1871.HK WACC - Weighted Average Cost of Capital

The WACC of China Oriented International Holdings Ltd (1871.HK) is 5.9%.

The Cost of Equity of China Oriented International Holdings Ltd (1871.HK) is 6.10%.

The Cost of Debt of China Oriented International Holdings Ltd (1871.HK) is 7.70%.

	Range	Selected
Cost of equity	5.30% - 6.90%	6.10%
Tax rate	23.70% - 33.10%	28.40%
Cost of debt	7.00% - 8.40%	7.70%
WACC	5.3% - 6.6%	5.9%

WACC

1871.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.4	0.43

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.30%	6.90%

Tax rate	23.70%	33.10%
Debt/Equity ratio	0.38	0.38
Cost of debt	7.00%	8.40%

After-tax WACC	5.3%	6.6%


Selected WACC	5.9%

1871.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 1871.HK:

cost_of_equity (6.10%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.4) + 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.