618.HK WACC - Weighted Average Cost of Capital

The WACC of Peking University Resources (Holdings) Company Ltd (618.HK) is 5.9%.

The Cost of Equity of Peking University Resources (Holdings) Company Ltd (618.HK) is 6.30%.

The Cost of Debt of Peking University Resources (Holdings) Company Ltd (618.HK) is 8.60%.

	Range	Selected
Cost of equity	5.50% - 7.10%	6.30%
Tax rate	22.70% - 39.50%	31.10%
Cost of debt	7.00% - 10.20%	8.60%
WACC	5.4% - 6.5%	5.9%

WACC

618.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.35	0.39

Additional risk adjustments	0.5%	1.0%
Cost of equity	5.50%	7.10%

Tax rate	22.70%	39.50%
Debt/Equity ratio	2.38	2.38
Cost of debt	7.00%	10.20%

After-tax WACC	5.4%	6.5%


Selected WACC	5.9%

618.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 618.HK:

cost_of_equity (6.30%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.35) + risk_adjustments (0.75%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.