2178.HK WACC - Weighted Average Cost of Capital

The WACC of Petro-king Oilfield Services Ltd (2178.HK) is 7.5%.

The Cost of Equity of Petro-king Oilfield Services Ltd (2178.HK) is 9.15%.

The Cost of Debt of Petro-king Oilfield Services Ltd (2178.HK) is 6.55%.

	Range	Selected
Cost of equity	6.70% - 11.60%	9.15%
Tax rate	2.00% - 3.70%	2.85%
Cost of debt	6.10% - 7.00%	6.55%
WACC	6.3% - 8.8%	7.5%

WACC

2178.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.64	1.1

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.70%	11.60%

Tax rate	2.00%	3.70%
Debt/Equity ratio	1.35	1.35
Cost of debt	6.10%	7.00%

After-tax WACC	6.3%	8.8%


Selected WACC	7.5%

2178.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 2178.HK:

cost_of_equity (9.15%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.64) + 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.