371.HK WACC - Weighted Average Cost of Capital

The WACC of Beijing Enterprises Water Group Ltd (371.HK) is 5.9%.

The Cost of Equity of Beijing Enterprises Water Group Ltd (371.HK) is 9.10%.

The Cost of Debt of Beijing Enterprises Water Group Ltd (371.HK) is 6.20%.

	Range	Selected
Cost of equity	7.60% - 10.60%	9.10%
Tax rate	21.60% - 22.70%	22.15%
Cost of debt	4.30% - 8.10%	6.20%
WACC	4.4% - 7.3%	5.9%

WACC

371.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.8	0.97

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.60%	10.60%

Tax rate	21.60%	22.70%
Debt/Equity ratio	3.18	3.18
Cost of debt	4.30%	8.10%

After-tax WACC	4.4%	7.3%


Selected WACC	5.9%

371.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 371.HK:

cost_of_equity (9.10%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.8) + 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.