342.HK WACC - Weighted Average Cost of Capital

The WACC of Newocean Energy Holdings Ltd (342.HK) is 5.7%.

The Cost of Equity of Newocean Energy Holdings Ltd (342.HK) is 20.75%.

The Cost of Debt of Newocean Energy Holdings Ltd (342.HK) is 5.75%.

	Range	Selected
Cost of equity	8.10% - 33.40%	20.75%
Tax rate	3.20% - 3.60%	3.40%
Cost of debt	4.50% - 7.00%	5.75%
WACC	4.4% - 7.0%	5.7%

WACC

342.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.88	4.22

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.10%	33.40%

Tax rate	3.20%	3.60%
Debt/Equity ratio	117.89	117.89
Cost of debt	4.50%	7.00%

After-tax WACC	4.4%	7.0%


Selected WACC	5.7%

342.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 342.HK:

cost_of_equity (20.75%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.88) + 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.