1004.HK WACC - Weighted Average Cost of Capital

The WACC of China Smarter Energy Group Holdings Ltd (1004.HK) is 5.1%.

The Cost of Equity of China Smarter Energy Group Holdings Ltd (1004.HK) is 6.25%.

The Cost of Debt of China Smarter Energy Group Holdings Ltd (1004.HK) is 5.00%.

	Range	Selected
Cost of equity	5.20% - 7.30%	6.25%
Tax rate	0.90% - 3.20%	2.05%
Cost of debt	5.00% - 5.00%	5.00%
WACC	5.0% - 5.3%	5.1%

WACC

1004.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.39	0.49

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.20%	7.30%

Tax rate	0.90%	3.20%
Debt/Equity ratio	4.34	4.34
Cost of debt	5.00%	5.00%

After-tax WACC	5.0%	5.3%


Selected WACC	5.1%

1004.HK's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for 1004.HK:

cost_of_equity (6.25%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.39) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.