1165.HK WACC - Weighted Average Cost of Capital

The WACC of Shunfeng International Clean Energy Ltd (1165.HK) is 6.0%.

The Cost of Equity of Shunfeng International Clean Energy Ltd (1165.HK) is 23.80%.

The Cost of Debt of Shunfeng International Clean Energy Ltd (1165.HK) is 5.50%.

	Range	Selected
Cost of equity	10.40% - 37.20%	23.80%
Tax rate	0.90% - 1.30%	1.10%
Cost of debt	4.00% - 7.00%	5.50%
WACC	4.1% - 7.8%	6.0%

WACC

1165.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.26	4.77

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.40%	37.20%

Tax rate	0.90%	1.30%
Debt/Equity ratio	34.22	34.22
Cost of debt	4.00%	7.00%

After-tax WACC	4.1%	7.8%


Selected WACC	6.0%

1165.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 1165.HK:

cost_of_equity (23.80%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.26) + 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.