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 6.15%.

The Cost of Debt of China Oriented International Holdings Ltd (1871.HK) is 7.60%.

	Range	Selected
Cost of equity	5.40% - 6.90%	6.15%
Tax rate	23.70% - 33.10%	28.40%
Cost of debt	7.00% - 8.20%	7.60%
WACC	5.4% - 6.5%	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	0.42	0.43

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.40%	6.90%

Tax rate	23.70%	33.10%
Debt/Equity ratio	0.46	0.46
Cost of debt	7.00%	8.20%

After-tax WACC	5.4%	6.5%


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 (6.15%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.42) + 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.