3718.HK WACC - Weighted Average Cost of Capital

The WACC of Beijing Enterprises Urban Resources Group Ltd (3718.HK) is 6.9%.

The Cost of Equity of Beijing Enterprises Urban Resources Group Ltd (3718.HK) is 12.90%.

The Cost of Debt of Beijing Enterprises Urban Resources Group Ltd (3718.HK) is 4.25%.

	Range	Selected
Cost of equity	11.00% - 14.80%	12.90%
Tax rate	23.80% - 30.40%	27.10%
Cost of debt	4.00% - 4.50%	4.25%
WACC	6.1% - 7.7%	6.9%

WACC

3718.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.35	1.57

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.00%	14.80%

Tax rate	23.80%	30.40%
Debt/Equity ratio	1.58	1.58
Cost of debt	4.00%	4.50%

After-tax WACC	6.1%	7.7%


Selected WACC	6.9%

3718.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 3718.HK:

cost_of_equity (12.90%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.35) + 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.