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1. Company Snapshot

1.a. Company Description

Recon Technology, Ltd.provides hardware, software, and on-site services to companies in the petroleum mining and extraction industry in the People's Republic of China.The company offers equipment, tools, and other hardware related to oilfield production and management, and transportation; and develops and sells industrial automation control and information solutions.


It also provides equipment for oil and gas production and transportation, including heating furnaces and burner, as well as enhancing techniques comprising packers of fracturing; production packers; sand prevention in oil and water wells; water locating and plugging techniques; fissure shaper; fracture acidizing techniques; and electronic broken-down services to resolve block-up and freezing problems.In addition, the company offers automation systems and services, including pumping unit controller that monitors the pumping units and collects data; RTU to monitor natural gas wells and collect gas well pressure data; wireless dynamometers and wireless pressure gauges; electric multi-way valves for oilfield metering station flow control; and natural gas flow computer systems.Further, it provides Recon SCADA oilfield monitor and data acquisition system for supervision and data collection; EPC service of pipeline SCADA system for pipeline monitoring and data acquisition; EPC service of oil and gas wells SCADA system for monitoring and data acquisition of oil wells and natural gas wells; EPC service of oilfield video surveillance and control system to control the oil and gas wellhead and measurement station areas; and technique service for digital oilfield transformation.


Additionally, the company offers oilfield waste water treatment solutions and related chemicals; and oily sludge disposal solutions.Recon Technology, Ltd.was incorporated in 2007 and is headquartered in Beijing, the People's Republic of China.

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1.b. Last Insights on RCON

Recon Technology, Ltd.'s recent performance was negatively impacted by a decline in total revenue, which decreased to RMB42.1 million ($5.8 million) for the six months ended December 31, 2024, compared to RMB45.3 million ($6.2 million) for the same period in 2023. This revenue contraction is a concerning trend, as it suggests a weakening demand for the company's solutions in the oilfield service, environmental protection, electric power, and coal chemical industries. Furthermore, the company's inability to maintain revenue growth in a relatively stable market environment raises questions about its competitiveness and market positioning.

1.c. Company Highlights

2. Transcript Summary

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3. NewsRoom

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Recon Technology, Ltd Reports Financial Year Results for Fiscal Year 2025

Oct -14

Source: prnewswire.com

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Recon Hits Milestone: Chemical Recycling Plant Construction Finished as Project Nears Production Launch

Aug -25

Source: prnewswire.com

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Recon Awarded Mega $5.85 Million Contract to Provide Upgrades Service for Large Mid-Asia Gas Field

Aug -05

Source: prnewswire.com

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Recon Technology, Ltd Reports Financial Results for the First Six Months of Fiscal Year 2025

Mar -31

Source: prnewswire.com

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Recon Technology, Ltd Reports Financial Year Results for Fiscal Year 2024

Oct -30

Source: prnewswire.com

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RCON Stock Dips by 5.41% Amid Latest Financial Data Release

Oct -02

Source: gurufocus.com

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Recon Technology, Ltd Reports Financial Results for the First Six Months of Fiscal Year 2024

Jun -28

Source: prnewswire.com

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Recon Technology Regains Nasdaq Compliance; Hearing Moot

May -23

Source: prnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (11.50%)

6. Segments

Automation Product and Software

Expected Growth: 12%

Recon Technology's Automation Product and Software segment growth is driven by increasing demand for digital oilfield solutions, rising adoption of IoT and AI technologies, and growing need for operational efficiency in the energy industry. Additionally, the company's expansion into new markets and strategic partnerships contribute to its 12% growth rate.

Oilfield Environmental Protection

Expected Growth: 11%

Recon Technology's 11% growth in Oilfield Environmental Protection is driven by increasing demand for eco-friendly oil extraction practices, stringent government regulations, and rising investments in sustainable energy solutions. Additionally, the company's innovative technologies and strategic partnerships have enabled it to capitalize on the growing need for environmental protection in the oilfield industry.

Equipment and Accessories

Expected Growth: 10%

Recon Technology's Equipment and Accessories segment growth is driven by increasing demand for oil and gas production, expansion into new markets, and strategic partnerships. Additionally, the company's focus on research and development has led to innovative products, enhancing its competitive edge. Furthermore, the growing need for efficient and cost-effective solutions in the energy industry has contributed to the segment's 10% growth.

Platform Outsourcing Services

Expected Growth: 14%

Recon Technology's 14% growth in Platform Outsourcing Services is driven by increasing demand for digital transformation, cost savings, and scalability. Growing adoption of cloud-based solutions, need for efficient IT infrastructure, and rising importance of data analytics also contribute to this growth. Additionally, Recon's expertise in automation, AI, and machine learning integration further fuels this expansion.

7. Detailed Products

ReconJet

ReconJet is a hardware and software integrated solution that provides real-time data transmission and analysis for oil and gas wells.

EagleFord

EagleFord is a data analysis and visualization platform that provides insights into oil and gas production operations.

FracWare

FracWare is a software solution that provides data management and analysis for hydraulic fracturing operations.

OSD

OSD (Oilfield Service and Data) is a platform that provides data integration and analytics for oilfield services.

EPC

EPC (Engineering, Procurement, and Construction) is a project management platform that provides data management and analytics for oil and gas projects.

8. Recon Technology, Ltd.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Recon Technology, Ltd. is moderate due to the availability of alternative technologies and services in the market.

Bargaining Power Of Customers

The bargaining power of customers is high due to the presence of large and established customers who can negotiate prices and terms.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the presence of multiple suppliers and the company's ability to negotiate prices.

Threat Of New Entrants

The threat of new entrants is moderate due to the presence of barriers to entry, such as high capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of established competitors and the need to differentiate products and services.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 7.34%
Debt Cost 7.07%
Equity Weight 92.66%
Equity Cost 15.20%
WACC 14.60%
Leverage 7.92%

11. Quality Control: Recon Technology, Ltd. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
NESR

A-Score: 4.9/10

Value: 6.4

Growth: 6.1

Quality: 5.2

Yield: 0.0

Momentum: 8.5

Volatility: 3.0

1-Year Total Return ->

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Stock-Card
Smart Sand

A-Score: 4.5/10

Value: 5.3

Growth: 4.4

Quality: 3.1

Yield: 6.0

Momentum: 4.0

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
Calfrac

A-Score: 4.2/10

Value: 8.1

Growth: 3.6

Quality: 3.7

Yield: 0.0

Momentum: 3.0

Volatility: 6.7

1-Year Total Return ->

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Stock-Card
Gulf Marine Services

A-Score: 4.2/10

Value: 8.8

Growth: 3.1

Quality: 6.7

Yield: 0.0

Momentum: 4.0

Volatility: 2.3

1-Year Total Return ->

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Stock-Card
Recon Technology

A-Score: 3.8/10

Value: 8.2

Growth: 4.6

Quality: 4.1

Yield: 0.0

Momentum: 3.0

Volatility: 3.0

1-Year Total Return ->

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Stock-Card
Helix Energy Solutions

A-Score: 3.6/10

Value: 6.9

Growth: 4.9

Quality: 4.5

Yield: 0.0

Momentum: 1.5

Volatility: 4.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

1.3$

Current Price

1.3$

Potential

-0.00%

Expected Cash-Flows