300118.SZ WACC - Weighted Average Cost of Capital

The WACC of Risen Energy Co Ltd (300118.SZ) is 7.6%.

The Cost of Equity of Risen Energy Co Ltd (300118.SZ) is 13.90%.

The Cost of Debt of Risen Energy Co Ltd (300118.SZ) is 5.00%.

	Range	Selected
Cost of equity	11.60% - 16.20%	13.90%
Tax rate	13.30% - 16.30%	14.80%
Cost of debt	5.00% - 5.00%	5.00%
WACC	6.9% - 8.4%	7.6%

WACC

300118.SZ WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	1.46	1.75

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.60%	16.20%

Tax rate	13.30%	16.30%
Debt/Equity ratio	1.85	1.85
Cost of debt	5.00%	5.00%

After-tax WACC	6.9%	8.4%


Selected WACC	7.6%

300118.SZ'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 300118.SZ:

cost_of_equity (13.90%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.46) + 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.