1702.HK WACC - Weighted Average Cost of Capital

The WACC of Dongguang Chemical Ltd (1702.HK) is 9.5%.

The Cost of Equity of Dongguang Chemical Ltd (1702.HK) is 9.65%.

The Cost of Debt of Dongguang Chemical Ltd (1702.HK) is 6.55%.

	Range	Selected
Cost of equity	8.20% - 11.10%	9.65%
Tax rate	27.40% - 28.00%	27.70%
Cost of debt	4.00% - 9.10%	6.55%
WACC	8.1% - 11.0%	9.5%

WACC

1702.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.9	1.03

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.20%	11.10%

Tax rate	27.40%	28.00%
Debt/Equity ratio	0.03	0.03
Cost of debt	4.00%	9.10%

After-tax WACC	8.1%	11.0%


Selected WACC	9.5%

1702.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 1702.HK:

cost_of_equity (9.65%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.9) + 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.