The WACC of Yanchang Petroleum International Ltd (346.HK) is 7.4%.
Range | Selected | |
Cost of equity | 8.4% - 13.0% | 10.7% |
Tax rate | 1.6% - 1.7% | 1.65% |
Cost of debt | 4.0% - 7.0% | 5.5% |
WACC | 5.7% - 9.2% | 7.4% |
Category | Low | High |
Long-term bond rate | 2.9% | 3.4% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 0.92 | 1.3 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.4% | 13.0% |
Tax rate | 1.6% | 1.7% |
Debt/Equity ratio | 1.63 | 1.63 |
Cost of debt | 4.0% | 7.0% |
After-tax WACC | 5.7% | 9.2% |
Selected WACC | 7.4% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
346.HK | Yanchang Petroleum International Ltd | 1.63 | 1.21 | 0.47 |
000096.SZ | Shenzhen Guangju Energy Co Ltd | 0 | 0.56 | 0.56 |
000159.SZ | Xinjiang International Industry Co Ltd | 0.38 | 1.09 | 0.79 |
000554.SZ | SINOPEC Shandong Taishan Petroleum Co Ltd | 0.03 | 0.83 | 0.81 |
342.HK | Newocean Energy Holdings Ltd | 117.89 | 0.39 | 0 |
5009.T | Fuji Kosan Co Ltd | 0.19 | 0.66 | 0.56 |
8347.HK | F8 Enterprises (Holdings) Group Ltd | 2.46 | -0.16 | -0.05 |
852.HK | Strong Petrochemical Holdings Ltd | 0.46 | 0.23 | 0.16 |
92.HK | Champion Technology Holdings Ltd | 0.01 | 0.06 | 0.06 |
979.HK | Green Energy Group Ltd | 0.01 | 0.9 | 0.89 |
Low | High | |
Unlevered beta | 0.34 | 0.56 |
Relevered beta | 0.88 | 1.45 |
Adjusted relevered beta | 0.92 | 1.3 |
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 346.HK:
cost_of_equity (10.70%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.92) + 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.