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China Netcom Technology Holdings (HKSE:08071) WACC % :6.98% (As of Dec. 14, 2024)


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What is China Netcom Technology Holdings WACC %?

As of today (2024-12-14), China Netcom Technology Holdings's weighted average cost of capital is 6.98%%. China Netcom Technology Holdings's ROIC % is -346.13% (calculated using TTM income statement data). China Netcom Technology Holdings earns returns that do not match up to its cost of capital. It will destroy value as it grows.

For a comprehensive WACC calculation, please access the WACC Calculator.


China Netcom Technology Holdings WACC % Historical Data

The historical data trend for China Netcom Technology Holdings's WACC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

China Netcom Technology Holdings WACC % Chart

China Netcom Technology Holdings Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
WACC %
Get a 7-Day Free Trial Premium Member Only Premium Member Only 9.38 3.96 3.85 5.90 6.99

China Netcom Technology Holdings Quarterly Data
Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23 Jun24
WACC % Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only - 6.69 - 6.99 7.16

Competitive Comparison of China Netcom Technology Holdings's WACC %

For the Software - Application subindustry, China Netcom Technology Holdings's WACC %, along with its competitors' market caps and WACC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


China Netcom Technology Holdings's WACC % Distribution in the Software Industry

For the Software industry and Technology sector, China Netcom Technology Holdings's WACC % distribution charts can be found below:

* The bar in red indicates where China Netcom Technology Holdings's WACC % falls into.



China Netcom Technology Holdings WACC % Calculation

The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. The WACC is commonly referred to as the firm's cost of capital. Generally speaking, a company's assets are financed by debt and equity. WACC is the average of the costs of these sources of financing, each of which is weighted by its respective use in the given situation. By taking a weighted average, we can see how much interest the company has to pay for every dollar it finances.

WACC=E/(E + D)*Cost of Equity+D/(E + D)*Cost of Debt*(1 - Tax Rate)

1. Weights:
Generally speaking, a company's assets are financed by debt and equity. We need to calculate the weight of equity and the weight of debt.
The market value of equity (E) is also called "Market Cap". As of today, China Netcom Technology Holdings's market capitalization (E) is HK$60.919 Mil.
The market value of debt is typically difficult to calculate, therefore, GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding the latest one-year quarterly average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together. As of Jun. 2024, China Netcom Technology Holdings's latest one-year quarterly average Book Value of Debt (D) is HK$0.8417 Mil.
a) weight of equity = E / (E + D) = 60.919 / (60.919 + 0.8417) = 0.9864
b) weight of debt = D / (E + D) = 0.8417 / (60.919 + 0.8417) = 0.0136

2. Cost of Equity:
GuruFocus uses Capital Asset Pricing Model (CAPM) to calculate the required rate of return. The formula is:
Cost of Equity = Risk-Free Rate of Return + Beta of Asset * (Expected Return of the Market - Risk-Free Rate of Return)
a) GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate. It is updated daily. The current risk-free rate is 4.395%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default.
b) Beta is the sensitivity of the expected excess asset returns to the expected excess market returns. China Netcom Technology Holdings's beta is 0.44.
c) (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.
Cost of Equity = 4.395% + 0.44 * 6% = 7.035%

3. Cost of Debt:
GuruFocus uses latest TTM Interest Expense divided by the latest one-year quarterly average debt to get the simplified cost of debt.
As of Jun. 2024, China Netcom Technology Holdings's interest expense (positive number) was HK$0.0267 Mil. Its total Book Value of Debt (D) is HK$0.8417 Mil.
Cost of Debt = 0.0267 / 0.8417 = 3.1722%.

4. Multiply by one minus TTM Tax Rate:
GuruFocus uses the most recent TTM Tax Expense divided by the most recent TTM Pre-Tax Income to calculate the tax rate. The calculated TTM tax rate is limited to between 0% and 100%. If the calculated tax rate is higher than 100%, it is set to 100%. If the calculated tax rate is less than 0%, it is set to 0%.
The latest calculated TTM Tax Rate = 0.028 / -5.9427 = -0.47%, which is less than 0%. Therefore it's set to 0%.

China Netcom Technology Holdings's Weighted Average Cost Of Capital (WACC) for Today is calculated as:

WACC=E / (E + D)*Cost of Equity+D / (E + D)*Cost of Debt*(1 - Tax Rate)
=0.9864*7.035%+0.0136*3.1722%*(1 - 0%)
=6.98%

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


China Netcom Technology Holdings  (HKSE:08071) WACC % Explanation

Because it costs money to raise capital. A firm that generates higher ROIC % than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, China Netcom Technology Holdings's weighted average cost of capital is 6.98%%. China Netcom Technology Holdings's ROIC % is -346.13% (calculated using TTM income statement data). China Netcom Technology Holdings earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Be Aware

1. GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding latest one-year quarterly average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together.
For companies that report quarterly, GuruFocus combines all of the most recent year's quarterly debt data from the beginning of the year to the year-end and calculates the average.
For companies that report semi-annually, GuruFocus combines all of the most recent year's semi-annual debt data from the start of the year to the year-end and calculates the average.
For companies that report annually, GuruFocus combines the beginning and ending annual debt data from the most recent year and then calculates the average.

2. The WACC formula discussed above does not include Preferred Stock. Please adjust if preferred stock is considered.

3. (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.

4. GuruFocus uses the latest TTM Interest Expense divided by the latest one-year quarterly average debt to get the simplified cost of debt.


Related Terms

China Netcom Technology Holdings Business Description

Traded in Other Exchanges
N/A
Address
89 Queensway, Office 2401A, 24th Floor, Tower One, Lippo Centre, Hong Kong, HKG
China Netcom Technology Holdings Ltd and its subsidiaries are engaged in the Smart Retail Business, Financial Technology Services Business, Sports Training Business, and Lottery Business. The vast majority of its revenue is generated from Smart Retail Business, which is into the provision of new retail digital transformation solutions and new retail integrated software service platform to chain retailers and merchants, and extended services such as cloud services, omnichannel payment services, and SMS marketing services, etc. Geographically, the company has business operations in the PRC and Hong Kong, of which key revenue is derived from the PRC.
Executives
Zuo Lei 2101 Beneficial owner
Zuo Lei 2101 Beneficial owner
Wang Yonghua 2201 Interest of corporation controlled by you
Shen Zhen Shi Tian Tu Tou Zi Guan Li Gu Fen You Xian Gong Si 2201 Interest of corporation controlled by you
51 Credit Card (china) Limited 2201 Interest of corporation controlled by you
51 Credit Card Inc. 2201 Interest of corporation controlled by you
Hang Zhou Zhen Niu Xin Xi Ke Ji You Xian Gong Si 2201 Interest of corporation controlled by you
Hang Zhou Jia Hao Ke Ji You Xian Gong Si 2201 Interest of corporation controlled by you
Tiantu Advisory Company Limited 2201 Interest of corporation controlled by you
Tiantu Investments Limited 2106 Person having a security interest in shares
Tiantu Investments International Limited 2101 Beneficial owner
51renpin.com Inc.
Shang Hai Wu Niu Wang Luo Ke Ji You Xian Gong Si

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