175.HK WACC - Weighted Average Cost of Capital
The WACC of Geely Automobile Holdings Ltd (175.HK) is 9.0%.
| Range | Selected | |
| Cost of equity | 8.0% - 10.4% | 9.2% |
| Tax rate | 4.3% - 7.5% | 5.9% |
| Cost of debt | 4.0% - 6.4% | 5.2% |
| WACC | 7.8% - 10.2% | 9.0% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.86 | 0.94 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.0% | 10.4% |
| Tax rate | 4.3% | 7.5% |
| Debt/Equity ratio | 0.04 | 0.04 |
| Cost of debt | 4.0% | 6.4% |
| After-tax WACC | 7.8% | 10.2% |
| Selected WACC | 9.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 175.HK | Geely Automobile Holdings Ltd | 0.04 | 1.04 | 1 |
| 000625.SZ | Chongqing Changan Automobile Co Ltd | 0.29 | 1.12 | 0.88 |
| 1114.HK | Brilliance China Automotive Holdings Ltd | 0.05 | 0.45 | 0.43 |
| 489.HK | Dongfeng Motor Group Co Ltd | 3.76 | 1.08 | 0.24 |
| 601238.SS | Guangzhou Automobile Group Co Ltd | 0.73 | 1.1 | 0.65 |
| 601633.SS | Great Wall Motor Co Ltd | 0.31 | 1.11 | 0.86 |
| 7202.T | Isuzu Motors Ltd | 0.51 | 0.98 | 0.67 |
| 7211.T | Mitsubishi Motors Corp | 0.52 | 1.22 | 0.82 |
| M&M.NS | Mahindra and Mahindra Ltd | 0.29 | 1.69 | 1.34 |
| MARUTI.NS | Maruti Suzuki India Ltd | 0 | 0.97 | 0.97 |
| Low | High | |
| Unlevered beta | 0.76 | 0.87 |
| Relevered beta | 0.79 | 0.91 |
| Adjusted relevered beta | 0.86 | 0.94 |
175.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 175.HK:
cost_of_equity (9.20%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.86) + 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.