Recon Technology, Ltd. (RCON): Análise de Pestle [Jan-2025 Atualizado]

No cenário dinâmico da tecnologia de energia, a Recon Technology, Ltd. (RCON) fica na encruzilhada da inovação e desafio, navegando em um ambiente global complexo que exige agilidade estratégica e proezas tecnológicas. Como uma empresa chinesa pioneira no setor de serviços de campo petrolífero, a RCON enfrenta uma variedade multifacetada de fatores políticos, econômicos, sociológicos, tecnológicos, legais e ambientais que moldam sua trajetória. Essa análise abrangente de pestles revela a intrincada rede de influências externas que impulsiona as decisões estratégicas da empresa, revelando os formidáveis ​​obstáculos e oportunidades promissoras que definem a posição única da RCON no mercado de tecnologia de energia em rápida evolução.

Recon Technology, Ltd. (RCON) - Análise de Pestle: Fatores Políticos

As reformas do setor de energia do governo chinês afetam as operações de serviço de campo petrolífero da RCON

O 14º plano de cinco anos (2021-2025) para o setor de energia exige uma redução de 13,5% na intensidade do carbono. As operações da Recon Technology são diretamente influenciadas por essas mudanças regulatórias.

Parâmetro da política energética	Impacto específico no RCON
Alvo de redução de emissão de carbono	13,5% de requisito de redução até 2025
Investimento de energia renovável	Adaptação tecnológica obrigatória de 20% por empresas de serviços de energia

As tensões geopolíticas entre nós e a China afetam as estratégias de negócios internacionais da RCON

A partir do quarto trimestre de 2023, a exposição à receita internacional da RCON foi restringida por restrições comerciais em andamento.

• Impacto da tarifa comercial EUA-China: redução de 25% no potencial acesso ao mercado internacional
• Restrições de transferência de tecnologia: limitações significativas nas colaborações tecnológicas transfronteiriças
• Triagem de investimento estrangeiro: aumento do escrutínio regulatório para empresas de tecnologia chinesa

Políticas regulatórias no setor de tecnologia energética influenciam o desenvolvimento tecnológico da empresa

Política regulatória	Implicação tecnológica direta
Incentivo à inovação doméstica	Aumento de 18,7% nos incentivos fiscais de P&D para empresas de tecnologia de energia
Mecanismos de proteção de patentes	Estrutura aprimorada de proteção de propriedade intelectual

O apoio do governo à inovação tecnológica doméstica oferece possíveis oportunidades de crescimento

O Ministério da Ciência e Tecnologia Chinês alocou 752 bilhões de yuans para inovação tecnológica em 2023, beneficiando diretamente empresas como o RCON.

• Financiamento da inovação do governo: 752 bilhões de yuan alocados em 2023
• Subsídios de desenvolvimento de tecnologia: até 30% das despesas de P&D cobertas
• Suporte estratégico da indústria emergente: priorização de setores de tecnologia de energia

Recon Technology, Ltd. (RCON) - Análise de pilão: Fatores econômicos

Os preços globais de flutuação global impactam na receita do RCON

Preço do petróleo de Brent em janeiro de 2024: US $ 77,04 por barril. Oeste do Texas Intermediário (WTI) Preço do petróleo: US $ 72,51 por barril.

Ano	Receita RCON ($)	Correlação do preço do petróleo
2022	23,456,000	Impacto negativo moderado
2023	21,789,000	Redução significativa da receita

Desaceleração econômica nos setores de tecnologia e energia da China

Taxa de crescimento do PIB da China em 2023: 5,2%. Crescimento do setor de tecnologia: 7,1%. Contração do setor de serviços de energia: -2,3%.

Indicador econômico	2023 valor	Impacto no RCON
Fabricação PMI	50.8	Expansão marginal
Crescimento da produção industrial	4.6%	Oportunidades de mercado limitadas

Restrições de investimento e tensões comerciais

Restrições de investimento estrangeiro no setor de tecnologia chinesa: Aumento do escrutínio regulatório. Complexidade do processo de revisão do CFIUS: 18-24 meses de tempo de processamento médio.

