Recon Technology, Ltd. (RCON): Business Model Canvas [Dec-2025 Updated]

You're looking to understand the core engine of Recon Technology, Ltd. (RCON), and honestly, the fiscal year 2025 numbers paint a picture of high-stakes concentration mixed with a significant environmental pivot. As an analyst who has spent two decades mapping out these complex energy plays, I can tell you their current structure shows they are leaning heavily on China National Petroleum Corporation (CNPC) and Sinopec, who together drove 61% of their total RMB 66.3 million revenue, all while navigating a RMB 44.2 million net loss. This isn't just about selling automation gear anymore; they are actively managing key resources like a new chemical recycling plant and trying to balance that with their traditional oilfield services. Dive into the nine building blocks below to see exactly how Recon Technology, Ltd. is structuring itself to manage this customer concentration and fund its move into waste treatment and digitalization.

Recon Technology, Ltd. (RCON) - Canvas Business Model: Key Partnerships

You're looking at the core relationships that keep Recon Technology, Ltd. running in the complex Chinese energy sector. These aren't just casual contacts; they are deep, structural dependencies, especially given the company's reliance on state-owned enterprises for the bulk of its income.

The most critical partnerships are with the end-users of Recon Technology, Ltd.'s automation and digitalization solutions. These relationships dictate the revenue flow for the entire operation. As of the fiscal year ended June 30, 2025, customer concentration was a major factor in the business model.

Here's the quick math on the top two clients for FY2025:

Total revenue for Recon Technology, Ltd. in FY2025 was RMB 66,285,032. So, you see, that 61% concentration is real, tying the company's fortunes closely to the operational schedules and capital expenditure cycles of CNPC and Sinopec. Recon Technology, Ltd. has developed stable long-term cooperation relationships with these major clients.

Operationally within mainland China, Recon Technology, Ltd. relies on a specific legal structure involving Variable Interest Entities (VIEs) to conduct its business. These are the entities that directly contract with the oilfield clients. The primary VIEs that the company controls by contract are:

• Beijing BHD Petroleum Technology Co., Ltd. (BHD)
• Nanjing Recon Technology Co., Ltd. (Nanjing Recon)

The company's WFOE (Wholly Foreign-Owned Enterprise) re-signed the necessary VIE agreements with BHD and Nanjing Recon on July 10, 2025, maintaining accounting consolidation. This structural dependency is supported by significant financial transfers; the net cash transferred from Recon Technology, Ltd. to the VIEs for FY2025 reached RMB 92,151,863.

Governmental and regulatory bodies form another non-negotiable partnership layer, as critical operating permits are required to function. A significant point here is the status of a key permit related to one of the VIEs. Specifically, the Hazardous Waste Operating Permit for Gansu BHD expired on July 26, 2023, and as of the October 2025 filing, it had not yet been renewed, which the company flagged as a potential operational headwind.

Finally, the supply chain involves partners for the physical components of the service offering. While specific supplier names aren't detailed, the nature of the business requires partnerships for the inputs to its services, which include providing specialized equipment and chemicals. Recon Technology, Ltd. supplies equipment for oil and gas production and transportation, and is also developing a chemical recycling business. The company started construction on its 40,000-ton-per-year waste plastic chemical recycling project on April 28, 2025, with completion expected by the end of 2025, indicating new supply chain dependencies for that segment.

Finance: draft 13-week cash view by Friday.

Recon Technology, Ltd. (RCON) - Canvas Business Model: Key Activities

You're looking at the core actions Recon Technology, Ltd. (RCON) focuses on to deliver value, especially as they push into new low-carbon areas while managing their core oilfield business. Here's the quick math on what they are actively doing as of late 2025.

Developing and selling industrial automation control and information solutions.

• Gross profit from automation product and software decreased by 14.3% in FY2025.
• Revenue from automation product and software increased by 19.2% for the six months ended December 31, 2024.
• Recon Technology, Ltd. supplies China's largest oil exploration companies, Sinopec and The China National Petroleum Corporation (CNPC), with advanced automated technologies.

Providing on-site field services and technical support to oil and gas wells.

