6885.HK WACC - Weighted Average Cost of Capital

The WACC of Henan Jinma Energy Co Ltd (6885.HK) is 8.2%.

The Cost of Equity of Henan Jinma Energy Co Ltd (6885.HK) is 46.20%.

The Cost of Debt of Henan Jinma Energy Co Ltd (6885.HK) is 6.05%.

	Range	Selected
Cost of equity	34.10% - 58.30%	46.20%
Tax rate	17.40% - 23.20%	20.30%
Cost of debt	5.10% - 7.00%	6.05%
WACC	6.6% - 9.7%	8.2%

WACC

6885.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	5.22	7.8

Additional risk adjustments	0.0%	0.5%
Cost of equity	34.10%	58.30%

Tax rate	17.40%	23.20%
Debt/Equity ratio	11.32	11.32
Cost of debt	5.10%	7.00%

After-tax WACC	6.6%	9.7%


Selected WACC	8.2%

6885.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 6885.HK:

cost_of_equity (46.20%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (5.22) + 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.