1240.HK WACC - Weighted Average Cost of Capital

The WACC of CNQC International Holdings Ltd (1240.HK) is 8.4%.

The Cost of Equity of CNQC International Holdings Ltd (1240.HK) is 7.05%.

The Cost of Debt of CNQC International Holdings Ltd (1240.HK) is 9.30%.

	Range	Selected
Cost of equity	5.30% - 8.80%	7.05%
Tax rate	6.70% - 9.70%	8.20%
Cost of debt	4.00% - 14.60%	9.30%
WACC	3.8% - 12.9%	8.4%

WACC

1240.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.41	0.71

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.30%	8.80%

Tax rate	6.70%	9.70%
Debt/Equity ratio	13.21	13.21
Cost of debt	4.00%	14.60%

After-tax WACC	3.8%	12.9%


Selected WACC	8.4%

1240.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 1240.HK:

cost_of_equity (7.05%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.41) + 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.