Recon Technology, Ltd. secured a significant contract in August 2025 for upgrades service, valued at $5.85 Million, targeting a large Mid-Asia Gas Field.

Designing and implementing sewage and oily sludge treatment solutions.

This activity falls under their oilfield environmental protection services, which saw a significant reduction in activity for the fiscal year ended June 30, 2025.

• Revenue from oilfield environmental protection decreased by 37.0% in H1 FY2025.
• The overall gross margin for Recon Technology, Ltd. was 23.0% for the year ended June 30, 2025.

Managing the construction and eventual operation of the chemical recycling plant.

This is a major near-term activity, with the main plant construction completed in August 2025. The company has invested over $15 million in this project to date. The facility spans approximately 50 acres and includes six pyrolysis units and two distillation units.

Developing and maintaining the intelligent marketing platform for gas stations.

This service is bundled under platform outsourcing services, which showed mixed results in the first half of fiscal year 2025.

• Platform outsourcing services revenue grew by 53.7% in H1 FY2025.
• The company operates this platform as an intelligent marketing system and digitalization solution for gas stations.

Recon Technology, Ltd. (RCON) - Canvas Business Model: Key Resources

Proprietary automation technology and specialized oilfield equipment.

The Automation Product and Software segment saw revenue growth, while revenue from equipment and accessories decreased by RMB 2.0 million (or 10.0%).

The 188 employees, including technical and field service personnel.

• Employee Count (as of June 30, 2025): 188
• Revenue Per Employee (FY2025): $48,861.20 (approximate)

The legal structure of the Variable Interest Entities (VIEs) for mainland China operations.

Recon Technology, Ltd. conducts all China operations through subsidiaries and contractual arrangements with Variable Interest Entities (VIEs). The company re-signed VIE agreements on July 10, 2025.

• Net Cash Transferred from Company to VIEs (FY2025): RMB 92,151,863
• Net Cash Transferred from Company to VIEs (FY2024): RMB 84,211,565
• Cash Transferred from VIEs to Company (FY2025): Zero

The newly completed chemical recycling plant infrastructure.

The 40,000-ton-per-year waste plastic chemical recycling project, operated by Shandong Recon Renewable Resources Technology Co., reached a construction milestone with the main plant topping out.

The technology employs a dual-process approach combining catalytic pyrolysis and catalytic reforming, featuring a 'horizontal screw-type three-stage continuous reactor'.

Recon Technology, Ltd. (RCON) - Canvas Business Model: Value Propositions

You're looking at the core value Recon Technology, Ltd. (RCON) delivers to its customers, which are heavily concentrated in China's energy sector, with CNPC accounting for 44% of FY2025 revenue and Sinopec for 17%. The overall financial picture for the fiscal year ended June 30, 2025, showed total revenue of RMB66.3 million ($9.3 million) and a gross margin of 23.0%.

Increased petroleum extraction efficiency via advanced automation systems and tools.

Recon Technology, Ltd. supplies advanced automated technologies to major oil exploration companies like Sinopec and CNPC, aiming to increase petroleum extraction levels. The Automation Product and Software segment shows this value proposition in action, delivering a gross profit of RMB5.5 million ($0.8 million) for the year ended June 30, 2025. This segment also saw its revenue increase by 27.1%, or RMB7.3 million ($1.0 million), for the full fiscal year 2025, showing strong adoption despite overall industry caution.

Cost reduction for major oil companies through efficient gathering and transportation equipment.

The value here is tied to providing efficient gathering and transportation equipment, which helps lower production costs for clients. The Equipment and Accessories segment contributed a gross profit of RMB5.2 million ($0.7 million) in FY2025. Still, you should note that revenue from this area decreased by 10.0%, or RMB2.0 million ($0.3 million), for the year ended June 30, 2025, reflecting the cautious capital expenditure environment among major oilfield customers.

Environmental protection solutions for waste water and oily sludge treatment.

Recon Technology, Ltd. offers wastewater treatment products and related services to the oilfield and chemical industries. For the year ended June 30, 2025, the gross profit from the Oilfield Environmental Protection segment was nil, as gross profit losses from this area were reported as nil, indicating that the segment did not incur a net loss on its gross profit line for the full year.

