2798.HK WACC - Weighted Average Cost of Capital

The WACC of Perennial Energy Holdings Ltd (2798.HK) is 7.9%.

The Cost of Equity of Perennial Energy Holdings Ltd (2798.HK) is 12.55%.

The Cost of Debt of Perennial Energy Holdings Ltd (2798.HK) is 4.30%.

	Range	Selected
Cost of equity	10.40% - 14.70%	12.55%
Tax rate	16.60% - 20.70%	18.65%
Cost of debt	4.00% - 4.60%	4.30%
WACC	6.8% - 9.0%	7.9%

WACC

2798.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.26	1.55

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.40%	14.70%

Tax rate	16.60%	20.70%
Debt/Equity ratio	1.07	1.07
Cost of debt	4.00%	4.60%

After-tax WACC	6.8%	9.0%


Selected WACC	7.9%

2798.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 2798.HK:

cost_of_equity (12.55%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.26) + 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.