1851.HK WACC - Weighted Average Cost of Capital

The WACC of China Gingko Education Group Company Ltd (1851.HK) is 7.7%.

The Cost of Equity of China Gingko Education Group Company Ltd (1851.HK) is 9.25%.

The Cost of Debt of China Gingko Education Group Company Ltd (1851.HK) is 4.90%.

	Range	Selected
Cost of equity	6.20% - 12.30%	9.25%
Tax rate	0.50% - 1.10%	0.80%
Cost of debt	4.00% - 5.80%	4.90%
WACC	5.4% - 9.9%	7.7%

WACC

1851.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.56	1.2

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.20%	12.30%

Tax rate	0.50%	1.10%
Debt/Equity ratio	0.55	0.55
Cost of debt	4.00%	5.80%

After-tax WACC	5.4%	9.9%


Selected WACC	7.7%

1851.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 1851.HK:

cost_of_equity (9.25%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.56) + 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.