1940.HK WACC - Weighted Average Cost of Capital

The WACC of China Gas Industry Investment Holdings Co. Ltd. (1940.HK) is 9.4%.

The Cost of Equity of China Gas Industry Investment Holdings Co. Ltd. (1940.HK) is 15.35%.

The Cost of Debt of China Gas Industry Investment Holdings Co. Ltd. (1940.HK) is 4.65%.

	Range	Selected
Cost of equity	13.40% - 17.30%	15.35%
Tax rate	22.10% - 22.30%	22.20%
Cost of debt	4.00% - 5.30%	4.65%
WACC	8.2% - 10.6%	9.4%

WACC

1940.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.76	1.93

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.40%	17.30%

Tax rate	22.10%	22.30%
Debt/Equity ratio	1.04	1.04
Cost of debt	4.00%	5.30%

After-tax WACC	8.2%	10.6%


Selected WACC	9.4%

1940.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 1940.HK:

cost_of_equity (15.35%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.76) + 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.