1378.HK WACC - Weighted Average Cost of Capital

The WACC of China Hongqiao Group Ltd (1378.HK) is 11.0%.

The Cost of Equity of China Hongqiao Group Ltd (1378.HK) is 12.70%.

The Cost of Debt of China Hongqiao Group Ltd (1378.HK) is 4.90%.

	Range	Selected
Cost of equity	11.10% - 14.30%	12.70%
Tax rate	24.00% - 25.20%	24.60%
Cost of debt	4.00% - 5.80%	4.90%
WACC	9.6% - 12.4%	11.0%

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	1.38	1.49

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.10%	14.30%

Tax rate	24.00%	25.20%
Debt/Equity ratio	0.24	0.24
Cost of debt	4.00%	5.80%

After-tax WACC	9.6%	12.4%


Selected WACC	11.0%

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 (12.70%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.38) + 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.