2198.HK WACC - Weighted Average Cost of Capital

The WACC of China Sanjiang Fine Chemicals Co Ltd (2198.HK) is 7.4%.

The Cost of Equity of China Sanjiang Fine Chemicals Co Ltd (2198.HK) is 17.50%.

The Cost of Debt of China Sanjiang Fine Chemicals Co Ltd (2198.HK) is 5.25%.

	Range	Selected
Cost of equity	14.80% - 20.20%	17.50%
Tax rate	10.10% - 17.60%	13.85%
Cost of debt	4.00% - 6.50%	5.25%
WACC	6.1% - 8.7%	7.4%

WACC

2198.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	2	2.34

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.80%	20.20%

Tax rate	10.10%	17.60%
Debt/Equity ratio	3.41	3.41
Cost of debt	4.00%	6.50%

After-tax WACC	6.1%	8.7%


Selected WACC	7.4%

2198.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 2198.HK:

cost_of_equity (17.50%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (2) + 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.