175.HK WACC - Weighted Average Cost of Capital

The WACC of Geely Automobile Holdings Ltd (175.HK) is 9.0%.

The Cost of Equity of Geely Automobile Holdings Ltd (175.HK) is 9.20%.

The Cost of Debt of Geely Automobile Holdings Ltd (175.HK) is 5.20%.

	Range	Selected
Cost of equity	8.00% - 10.40%	9.20%
Tax rate	4.30% - 7.50%	5.90%
Cost of debt	4.00% - 6.40%	5.20%
WACC	7.8% - 10.2%	9.0%

WACC

175.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.86	0.94

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.00%	10.40%

Tax rate	4.30%	7.50%
Debt/Equity ratio	0.04	0.04
Cost of debt	4.00%	6.40%

After-tax WACC	7.8%	10.2%


Selected WACC	9.0%

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.