600025.SS WACC - Weighted Average Cost of Capital

The WACC of Huaneng Lancang River Hydropower Inc (600025.SS) is 6.8%.

The Cost of Equity of Huaneng Lancang River Hydropower Inc (600025.SS) is 8.50%.

The Cost of Debt of Huaneng Lancang River Hydropower Inc (600025.SS) is 5.00%.

	Range	Selected
Cost of equity	7.40% - 9.60%	8.50%
Tax rate	12.30% - 12.50%	12.40%
Cost of debt	5.00% - 5.00%	5.00%
WACC	6.2% - 7.5%	6.8%

WACC

600025.SS WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	0.77	0.83

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.40%	9.60%

Tax rate	12.30%	12.50%
Debt/Equity ratio	0.67	0.67
Cost of debt	5.00%	5.00%

After-tax WACC	6.2%	7.5%


Selected WACC	6.8%

600025.SS'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 600025.SS:

cost_of_equity (8.50%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.77) + 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.