1004.HK WACC - Weighted Average Cost of Capital

The WACC of China Smarter Energy Group Holdings Ltd (1004.HK) is 5.7%.

The Cost of Equity of China Smarter Energy Group Holdings Ltd (1004.HK) is 9.20%.

The Cost of Debt of China Smarter Energy Group Holdings Ltd (1004.HK) is 5.50%.

	Range	Selected
Cost of equity	7.60% - 10.80%	9.20%
Tax rate	2.40% - 4.30%	3.35%
Cost of debt	4.00% - 7.00%	5.50%
WACC	4.3% - 7.1%	5.7%

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	0.79	0.99

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.60%	10.80%

Tax rate	2.40%	4.30%
Debt/Equity ratio	9.67	9.67
Cost of debt	4.00%	7.00%

After-tax WACC	4.3%	7.1%


Selected WACC	5.7%

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 (9.20%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.79) + 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.