1525.HK WACC - Weighted Average Cost of Capital

The WACC of Shanghai Gench Education Group Ltd (1525.HK) is 7.0%.

The Cost of Equity of Shanghai Gench Education Group Ltd (1525.HK) is 10.00%.

The Cost of Debt of Shanghai Gench Education Group Ltd (1525.HK) is 4.25%.

	Range	Selected
Cost of equity	7.20% - 12.80%	10.00%
Tax rate	25.20% - 25.70%	25.45%
Cost of debt	4.00% - 4.50%	4.25%
WACC	5.3% - 8.6%	7.0%

WACC

1525.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.73	1.29

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.20%	12.80%

Tax rate	25.20%	25.70%
Debt/Equity ratio	0.8	0.8
Cost of debt	4.00%	4.50%

After-tax WACC	5.3%	8.6%


Selected WACC	7.0%

1525.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 1525.HK:

cost_of_equity (10.00%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.73) + 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.