6839.HK WACC - Weighted Average Cost of Capital

The WACC of Yunnan Water Investment Company Ltd (6839.HK) is 4.9%.

The Cost of Equity of Yunnan Water Investment Company Ltd (6839.HK) is 36.35%.

The Cost of Debt of Yunnan Water Investment Company Ltd (6839.HK) is 5.65%.

	Range	Selected
Cost of equity	28.10% - 44.60%	36.35%
Tax rate	11.70% - 19.60%	15.65%
Cost of debt	4.30% - 7.00%	5.65%
WACC	4.0% - 5.9%	4.9%

WACC

6839.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	4.22	5.84

Additional risk adjustments	0.0%	0.5%
Cost of equity	28.10%	44.60%

Tax rate	11.70%	19.60%
Debt/Equity ratio	157.59	157.59
Cost of debt	4.30%	7.00%

After-tax WACC	4.0%	5.9%


Selected WACC	4.9%

6839.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 6839.HK:

cost_of_equity (36.35%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (4.22) + 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.