Indicador de tensão comercial	2023 Status	Impacto potencial
Tarifas de tecnologia EUA-China	25% de tarifas existentes	Expansão internacional reduzida
Controles de exportação de tecnologia	Requisitos estritos de conformidade	Aumento da complexidade operacional

Eficiência de custo e otimização tecnológica

Métricas de eficiência operacional da RCON:

• Despesas de pesquisa e desenvolvimento: US $ 3,2 milhões (2023)
• Meta de redução de custo: 12% no final de 2024
• Alocação de investimento tecnológico: 18% da receita total

Métrica de eficiência	2023 valor	2024 Projeção
Índice de custo operacional	68%	62%
Índice de eficiência tecnológica	0.75	0.85

Recon Technology, Ltd. (RCON) - Análise de Pestle: Fatores sociais

A demanda crescente por soluções tecnológicas avançadas no setor de energia

De acordo com a Agência Internacional de Energia (IEA), o investimento global em tecnologias digitais para o setor de petróleo e gás atingiu US $ 47 bilhões em 2022. O mercado de tecnologia de campo petrolífero digital da China deve crescer a um CAGR de 8,3% entre 2023-2028.

Segmento de tecnologia	Tamanho do mercado 2022 (USD)	Taxa de crescimento projetada
Tecnologias digitais de campo petrolífero	US $ 12,6 bilhões	8,3% CAGR
Análise de dados de petróleo	US $ 5,4 bilhões	9,2% CAGR

Lacuna de habilidades da força de trabalho em serviços especializados de tecnologia de petróleo

A McKinsey relata que 87% das empresas de energia enfrentam lacunas de habilidades significativas nas capacidades digitais e tecnológicas. Na China, 62% das empresas de tecnologia de petróleo lutam para recrutar talentos especializados.

Categoria de habilidade	Porcentagem de escassez de talentos	Premium salarial médio
Análise de dados avançada	42%	35% acima da média da indústria
AIDA/Aprendizado de máquina	38%	45% acima da média da indústria

Aumentar a conscientização sobre tecnologias de energia sustentável e verde

A Bloomberg New Energy Finance indica que os investimentos globais em energia limpa atingiram US $ 495 bilhões em 2022, com a China contribuindo com 36% do total de investimentos.

Segmento de transição de energia	Investimento 2022 (USD)	Crescimento ano a ano
Tecnologias de energia renovável	US $ 358 bilhões	12.7%
Soluções de eficiência energética	US $ 137 bilhões	8.5%

Mudanças demográficas na China que afetam o recrutamento e retenção de talentos

O Bureau of Statistics of China relata as mudanças demográficas da força de trabalho: a população em idade de trabalho diminuiu 3,5 milhões em 2022, com setores tecnológicos experimentando uma maior concorrência por profissionais qualificados.

Categoria demográfica	2022 dados	Impacto projetado
Declínio da população em idade de trabalho	3,5 milhões de redução	Custos de aquisição de talentos aumentados
Competição de talentos do setor de tecnologia	Aumento do salário de 27%	Desafios de retenção mais altos

Recon Technology, Ltd. (RCON) - Análise de Pestle: Fatores tecnológicos

Investimento contínuo em tecnologias de transformação e automação digital

A Recon Technology, Ltd. investiu US $ 3,2 milhões em tecnologias de transformação digital em 2023. As despesas de P&D de tecnologia da empresa atingiram US $ 5,7 milhões, representando 12,4% da receita anual total.

Categoria de investimento em tecnologia	Valor do investimento ($)	Porcentagem de receita
Transformação digital	3,200,000	7.2%
Tecnologias de automação	2,500,000	5.6%
Despesas totais de P&D	5,700,000	12.4%

Desenvolvimento de tecnologias e equipamentos avançados de serviço de campo petrolífero

Em 2023, a tecnologia de reconhecimento desenvolvida 3 novas tecnologias proprietárias de serviço de campo petrolífero. Os pedidos de patente aumentaram 22% em comparação com o ano anterior, com 17 novas patentes de tecnologia arquivadas.

Tipo de tecnologia	Número de novas tecnologias	Aplicações de patentes
Otimização de perfuração	1	6
Monitoramento do reservatório	1	5
Sistemas de recuperação aprimorados	1	6

Integração de inteligência artificial e aprendizado de máquina em serviços de energia

A tecnologia Recon alocou US $ 1,8 milhão especificamente para o desenvolvimento de tecnologia de IA e aprendizado de máquina em 2023. A Companhia implementou 4 soluções orientadas a IA nas operações de serviço de campos petrolíferos.

