987.HK WACC - Weighted Average Cost of Capital

The WACC of China Renewable Energy Investment Ltd (987.HK) is 7.5%.

The Cost of Equity of China Renewable Energy Investment Ltd (987.HK) is 5.80%.

The Cost of Debt of China Renewable Energy Investment Ltd (987.HK) is 12.35%.

	Range	Selected
Cost of equity	5.00% - 6.60%	5.80%
Tax rate	15.50% - 19.00%	17.25%
Cost of debt	4.80% - 19.90%	12.35%
WACC	4.6% - 10.4%	7.5%

WACC

987.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.36	0.39

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.00%	6.60%

Tax rate	15.50%	19.00%
Debt/Equity ratio	0.67	0.67
Cost of debt	4.80%	19.90%

After-tax WACC	4.6%	10.4%


Selected WACC	7.5%

987.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 987.HK:

cost_of_equity (5.80%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.36) + 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.