1316.HK WACC - Weighted Average Cost of Capital

The WACC of Nexteer Automotive Group Ltd (1316.HK) is 9.5%.

The Cost of Equity of Nexteer Automotive Group Ltd (1316.HK) is 9.65%.

The Cost of Debt of Nexteer Automotive Group Ltd (1316.HK) is 5.80%.

	Range	Selected
Cost of equity	8.30% - 11.00%	9.65%
Tax rate	21.60% - 29.10%	25.35%
Cost of debt	4.00% - 7.60%	5.80%
WACC	8.1% - 10.8%	9.5%

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	0.92	1.02

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.30%	11.00%

Tax rate	21.60%	29.10%
Debt/Equity ratio	0.04	0.04
Cost of debt	4.00%	7.60%

After-tax WACC	8.1%	10.8%


Selected WACC	9.5%

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 (9.65%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.92) + 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.