1427.HK WACC - Weighted Average Cost of Capital

The WACC of China Tianbao Group Development Co Ltd (1427.HK) is 8.8%.

The Cost of Equity of China Tianbao Group Development Co Ltd (1427.HK) is 29.00%.

The Cost of Debt of China Tianbao Group Development Co Ltd (1427.HK) is 7.70%.

	Range	Selected
Cost of equity	21.20% - 36.80%	29.00%
Tax rate	16.70% - 26.40%	21.55%
Cost of debt	7.00% - 8.40%	7.70%
WACC	7.7% - 9.9%	8.8%

WACC

1427.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	3.06	4.72

Additional risk adjustments	0.0%	0.5%
Cost of equity	21.20%	36.80%

Tax rate	16.70%	26.40%
Debt/Equity ratio	7.16	7.16
Cost of debt	7.00%	8.40%

After-tax WACC	7.7%	9.9%


Selected WACC	8.8%

1427.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 1427.HK:

cost_of_equity (29.00%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (3.06) + 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.