Skyrocketing Recon Technology, Ltd. (NASDAQ:RCON) Reports First Quarter Fiscal Year 2017 Financial Results

Leading independent oilfield services provider, Recon Technology, Ltd. (NASDAQ:RCON), reported its financial results for Q1, 2017.

BEIJING, Nov. 14, 2016 /PRNewswire/ —

    Revenue grew 117% YoY; gross profit increased 172% and gross margin improved 280 basis points YoY

Recon Technology (the “Company” or “Recon”) (RCON), (“Recon” or the “Company”), a leading independent oilfield services provider operating primarily in China, today reported its financial results for the first quarter of fiscal year 2017, which ended September 30, 2016.

Q1 FY2017 Financial Highlights: 

    Total revenues for Q1 FY2017 were RMB7.8 million ($1.2 million),* an increase of RMB4.2 million or 117.1% from RMB3.6 million for the same period last fiscal year;

    Gross profit increased 171.9% to RMB1.1 million ($0.2 million) for the three months ended September 30, 2016 from RMB0.4 million for the same period in 2015;

    Gross margin improved more than 280 basis points to 14.0% in Q1 FY2017, compared to 11.2% for the same period last fiscal year;

    Newly launched Oilfield waste management business saw RMB1.9 million ($0.3 million) in revenues, as compared to RMB0 in the same period of last year;

    Operating loss was RMB5.5 million ($0.8 million) for the first quarter of FY2017, compared to a loss of RMB8.7 million for the same period last fiscal year;

    Net loss and net loss attributable to ordinary shareholders for Q1 FY2017 was RMB5.5 million ($0.8 million), or RMB0.92 ($0.14) per diluted share, compared to RMB8.8 million, or RMB1.63 ($0.26) per diluted share, for the same period last fiscal year.

Courtesy foreign exchange rates are calculated based on RMB 6.6702: US$1.00.

Mr. Shenping Yin, Chairman and CEO of Recon stated, “We continued to develop and expand our new oilfield waste management business this quarter. We are pleased with these results so far in fiscal 2017. And we look forward to expanding more business sectors and potential markets in the following quarters.”

Revenues

Revenues for the three months ended September 30, 2016 were RMB7.8 million ($1.2 million), an increase of RMB4.2 million or 117.1% from RMB3.6 million for the three months ended September 30, 2015. The overall increase in revenue was mainly caused by our increased hardware and software revenue. In particular, (a) revenue from automation products and embedded software increased slightly to RMB2.1 million; (b) revenues from equipment and accessories increased by RMB2.3 million, or 160.5%, to RMB3.8 million for the three months ended September 30, 2016, as compared to RMB1.5 million for the same period of last fiscal year; and (c) as of first quarter of fiscal year 2017, the new oilfield waste water treatment products segment contributed RMB1.9 million revenue to our operations.

Gross Profit and Gross Margin

Cost of revenues increased from RMB3.2 million in the three months ended September 30, 2015 to RMB6.7 million ($1.0 million) for the same period in 2016, an increase of approximately RMB3.5 million ($0.5 million), or 110.2%.

Gross profit increased to approximately RMB1.1 million ($0.2 million) for the three months ended September 30, 2016 from approximately RMB0.4 million for the same period in 2015. Gross profit as a percentage of revenue increased to 14.0% for the three months ended September 30, 2016 from 11.2% for the same period in 2015.

Operating Loss and Operating Loss Margin

Selling expenses decreased approximately RMB62.5 thousand ($9.4 thousand) for the three months ended September 30, 2016 compared to the same period in 2015. General and administrative expenses increased by 20.5% or RMB0.8 million ($0.1 million), from  RMB4.1 million in the three months ended September 30, 2015 to RMB4.9 million ($0.7 million) in the same period of 2016. Research and development expenses decreased from approximately RMB1.8 million for three months ended September 30, 2015 to approximately RMB0.6 million ($0.1 million) for the same period of 2016. Total operating expenses decreased by RMB2.5 million, or 27.6%, to RMB6.6 million ($1.0 million) for the three months ended September 30, 2016 from RMB9.08 million for the same period during last fiscal year.

Operating loss was approximately RMB5.5 million ($0.8 million) for the three months ended September 30, 2016, compared to a loss of RMB8.7 million for the same period of 2015.

Net Loss

Net loss and net loss attributable to ordinary shareholders for the three months ended September 30, 2016 was RMB5.5 million ($0.8 million), or RMB0.92 ($0.14) per diluted share, compared to RMB8.85 million, or RMB1.63 ($0.26) per diluted share, for the same period last fiscal year.

Financial Position

As of September 30, 2016, the Company had cash and cash equivalents of RMB0.6 million ($0.08 million), and short-term borrowings from related parties of RMB12.5 million ($1.9 million), compared to RMB3.9 million and RMB9.4 million, respectively, for the same period last fiscal year. Working capital as of September 30, 2016 was RMB41.2 million ($6.2 million) as compared to RMB66.5 million at September 30, 2015. Net cash used in operating activities was RMB0.3 million ($0.05 million) for the three months ended September 30, 2016, compared to RMB1.0 million for the same period of last fiscal year. Net cash used in investing activities was RMB22.3 thousand ($3.3 thousand) for the three months ended September 30, 2016, compared to RMB0.5 million for the same period of last fiscal year. Net cash used in financing activities was RMB1.0 million ($0.1 million) for the three months ended September 30, 2016, compared to RMB7.1 million ($1.1 million) for the same period last fiscal year.

Recent Developments

As of the first quarter of fiscal year 2017, the Company has achieved remarkable achievement in its oilfield waste water treatment segment. In January 2016, the Company announced its cooperation with Qinghai Oilfield Company, signing an agreement to sell the oilfield RMB3.98 million of related products and services. For the three months period ended September 30, 2016, the Company has completed this agreement and continues to expand markets in the environmental protection industry, including oilfield water treatment and other industrial and sewage disposal projects.

The Company has also developed new clients China’s top producing Changqing Oilfield, which is located in China’s Xi’an Province.

About Recon

Recon Technology, Ltd. is China’s first listed non-state owned oil and gas field service company on Nasdaq (RCON). Recon supplies China’s largest oil exploration companies, Sinopec and CNPC, with advanced automated technologies, efficient gathering and transportation equipment and reservoir stimulation measure for increasing petroleum extraction levels, reducing impurities and lowering production costs. Through the years, RCON has taken leading positions on several segmented markets of the oil and gas filed service industry. RCON also has developed stable long-term cooperation relationship with its major clients, and its products and service are also well accepted by clients. For additional information please visit us at www.recon.cn.

Original Source

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Recon Technology, Ltd. (NASDAQ:RCON) shares are trading +83.81% on the news and in the range of $1.04 – 1.93 during the current trading session.  When taking a look at which direction the stock might be headed, investors often look to brokerage analysts who cover the stock.  Sell-side research firms on Wall Street currently have a consensus one-year price target of $N/A on the stock.  This is according to brokerage analysts polled by Thomson Reuters First Call.

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In looking at where the stock is trading on a technical level, the stock is trading +81.55% away from its 50-day moving average of $1.06.  Based on the most recent available data, the equity is -21.54% off of its 52-week high of $2.46 and +124.81% away from its 52-week low which is $0.86.

Today, the stock opened at $1.09 and the last bid at the time of writing stood at $1.93.  During the session thus far, the equity dipped down to $1.04 and touched $1.93 as the high point.  Recon Technology, Ltd. (NASDAQ:RCON) has a market cap of $11.54M and has seen an average daily volume of 17,483 over the past three months.

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