1237.HK WACC - Weighted Average Cost of Capital

The WACC of China Environmental Technology and Bioenergy Holdings Ltd (1237.HK) is 8.5%.

The Cost of Equity of China Environmental Technology and Bioenergy Holdings Ltd (1237.HK) is 20.50%.

The Cost of Debt of China Environmental Technology and Bioenergy Holdings Ltd (1237.HK) is 7.70%.

	Range	Selected
Cost of equity	13.40% - 27.60%	20.50%
Tax rate	16.70% - 25.40%	21.05%
Cost of debt	7.00% - 8.40%	7.70%
WACC	7.1% - 9.8%	8.5%

WACC

1237.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.77	3.41

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.40%	27.60%

Tax rate	16.70%	25.40%
Debt/Equity ratio	5.04	5.04
Cost of debt	7.00%	8.40%

After-tax WACC	7.1%	9.8%


Selected WACC	8.5%

1237.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 1237.HK:

cost_of_equity (20.50%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.77) + 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.