1551.HK WACC - Weighted Average Cost of Capital

The WACC of Guangzhou Rural Commercial Bank Co Ltd (1551.HK) is 4.7%.

The Cost of Equity of Guangzhou Rural Commercial Bank Co Ltd (1551.HK) is 8.55%.

The Cost of Debt of Guangzhou Rural Commercial Bank Co Ltd (1551.HK) is 5.00%.

	Range	Selected
Cost of equity	7.20% - 9.90%	8.55%
Tax rate	13.90% - 15.60%	14.75%
Cost of debt	5.00% - 5.00%	5.00%
WACC	4.6% - 4.8%	4.7%

WACC

1551.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.72	0.86

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.20%	9.90%

Tax rate	13.90%	15.60%
Debt/Equity ratio	9.04	9.04
Cost of debt	5.00%	5.00%

After-tax WACC	4.6%	4.8%


Selected WACC	4.7%

1551.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 1551.HK:

cost_of_equity (8.55%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.72) + 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.