1866.HK WACC - Weighted Average Cost of Capital

The WACC of China Xlx Fertiliser Ltd (1866.HK) is 6.9%.

The Cost of Equity of China Xlx Fertiliser Ltd (1866.HK) is 15.05%.

The Cost of Debt of China Xlx Fertiliser Ltd (1866.HK) is 4.35%.

	Range	Selected
Cost of equity	12.00% - 18.10%	15.05%
Tax rate	16.40% - 17.00%	16.70%
Cost of debt	4.10% - 4.60%	4.35%
WACC	5.9% - 7.9%	6.9%

WACC

1866.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.53	2.04

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.00%	18.10%

Tax rate	16.40%	17.00%
Debt/Equity ratio	2.52	2.52
Cost of debt	4.10%	4.60%

After-tax WACC	5.9%	7.9%


Selected WACC	6.9%

1866.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 1866.HK:

cost_of_equity (15.05%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.53) + 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.