1397.HK WACC - Weighted Average Cost of Capital

The WACC of Baguio Green Group Ltd (1397.HK) is 7.4%.

The Cost of Equity of Baguio Green Group Ltd (1397.HK) is 9.20%.

The Cost of Debt of Baguio Green Group Ltd (1397.HK) is 4.35%.

	Range	Selected
Cost of equity	7.90% - 10.50%	9.20%
Tax rate	18.40% - 21.90%	20.15%
Cost of debt	4.00% - 4.70%	4.35%
WACC	6.5% - 8.4%	7.4%

WACC

1397.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.83	0.94

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.90%	10.50%

Tax rate	18.40%	21.90%
Debt/Equity ratio	0.44	0.44
Cost of debt	4.00%	4.70%

After-tax WACC	6.5%	8.4%


Selected WACC	7.4%

1397.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 1397.HK:

cost_of_equity (9.20%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.83) + 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.