1378.HK WACC - Weighted Average Cost of Capital

The WACC of China Hongqiao Group Ltd (1378.HK) is 9.0%.

The Cost of Equity of China Hongqiao Group Ltd (1378.HK) is 11.50%.

The Cost of Debt of China Hongqiao Group Ltd (1378.HK) is 4.85%.

	Range	Selected
Cost of equity	9.60% - 13.40%	11.50%
Tax rate	21.90% - 23.40%	22.65%
Cost of debt	4.00% - 5.70%	4.85%
WACC	7.6% - 10.5%	9.0%

WACC

1378.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.13	1.36

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.60%	13.40%

Tax rate	21.90%	23.40%
Debt/Equity ratio	0.46	0.46
Cost of debt	4.00%	5.70%

After-tax WACC	7.6%	10.5%


Selected WACC	9.0%

1378.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 1378.HK:

cost_of_equity (11.50%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.13) + 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.