987.HK WACC - Weighted Average Cost of Capital
The WACC of China Renewable Energy Investment Ltd (987.HK) is 7.5%.
| Range | Selected | |
| Cost of equity | 5.0% - 6.6% | 5.8% |
| Tax rate | 15.5% - 19.0% | 17.25% |
| Cost of debt | 4.8% - 19.9% | 12.35% |
| WACC | 4.6% - 10.3% | 7.5% |
| 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 | 5.0% | 6.6% |
| Tax rate | 15.5% | 19.0% |
| Debt/Equity ratio | 0.64 | 0.64 |
| Cost of debt | 4.8% | 19.9% |
| After-tax WACC | 4.6% | 10.3% |
| Selected WACC | 7.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 987.HK | China Renewable Energy Investment Ltd | 0.64 | 0.65 | 0.43 |
| 1004.HK | China Smarter Energy Group Holdings Ltd | 9.67 | 0.41 | 0.05 |
| 1250.HK | Beijing Enterprises Clean Energy Group Ltd | 6.8 | 0.56 | 0.08 |
| 182.HK | Concord New Energy Group Ltd | 4.76 | 0.48 | 0.1 |
| 295.HK | Kong Sun Holdings Ltd | 8.87 | 1 | 0.12 |
| 686.HK | Beijing Energy International Holding Co Ltd | 27.02 | 0.78 | 0.03 |
| IFEC.BK | Inter Far East Energy Corporation PCL | 96.48 | 0.68 | 0.01 |
| NWF.NZ | NZ Windfarms Ltd | 0 | -1.46 | -1.46 |
| S4A.VN | Sesan 4A Hydroelectric JSC | 0.26 | -0.48 | -0.39 |
| TBC.VN | Thacba Hydro Power JSC | 0.02 | 0.02 | 0.02 |
| Low | High | |
| Unlevered beta | 0.03 | 0.06 |
| Relevered beta | 0.04 | 0.09 |
| Adjusted relevered beta | 0.36 | 0.39 |
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.