2688.HK WACC - Weighted Average Cost of Capital

The WACC of ENN Energy Holdings Ltd (2688.HK) is 7.5%.

The Cost of Equity of ENN Energy Holdings Ltd (2688.HK) is 9.30%.

The Cost of Debt of ENN Energy Holdings Ltd (2688.HK) is 4.25%.

	Range	Selected
Cost of equity	7.90% - 10.70%	9.30%
Tax rate	21.50% - 22.20%	21.85%
Cost of debt	4.00% - 4.50%	4.25%
WACC	6.5% - 8.6%	7.5%

WACC

2688.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.84	0.98

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.90%	10.70%

Tax rate	21.50%	22.20%
Debt/Equity ratio	0.42	0.42
Cost of debt	4.00%	4.50%

After-tax WACC	6.5%	8.6%


Selected WACC	7.5%

2688.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 2688.HK:

cost_of_equity (9.30%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.84) + 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.