883.HK WACC - Weighted Average Cost of Capital

The WACC of CNOOC Ltd (883.HK) is 8.1%.

The Cost of Equity of CNOOC Ltd (883.HK) is 9.70%.

The Cost of Debt of CNOOC Ltd (883.HK) is 4.25%.

	Range	Selected
Cost of equity	7.90% - 11.50%	9.70%
Tax rate	28.60% - 29.20%	28.90%
Cost of debt	4.00% - 4.50%	4.25%
WACC	6.7% - 9.4%	8.1%

WACC

883.HK WACC calculation

Category	Low	High

Long-term bond rate	2.8%	3.3%
Equity market risk premium	5.3%	6.3%
Adjusted beta	0.96	1.21

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.90%	11.50%

Tax rate	28.60%	29.20%
Debt/Equity ratio	0.32	0.32
Cost of debt	4.00%	4.50%

After-tax WACC	6.7%	9.4%


Selected WACC	8.1%

883.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 883.HK:

cost_of_equity (9.70%) = risk_free_rate (3.05%) + equity_risk_premium (5.80%) * adjusted_beta (0.96) + 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.