1728.HK WACC - Weighted Average Cost of Capital

The WACC of China ZhengTong Auto Services Holdings Ltd (1728.HK) is 7.2%.

The Cost of Equity of China ZhengTong Auto Services Holdings Ltd (1728.HK) is 27.70%.

The Cost of Debt of China ZhengTong Auto Services Holdings Ltd (1728.HK) is 6.00%.

	Range	Selected
Cost of equity	12.60% - 42.80%	27.70%
Tax rate	2.90% - 4.90%	3.90%
Cost of debt	5.00% - 7.00%	6.00%
WACC	5.4% - 9.0%	7.2%

WACC

1728.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.63	5.58

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.60%	42.80%

Tax rate	2.90%	4.90%
Debt/Equity ratio	14.32	14.32
Cost of debt	5.00%	7.00%

After-tax WACC	5.4%	9.0%


Selected WACC	7.2%

1728.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 1728.HK:

cost_of_equity (27.70%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.63) + 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.