603.HK WACC - Weighted Average Cost of Capital

The WACC of China Oil and Gas Group Ltd (603.HK) is 5.7%.

The Cost of Equity of China Oil and Gas Group Ltd (603.HK) is 24.25%.

The Cost of Debt of China Oil and Gas Group Ltd (603.HK) is 5.05%.

	Range	Selected
Cost of equity	19.00% - 29.50%	24.25%
Tax rate	24.40% - 27.30%	25.85%
Cost of debt	5.00% - 5.10%	5.05%
WACC	5.2% - 6.2%	5.7%

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	2.7	3.67

Additional risk adjustments	0.0%	0.5%
Cost of equity	19.00%	29.50%

Tax rate	24.40%	27.30%
Debt/Equity ratio	9.45	9.45
Cost of debt	5.00%	5.10%

After-tax WACC	5.2%	6.2%


Selected WACC	5.7%

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 (24.25%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (2.7) + 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.