855.HK WACC - Weighted Average Cost of Capital

The WACC of China Water Affairs Group Ltd (855.HK) is 5.5%.

The Cost of Equity of China Water Affairs Group Ltd (855.HK) is 11.70%.

The Cost of Debt of China Water Affairs Group Ltd (855.HK) is 4.25%.

	Range	Selected
Cost of equity	9.30% - 14.10%	11.70%
Tax rate	23.10% - 23.50%	23.30%
Cost of debt	4.00% - 4.50%	4.25%
WACC	4.8% - 6.3%	5.5%

WACC

855.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.07	1.46

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.30%	14.10%

Tax rate	23.10%	23.50%
Debt/Equity ratio	2.69	2.69
Cost of debt	4.00%	4.50%

After-tax WACC	4.8%	6.3%


Selected WACC	5.5%

855.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 855.HK:

cost_of_equity (11.70%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.07) + 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.