1600.HK WACC - Weighted Average Cost of Capital

The WACC of China Tian Lun Gas Holdings Ltd (1600.HK) is 7.0%.

The Cost of Equity of China Tian Lun Gas Holdings Ltd (1600.HK) is 16.40%.

The Cost of Debt of China Tian Lun Gas Holdings Ltd (1600.HK) is 5.40%.

	Range	Selected
Cost of equity	14.00% - 18.80%	16.40%
Tax rate	27.60% - 29.60%	28.60%
Cost of debt	4.80% - 6.00%	5.40%
WACC	6.1% - 7.9%	7.0%

WACC

1600.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.87	2.14

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.00%	18.80%

Tax rate	27.60%	29.60%
Debt/Equity ratio	2.98	2.98
Cost of debt	4.80%	6.00%

After-tax WACC	6.1%	7.9%


Selected WACC	7.0%

1600.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 1600.HK:

cost_of_equity (16.40%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.87) + 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.