2779.HK WACC - Weighted Average Cost of Capital

The WACC of China Xinhua Education Group Ltd (2779.HK) is 7.4%.

The Cost of Equity of China Xinhua Education Group Ltd (2779.HK) is 9.40%.

The Cost of Debt of China Xinhua Education Group Ltd (2779.HK) is 4.25%.

	Range	Selected
Cost of equity	6.90% - 11.90%	9.40%
Tax rate	1.30% - 1.70%	1.50%
Cost of debt	4.00% - 4.50%	4.25%
WACC	5.8% - 9.0%	7.4%

WACC

2779.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.68	1.15

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.90%	11.90%

Tax rate	1.30%	1.70%
Debt/Equity ratio	0.65	0.65
Cost of debt	4.00%	4.50%

After-tax WACC	5.8%	9.0%


Selected WACC	7.4%

2779.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 2779.HK:

cost_of_equity (9.40%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.68) + 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.