603.HK WACC - Weighted Average Cost of Capital

The WACC of China Oil and Gas Group Ltd (603.HK) is 5.3%.

The Cost of Equity of China Oil and Gas Group Ltd (603.HK) is 28.90%.

The Cost of Debt of China Oil and Gas Group Ltd (603.HK) is 4.60%.

	Range	Selected
Cost of equity	22.40% - 35.40%	28.90%
Tax rate	24.40% - 27.30%	25.85%
Cost of debt	4.30% - 4.90%	4.60%
WACC	4.7% - 5.9%	5.3%

WACC

603.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	3.26	4.52

Additional risk adjustments	0.0%	0.5%
Cost of equity	22.40%	35.40%

Tax rate	24.40%	27.30%
Debt/Equity ratio	12.87	12.87
Cost of debt	4.30%	4.90%

After-tax WACC	4.7%	5.9%


Selected WACC	5.3%

603.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 603.HK:

cost_of_equity (28.90%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (3.26) + 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.