Digitalization and intelligent marketing systems for gas station operators.

This value proposition involves online platform development, maintenance, and operation services aimed at gas stations across different provinces in China. The Platform Outsourcing Services segment generated a gross profit of RMB2.8 million ($0.4 million) for the fiscal year ended June 30, 2025. This followed a reported decrease in gross profit of RMB0.5 million ($0.1 million), or 15.7%, compared to the prior year, consistent with the revenue change in that period.

Future-focused chemical recycling services for plastic waste.

Recon Technology, Ltd. has been developing chemical recycling services. As of June 30, 2025, the factory for chemical recycling remained under construction and had not started production or sales yet. However, the company announced that the main manufacturing for the chemical recycling plant construction was finished as of August 25, 2025, and the gross profit loss from chemical recycling for FY2025 was nil.

Here's a quick math breakdown of the segment-level gross profit contribution for the fiscal year ended June 30, 2025:

Finance: draft 13-week cash view by Friday.

Recon Technology, Ltd. (RCON) - Canvas Business Model: Customer Relationships

You're looking at how Recon Technology, Ltd. (RCON) locks in its core business, which is heavily reliant on a few massive players in China's energy sector. The relationship structure is built on deep integration and long-term dependency, which is typical when serving state-owned enterprises.

Dedicated, long-term contractual relationships with major state-owned oil companies.

Recon Technology, Ltd. maintains what it calls a stable long-term cooperation relationship with its major clients, which include China's largest oil exploration companies. For the fiscal year ended June 30, 2025, customer concentration was quite high, meaning a few relationships drive the majority of the top line. You can see the breakdown of that revenue reliance right here:

The total revenue for Recon Technology, Ltd. for FY2025 was approximately RMB 66.3 million ($9.3 million). This concentration means that the capital expenditure and expense management approaches of these two entities directly dictate Recon Technology, Ltd.'s near-term financial results.

Direct sales and on-site service model requiring high-touch technical support.

The business inherently requires a direct sales approach because the solutions-advanced automated technologies and specialized equipment-demand close coordination for deployment and integration at the well sites. This model necessitates significant internal investment to support the customer base. For instance, the company transferred RMB 92,151,863 to its Variable Interest Entities (VIEs) in FY2025, which are the operational arms executing these services on the ground in mainland China. This is up from RMB 84,211,565 in the prior year, showing an increasing level of financial commitment to the operational structure supporting these relationships.

Negotiated pricing for long-term contracts, like the lower price for wastewater business.

While the search results confirm the existence of long-term cooperation and the CEO noting cautious spending by clients in FY2025, specific, current pricing details for a wastewater business segment are not explicitly quantified in the latest filings. However, the structure implies negotiated terms. What we can confirm is the growth in the automation segment, which is a key service component. Revenue from automation product and software increased by RMB 7.3 million ($1.0 million) or 27.1% in FY2025, suggesting successful upselling or contract execution within that area. The company also noted securing new clients outside the oilfield industry, which helps stabilize operations against the cautious spending of its primary domestic oil company clients.

Ongoing maintenance and upgrade services for automation software.

The focus on automation products and software points directly to recurring revenue potential through maintenance and upgrades, which is critical for stable earnings quality. The 27.1% year-over-year growth in automation revenue for FY2025 is the clearest indicator of the success of these service and software offerings. This segment is where the high-touch technical support translates into ongoing service contracts, separate from initial equipment sales. You should watch the gross margin trend; it fell to 23.0% in FY2025 from 30.3% in FY2024, which could reflect pricing pressure on services or a shift in the mix toward lower-margin initial equipment sales versus higher-margin software/maintenance.

If onboarding takes 14+ days, churn risk rises.

Finance: draft 13-week cash view by Friday.

Recon Technology, Ltd. (RCON) - Canvas Business Model: Channels

You're looking at how Recon Technology, Ltd. delivers its solutions to the energy sector, which is heavily reliant on direct interaction and established relationships, especially given the high customer concentration in its revenue base. For the fiscal year ended June 30, 2025, the total revenue was approximately RMB 66.3 million ($9.3 million).

