1606.HK WACC - Weighted Average Cost of Capital

The WACC of China Development Bank Financial Leasing Co Ltd (1606.HK) is 4.6%.

The Cost of Equity of China Development Bank Financial Leasing Co Ltd (1606.HK) is 42.40%.

The Cost of Debt of China Development Bank Financial Leasing Co Ltd (1606.HK) is 4.25%.

	Range	Selected
Cost of equity	22.90% - 61.90%	42.40%
Tax rate	27.20% - 28.90%	28.05%
Cost of debt	4.00% - 4.50%	4.25%
WACC	3.7% - 5.5%	4.6%

WACC

1606.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	3.36	8.31

Additional risk adjustments	0.0%	0.5%
Cost of equity	22.90%	61.90%

Tax rate	27.20%	28.90%
Debt/Equity ratio	24.66	24.66
Cost of debt	4.00%	4.50%

After-tax WACC	3.7%	5.5%


Selected WACC	4.6%

1606.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 1606.HK:

cost_of_equity (42.40%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (3.36) + 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.