1871.HK WACC - Weighted Average Cost of Capital

The WACC of China Oriented International Holdings Ltd (1871.HK) is 5.9%.

The Cost of Equity of China Oriented International Holdings Ltd (1871.HK) is 5.95%.

The Cost of Debt of China Oriented International Holdings Ltd (1871.HK) is 7.35%.

	Range	Selected
Cost of equity	5.20% - 6.70%	5.95%
Tax rate	16.60% - 26.00%	21.30%
Cost of debt	7.00% - 7.70%	7.35%
WACC	5.3% - 6.5%	5.9%

WACC

1871.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.39	0.4

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.20%	6.70%

Tax rate	16.60%	26.00%
Debt/Equity ratio	0.27	0.27
Cost of debt	7.00%	7.70%

After-tax WACC	5.3%	6.5%


Selected WACC	5.9%

1871.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 1871.HK:

cost_of_equity (5.95%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.39) + 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.