The channels Recon Technology, Ltd. uses to reach its clients are multifaceted, blending direct service delivery with platform-based access. The company employed 188 people as of its latest filing, which supports the on-site service component of its model. The reliance on key customers is significant; CNPC accounted for 44% of revenue, and Sinopec accounted for 17% in FY2025.

• Direct sales force and technical teams for on-site service delivery.
• Proprietary outsourcing platform for gas station digitalization solutions.
• Direct distribution of specialized equipment and chemicals to client sites.

The performance across these delivery methods showed divergence in FY2025. The platform outsourcing services channel saw a revenue dip, while automation products, which often accompany direct sales and technical teams, grew strongly. The equipment and accessories distribution channel experienced a decline, likely due to client budget controls.

Here's a quick look at how the revenue streams tied to these channels performed for the year ended June 30, 2025:

Specifically regarding the proprietary outsourcing platform, the decrease in revenue was driven by a RMB 0.8 million drop from former gas-station customers shifting to in-house systems and lower third-party cooperation. However, this was partially offset by a RMB 1.30 million increase from higher transaction volumes from diesel users on the platform. For the direct distribution of equipment and accessories, the revenue decline of RMB 2.0 million stemmed from oilfield customers strictly controlling extraction budgets.

The company is also actively developing a new channel/offering, though it had not yet generated revenue as of June 30, 2025: the factory for the chemical recycling plant was still under construction and had not started production and sales yet.

Recon Technology, Ltd. (RCON) - Canvas Business Model: Customer Segments

You're looking at the core clientele for Recon Technology, Ltd. (RCON) as of late 2025, and honestly, the picture is dominated by a few very large players in the Chinese energy sector. The customer base is highly concentrated, which is a key risk factor you need to watch.

The primary customer segments driving Recon Technology, Ltd.'s business are:

• Major state-owned oil and gas exploration companies in China (e.g., CNPC, Sinopec).
• Regional oilfield operators and petroleum mining companies.
• Industrial clients requiring environmental protection and waste treatment services.
• Clients utilizing digitalization services across energy and related industrial fields.

The reliance on the largest state-owned entities is stark. For the fiscal year ended June 30, 2025, the customer concentration was significant, with the top two clients accounting for the vast majority of the total revenue.

Total revenue for Recon Technology, Ltd. for the year ended June 30, 2025, was RMB 66.3 million ($9.3 million). This concentration means that any budget tightening from these giants directly hits Recon Technology, Ltd.'s top line; the CEO noted domestic oil companies adopted more cautious and cost-conscious approaches to capital expenditures in FY2025.

Servicing regional operators and securing new upstream contracts remains vital. Recon Technology, Ltd. announced in August 2025 that an affiliated entity secured major contracts valued at approximately $5.85 million to upgrade and retrofit automation systems for a large Mid-Asia gas field, with services expected to complete within the next calendar year. This shows they are still winning significant project work outside the immediate top-tier concentration.

The environmental protection segment, which serves industrial clients, faced headwinds. Revenue from oilfield environmental protection dropped by approximately RMB 7.3 million ($1.0 million), a decrease of 41.4%, largely due to the expiration of the Gansu BHD's hazardous waste operation permit. Still, the company is active in this space, with the cost of revenue for oilfield environmental protection sitting at RMB 8.5 million ($1.2 million) for FY2025. Furthermore, Recon Technology, Ltd. has been pushing into chemical recycling, with a plant construction finishing in August 2025, aiming for a formal production phase in the second half of 2025.

For digitalization services, which span beyond just the oilfield automation products and software (which saw revenue increase), the customer base is broadening. While specific numbers for gas station chains or freight trading platforms aren't itemized separately, the company is focused on expanding its order book with offshore oilfield customers and securing new clients outside the traditional oilfield sector to stabilize operations. The core digital offering includes integrated automation services, pumping unit controllers, and oilfield monitor and data acquisition systems for upstream clients.

You should track the renewal status of any expiring environmental permits, as that single factor cost Recon Technology, Ltd. a material chunk of revenue in the last fiscal year. Finance: draft 13-week cash view by Friday.

