrutiny by 2025 standards.

Finance: draft 13-week cash view by Friday.