1316.HK WACC - Weighted Average Cost of Capital

The WACC of Nexteer Automotive Group Ltd (1316.HK) is 9.2%.

The Cost of Equity of Nexteer Automotive Group Ltd (1316.HK) is 9.45%.

The Cost of Debt of Nexteer Automotive Group Ltd (1316.HK) is 6.35%.

	Range	Selected
Cost of equity	8.00% - 10.90%	9.45%
Tax rate	29.30% - 31.00%	30.15%
Cost of debt	4.00% - 8.70%	6.35%
WACC	7.7% - 10.6%	9.2%

WACC

1316.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.87	1.01

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.00%	10.90%

Tax rate	29.30%	31.00%
Debt/Equity ratio	0.07	0.07
Cost of debt	4.00%	8.70%

After-tax WACC	7.7%	10.6%


Selected WACC	9.2%

1316.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 1316.HK:

cost_of_equity (9.45%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.87) + 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.