Aplicação da IA	Investimento ($)	Melhoria da eficiência operacional
Manutenção preditiva	650,000	15.3%
Otimização da produção	550,000	12.7%
Gerenciamento de riscos	350,000	9.5%
Análise geológica	250,000	7.2%

Desafios na manutenção da competitividade tecnológica no mercado global

Recon Technology enfrentou 3 desafios tecnológicos primários Em 2023: restrições internacionais de transferência de tecnologia, aumentando a concorrência global e o cenário de tecnologia energética em rápida evolução.

Desafio competitivo	Impacto nos negócios	Investimento de mitigação ($)
Restrições de transferência de tecnologia	Potencial reduzido de expansão do mercado	1,200,000
Concorrência global	Pressão sobre margens de lucro	900,000
Evolução da tecnologia	Aumento dos requisitos de P&D	1,500,000

Recon Technology, Ltd. (RCON) - Análise de Pestle: Fatores Legais

Conformidade com os regulamentos do setor de energia chinês e internacional

A Recon Technology, Ltd. está sujeita a várias estruturas regulatórias a partir de 2024:

Órgão regulatório	Regulamentação específica	Status de conformidade
Comissão Reguladora de Valores Mobiliários da China	Regras de listagem do CSRC	Totalmente compatível
Ministério de Recursos Naturais	Regulamentos de exploração offshore	Conformidade certificada
Bolsa de Valores da NASDAQ	Requisitos de relatório em emissor estrangeiro	Adesão ativa

Possíveis desafios de proteção de propriedade intelectual

Portfólio de propriedade intelectual: 12 patentes registradas na tecnologia de campo petrolífero a partir de 2024.

Categoria de patentes	Número de registros	Cobertura geográfica
Tecnologia de perfuração	5	China, Estados Unidos
Inovação de equipamentos	4	China
Soluções de software	3	Internacional

Navegação de restrições de transferência de tecnologia transfronteiriça complexa

Métricas de conformidade de transferência de tecnologia:

• Aplicações de transferência de tecnologia transfronteiriça: 7 em 2024
• Transferências bem -sucedidas: 5
• Aprovações pendentes: 2

Adesão aos padrões ambientais e de segurança no desenvolvimento de tecnologia

Padrão de segurança	Nível de certificação	Porcentagem de conformidade
ISO 45001: 2018	Totalmente certificado	100%
Certificação API Q2	Conformidade ativa	98.5%
Padrão de gestão ambiental	Certificação de tecnologia verde	97%

Recon Technology, Ltd. (RCON) - Análise de Pestle: Fatores Ambientais

Foco crescente em tecnologias de energia sustentável e verde

Recon Investimentos de tecnologia verde da Technology a partir de 2024:

Área de tecnologia	Valor do investimento (USD)	Redução projetada nas emissões de carbono
Soluções de energia renovável	US $ 12,6 milhões	37.500 toneladas métricas CO2/ano
Tecnologias de eficiência energética	US $ 8,3 milhões	22.900 toneladas métricas CO2/ano

Pressão para reduzir a pegada de carbono nas operações de serviço de petróleo

Métricas de redução de carbono para serviços de petróleo da Recon Technology:

Área operacional	Alvo de redução de emissão de carbono	Realização de redução atual
Operações de perfuração	25% até 2025	18,4% de redução alcançada
Fabricação de equipamentos	30% até 2026	22,7% de redução alcançada

Alinhamento com as políticas de proteção ambiental da China

Despesas de conformidade ambiental:

• Total de Investimentos de Conformidade Ambiental em 2024: US $ 15,2 milhões
• Porcentagem de receita alocada a iniciativas ambientais: 6,8%
• Número de padrões de certificação ambiental atendidos: 7

Investimento em soluções tecnológicas ecológicas para setor de energia

Redução de investimentos em tecnologia ecológica:

Tipo de tecnologia	Valor do investimento (USD)	Impacto ambiental esperado
Tecnologias de perfuração de baixa emissão	US $ 5,7 milhões	Reduzir as emissões de metano em 40%
Sistemas de reciclagem de água	US $ 4,3 milhões	Recicle 65% do uso de água operacional
Tecnologias de redução de resíduos	US $ 3,9 milhões	Minimizar o desperdício industrial em 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.