2371.HK WACC - Weighted Average Cost of Capital

The WACC of China Chuanglian Education Financial Group Ltd (2371.HK) is 5.4%.

The Cost of Equity of China Chuanglian Education Financial Group Ltd (2371.HK) is 5.85%.

The Cost of Debt of China Chuanglian Education Financial Group Ltd (2371.HK) is 6.65%.

	Range	Selected
Cost of equity	5.00% - 6.70%	5.85%
Tax rate	19.00% - 37.50%	28.25%
Cost of debt	6.30% - 7.00%	6.65%
WACC	5.0% - 5.8%	5.4%

WACC

2371.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.28	0.33

Additional risk adjustments	0.5%	1.0%
Cost of equity	5.00%	6.70%

Tax rate	19.00%	37.50%
Debt/Equity ratio	0.66	0.66
Cost of debt	6.30%	7.00%

After-tax WACC	5.0%	5.8%


Selected WACC	5.4%

2371.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 2371.HK:

cost_of_equity (5.85%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.28) + risk_adjustments (0.75%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.