2686.HK WACC - Weighted Average Cost of Capital

The WACC of AAG Energy Holdings Ltd (2686.HK) is 8.7%.

The Cost of Equity of AAG Energy Holdings Ltd (2686.HK) is 8.75%.

The Cost of Debt of AAG Energy Holdings Ltd (2686.HK) is 4.25%.

	Range	Selected
Cost of equity	5.70% - 11.80%	8.75%
Tax rate	27.20% - 29.50%	28.35%
Cost of debt	4.00% - 4.50%	4.25%
WACC	5.7% - 11.7%	8.7%

WACC

2686.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.47	1.14

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.70%	11.80%

Tax rate	27.20%	29.50%
Debt/Equity ratio	0.01	0.01
Cost of debt	4.00%	4.50%

After-tax WACC	5.7%	11.7%


Selected WACC	8.7%

2686.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 2686.HK:

cost_of_equity (8.75%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.47) + 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.