702.HK WACC - Weighted Average Cost of Capital

The WACC of Sino Oil and Gas Holdings Ltd (702.HK) is 4.8%.

The Cost of Equity of Sino Oil and Gas Holdings Ltd (702.HK) is 17.40%.

The Cost of Debt of Sino Oil and Gas Holdings Ltd (702.HK) is 4.25%.

	Range	Selected
Cost of equity	11.00% - 23.80%	17.40%
Tax rate	1.70% - 3.00%	2.35%
Cost of debt	4.00% - 4.50%	4.25%
WACC	4.3% - 5.3%	4.8%

WACC

702.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.36	2.85

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.00%	23.80%

Tax rate	1.70%	3.00%
Debt/Equity ratio	19.03	19.03
Cost of debt	4.00%	4.50%

After-tax WACC	4.3%	5.3%


Selected WACC	4.8%

702.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 702.HK:

cost_of_equity (17.40%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.36) + 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.