840.HK WACC - Weighted Average Cost of Capital

The WACC of Xinjiang Tianye Water Saving Irrigation System Co Ltd (840.HK) is 10.6%.

The Cost of Equity of Xinjiang Tianye Water Saving Irrigation System Co Ltd (840.HK) is 16.00%.

The Cost of Debt of Xinjiang Tianye Water Saving Irrigation System Co Ltd (840.HK) is 5.00%.

	Range	Selected
Cost of equity	13.20% - 18.80%	16.00%
Tax rate	4.30% - 8.30%	6.30%
Cost of debt	5.00% - 5.00%	5.00%
WACC	9.2% - 12.0%	10.6%

WACC

840.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.74	2.14

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.20%	18.80%

Tax rate	4.30%	8.30%
Debt/Equity ratio	0.91	0.91
Cost of debt	5.00%	5.00%

After-tax WACC	9.2%	12.0%


Selected WACC	10.6%

840.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 840.HK:

cost_of_equity (16.00%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.74) + 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.