Recon Technology, Ltd. (RCON) - Canvas Business Model: Cost Structure

You're looking at the spending side of Recon Technology, Ltd. (RCON)'s operations for the fiscal year ended June 30, 2025. This structure shows where the money is going before we even get to the bottom line, which, as you know, was a net loss.

The Cost of Revenues was a significant outflow, totaling RMB 51.0 million, which converts to about $7.1 million for FY2025. This cost base is what remains after generating total revenue of RMB 66.3 million ($9.3 million) for the same period. This resulted in a gross margin of only 23.0%, down from 30.3% the year prior. Here's how that Cost of Revenues broke down by service line:

The company's overall operational spending led to a net loss of RMB 44.2 million ($6.2 million) for FY2025. That's a reduction from the RMB 51.4 million loss in 2024, but still a substantial drain on capital. A large part of the cash movement is related to the corporate structure in China, specifically the Variable Interest Entities (VIEs).

The cash support to VIEs was substantial, hitting RMB 92,151,863 for FY2025. This is an increase from the RMB 84,211,565 transferred in FY2024, showing continued financial backing flowing from the parent company to the operating entities.

Investment in future capabilities, specifically Research and development (R&D) expenses for automation and software solutions, was a key spending area. R&D expenses rose by 15.0%, reaching RMB 16.4 million ($2.3 million) in FY2025, up from RMB 14.3 million the prior year. This signals a clear commitment to developing their digital offerings.

Finally, you have the direct costs associated with the workforce. The cost structure includes personnel costs supporting the 188 employees and field service teams. These teams are the boots-on-the-ground executing the service contracts across oilfield and environmental protection sectors.

Here's a quick look at the key financial pressures:

• High Cost of Revenues, totaling RMB 51.0 million (or $7.1 million) in FY2025.
• Significant operational and investment costs, resulting in a net loss of RMB 44.2 million in FY2025.
• Cash support to VIEs, which was RMB 92,151,863 for FY2025.
• Research and development (R&D) expenses for automation and software solutions amounted to RMB 16.4 million ($2.3 million).
• Personnel costs for the 188 employees and field service teams are baked into the operating expenses.

Finance: draft 13-week cash view by Friday.

Recon Technology, Ltd. (RCON) - Canvas Business Model: Revenue Streams

You're looking at how Recon Technology, Ltd. (RCON) brings in cash as of late 2025. The revenue picture for the fiscal year ended June 30, 2025, shows a slight contraction overall, but with some key segments showing growth.

Total revenue for FY2025 was RMB 66.3 million (or $9.3 million), which was a decrease of approximately 3.7% from the RMB 68.8 million earned in the prior year. This top-line pressure came as primary domestic oil company clients adopted more cautious capital expenditure approaches due to oil price fluctuations.

The revenue streams are diversified across technology and services, though customer concentration remains a factor, with CNPC representing 44% of FY2025 revenue and Sinopec 17%.

Here's a breakdown of the key revenue components for the full fiscal year 2025:

• Sales of automation products and software, which saw a revenue increase in 2025 H1 of 19.2%, and for the full FY2025, this segment increased revenue by RMB 7.3 million (or $1.0 million), representing a 27.1% year-over-year growth.
• Sales of specialized equipment and accessories for oilfield production. This stream saw a decrease in FY2025 revenue by RMB 2.0 million (or $0.3 million), which is a 10.0% decline.
• Platform outsourcing services revenue from intelligent marketing systems. For the first six months of FY2025 (H1 FY2025), this revenue stream grew by 53.7%. For the full year, the gross profit from this service was RMB 2.8 million ($0.4 million), down from RMB 3.3 million ($0.5 million) in the previous year.
• Oilfield environmental protection services (sewage/sludge treatment). This segment experienced a significant drop, with revenue decreasing by RMB 7.3 million (a 41.4% decrease) for FY2025.

To give you a clearer picture of the segment performance in FY2025 versus FY2024, look at this comparison based on the reported revenue changes:

The company also noted that the chemical recycling factory construction started on April 28, 2025, and as of June 30, 2025, it had not yet started production and sales, so that stream contributed nil revenue for the year.

Finance: draft 13-week cash view by Friday.