The WACC of Jilin Province Chuncheng Heating Co Ltd (1853.HK) is 7.9%.
Range | Selected | |
Cost of equity | 6.7% - 9.0% | 7.85% |
Tax rate | 27.3% - 27.9% | 27.6% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 6.7% - 9.0% | 7.9% |
Category | Low | High |
Long-term bond rate | 2.9% | 3.4% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 0.65 | 0.74 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.7% | 9.0% |
Tax rate | 27.3% | 27.9% |
Debt/Equity ratio | 0 | 0 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 6.7% | 9.0% |
Selected WACC | 7.9% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
1853.HK | Jilin Province Chuncheng Heating Co Ltd | 0 | 0.01 | 0.01 |
000605.SZ | Bohai Water Industry Co Ltd | 1.41 | 1.11 | 0.55 |
000685.SZ | Zhongshan Public Utilities Group Co Ltd | 0.68 | 1.05 | 0.7 |
000692.SZ | Shenyang Huitian Thermal Power Co Ltd | 1.53 | 0.97 | 0.46 |
000711.SZ | Kingland Technology Co Ltd | 0.01 | 0.48 | 0.48 |
1395.HK | ELL Environmental Holdings Ltd | 1.18 | 1.29 | 0.7 |
2281.HK | Luzhou Xinglu Water Group Co Ltd | 3.81 | 0.47 | 0.13 |
3768.HK | Kunming Dianchi Water Treatment Co Ltd | 8.01 | 0.43 | 0.06 |
688466.SS | GreenTech Environmental Co Ltd | 0.23 | 1.08 | 0.92 |
WABAG.NS | Va Tech Wabag Ltd | 0.02 | 1.61 | 1.59 |
Low | High | |
Unlevered beta | 0.47 | 0.61 |
Relevered beta | 0.48 | 0.61 |
Adjusted relevered beta | 0.65 | 0.74 |
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 1853.HK:
cost_of_equity (7.85%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.65) + 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.