228.HK WACC - Weighted Average Cost of Capital

The WACC of China Energy Development Holdings Ltd (228.HK) is 5.2%.

The Cost of Equity of China Energy Development Holdings Ltd (228.HK) is 7.25%.

The Cost of Debt of China Energy Development Holdings Ltd (228.HK) is 4.60%.

	Range	Selected
Cost of equity	5.10% - 9.40%	7.25%
Tax rate	27.90% - 33.50%	30.70%
Cost of debt	4.00% - 5.20%	4.60%
WACC	4.0% - 6.5%	5.2%

WACC

228.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.38	0.79

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.10%	9.40%

Tax rate	27.90%	33.50%
Debt/Equity ratio	0.96	0.96
Cost of debt	4.00%	5.20%

After-tax WACC	4.0%	6.5%


Selected WACC	5.2%

228.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 228.HK:

cost_of_equity (7.25%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.38) + 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.