8128.HK WACC - Weighted Average Cost of Capital

The WACC of China Geothermal Industry Development Group Ltd (8128.HK) is 6.6%.

The Cost of Equity of China Geothermal Industry Development Group Ltd (8128.HK) is 7.10%.

The Cost of Debt of China Geothermal Industry Development Group Ltd (8128.HK) is 5.40%.

	Range	Selected
Cost of equity	6.20% - 8.00%	7.10%
Tax rate	2.50% - 7.60%	5.05%
Cost of debt	4.30% - 6.50%	5.40%
WACC	5.7% - 7.5%	6.6%

WACC

8128.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.56	0.59

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.20%	8.00%

Tax rate	2.50%	7.60%
Debt/Equity ratio	0.32	0.32
Cost of debt	4.30%	6.50%

After-tax WACC	5.7%	7.5%


Selected WACC	6.6%

8128.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 8128.HK:

cost_of_equity (7.10%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.56) + 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.