Recon's Rebound: Overseas Deals & Green Pivot Fuel Turnaround

BEIJING – March 13, 2026 – Recon Technology, Ltd (NASDAQ: RCON) today announced a dramatic financial turnaround for the first six months of its 2026 fiscal year, showcasing a potent combination of international expansion and strategic diversification. The China-based energy solutions integrator reported that its total revenue more than doubled to RMB85.0 million ($12.2 million), a 102.2% surge compared to the same period last year, while simultaneously slashing its net loss by over 65%.

The impressive results, which cover the six months ending December 31, 2025, were primarily fueled by the successful execution of major overseas oilfield projects, signaling a pivotal shift in the company's focus and a key driver of its renewed financial health. This international success provides a stark contrast to challenges in some domestic segments, painting a picture of a company navigating a complex landscape through agile strategy.

A Tale of Two Markets

The engine of Recon's remarkable growth was its automation product and software division, which saw revenues skyrocket by 197.6%. This increase was almost entirely driven by a single RMB44.2 million ($5.9 million) overseas oilfield project. Research suggests this is likely connected to a previously announced $5.85 million contract for upgrading a large gas field in Mid-Asia, highlighting the scale and success of Recon's push beyond its domestic borders. The company leveraged a major automation service and maintenance project secured outside of China back in 2012, indicating a long-term strategy now bearing significant fruit.

This international boom, however, was juxtaposed with a complete collapse in one of its domestic service lines. Revenue from platform outsourcing services plummeted by 100%, falling to zero. The company attributed this to "strategic shifts in its major clients' business decisions" and "unfavorable changes in domestic industry policies." This has led to the orderly dissolution of its Future Gas Station (FGS) business unit and the winding down of another underperforming unit, Qinghai BHD. This development underscores the volatility and policy-driven nature of certain sectors within the Chinese market, where tightening internet regulations and shifting energy policies can rapidly alter the business environment.

Despite the domestic setback in outsourcing, the company's core oilfield business showed signs of recovery. Mr. Shenping Yin, Founder and CEO of Recon, commented on the overall performance, stating, "We are encouraged by the significant progress the Company has made... Recon's core business remained stable and achieved substantial growth, primarily driven by the successful execution of overseas oilfield projects and the recovery of domestic oilfield production activities."

Beyond the Oilfield: A Bet on the Circular Economy

While solidifying its core business abroad, Recon is making a significant strategic pivot toward sustainability and the circular economy. The company is moving forward with a major plastic chemical recycling project, a venture that promises to diversify its revenue streams and align it with global ESG trends.

Launched in 2023, the project is located in Shandong, China, and represents a substantial investment of over $15 million. According to Mr. Yin, the project "continues to progress on schedule" and is expected to be fully completed by July 2026. The facility, which began trial operations in December 2025, will use a combination of catalytic pyrolysis and reforming processes to convert waste plastics into valuable resources.

Once fully operational, the plant is designed to process membrane film-type waste plastic, producing an estimated 30,000 tons of plastic pyrolysis oil and 6,000 tons of carbon residue annually. This new venture positions Recon to capitalize on China's growing recycled plastics market, which is forecast to reach over 100 million tonnes by 2030. The company has already signed product purchase intent and strategic cooperation agreements, indicating strong market interest in its output even before full completion.

"The project... will position Recon to capitalize on the growing demand for sustainable and recycled materials, aligning with global ESG trends and creating long-term value for shareholders," Mr. Yin added.

Analyzing the Financial Health

A deeper look at the financials reveals a company improving its profitability and managing its resources for growth. Gross profit more than doubled to RMB28.5 million ($4.1 million), and the gross margin improved to 33.5% from 31.7% a year prior. This was significantly aided by the oilfield environmental protection services segment, which not only doubled its revenue but also swung from a gross loss of RMB2.1 million to a gross profit of RMB2.7 million, largely due to favorable accounting from prior-period testing costs and better settlement prices.

The company's net loss narrowed to RMB7.2 million ($1.0 million) from a substantial RMB20.7 million loss in the prior-year period. This improvement was also supported by disciplined cost management, with selling expenses decreasing by 16.2% and research and development expenses falling by 22.1%.

While the company's cash position decreased from RMB98.9 million to RMB75.1 million during the six-month period, this was a direct result of its strategic investments. The decline is attributed to funding the construction of the Shandong recycling plant and expanding loans to third parties. Despite this cash outflow for investment, Recon's balance sheet remains robust. As of December 31, 2025, the company's short-term assets of CN¥356.2 million far exceeded its total liabilities of CN¥91.9 million. With a low debt-to-equity ratio and more cash on hand than total debt, the company appears well-capitalized to fund its ongoing projects and navigate future challenges.

In his commentary, Mr. Yin acknowledged the difficult market but emphasized the company's strength. "Amid a dynamic global energy market... the Company has demonstrated resilience and adaptability, leveraging its core strengths to drive revenue growth while navigating operational challenges." As Recon moves into the second half of its fiscal year, it does so with a proven international growth engine, a promising new venture nearing completion, and a clear strategy to balance its diverse portfolio.