1788.HK WACC - Weighted Average Cost of Capital

The WACC of Guotai Junan International Holdings Ltd (1788.HK) is 4.8%.

The Cost of Equity of Guotai Junan International Holdings Ltd (1788.HK) is 12.10%.

The Cost of Debt of Guotai Junan International Holdings Ltd (1788.HK) is 4.25%.

	Range	Selected
Cost of equity	9.90% - 14.30%	12.10%
Tax rate	11.20% - 13.90%	12.55%
Cost of debt	4.00% - 4.50%	4.25%
WACC	4.4% - 5.2%	4.8%

WACC

1788.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.18	1.5

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.90%	14.30%

Tax rate	11.20%	13.90%
Debt/Equity ratio	6.83	6.83
Cost of debt	4.00%	4.50%

After-tax WACC	4.4%	5.2%


Selected WACC	4.8%

1788.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 1788.HK:

cost_of_equity (12.10%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.18) + 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.