1866.HK WACC - Weighted Average Cost of Capital

The WACC of China Xlx Fertiliser Ltd (1866.HK) is 7.1%.

The Cost of Equity of China Xlx Fertiliser Ltd (1866.HK) is 13.90%.

The Cost of Debt of China Xlx Fertiliser Ltd (1866.HK) is 4.60%.

	Range	Selected
Cost of equity	11.10% - 16.70%	13.90%
Tax rate	16.40% - 17.00%	16.70%
Cost of debt	4.30% - 4.90%	4.60%
WACC	6.1% - 8.2%	7.1%

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	1.38	1.84

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.10%	16.70%

Tax rate	16.40%	17.00%
Debt/Equity ratio	2.06	2.06
Cost of debt	4.30%	4.90%

After-tax WACC	6.1%	8.2%


Selected WACC	7.1%

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 (13.90%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.38) + 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.