The WACC of China Huarong Energy Co Ltd (1101.HK) is 5.4%.
Range | Selected | |
Cost of equity | 5.1% - 40.6% | 22.85% |
Tax rate | 0.2% - 0.4% | 0.3% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 5.0% - 5.8% | 5.4% |
Category | Low | High |
Long-term bond rate | 2.9% | 3.4% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 0.12 | 5.05 |
Additional risk adjustments | 1.5% | 2.0% |
Cost of equity | 5.1% | 40.6% |
Tax rate | 0.2% | 0.4% |
Debt/Equity ratio | 45.18 | 45.18 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 5.0% | 5.8% |
Selected WACC | 5.4% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
1101.HK | China Huarong Energy Co Ltd | 45.18 | 0.85 | 0.02 |
228.HK | China Energy Development Holdings Ltd | 0.5 | 0.26 | 0.18 |
353.HK | Energy International Investments Holdings Ltd | 1.23 | -0.1 | -0.04 |
556.HK | Pan Asia Environmental Protection Group Ltd | 0.02 | -0.29 | -0.29 |
663.HK | King Stone Energy Group Ltd | 1.03 | -0.47 | -0.23 |
689.HK | EPI (Holdings) Ltd | 0.06 | 0.56 | 0.53 |
704.HK | Huscoke Holdings Ltd | 2.61 | 0.55 | 0.15 |
8011.HK | Polyard Petroleum International Group Ltd | 0.13 | 0.17 | 0.15 |
BANE.ME | ANK Bashneft' PAO | 0.23 | 0.23 | 0.19 |
SAN.AX | Sagalio Energy Ltd | 0 | -1.99 | -1.98 |
Low | High | |
Unlevered beta | -0.01 | 0.15 |
Relevered beta | -0.31 | 7.04 |
Adjusted relevered beta | 0.12 | 5.05 |
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 1101.HK:
cost_of_equity (22.85%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.12) + risk_adjustments (1.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.