1788.HK WACC - Weighted Average Cost of Capital

The WACC of Guotai Junan International Holdings Ltd (1788.HK) is 4.9%.

The Cost of Equity of Guotai Junan International Holdings Ltd (1788.HK) is 11.10%.

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

	Range	Selected
Cost of equity	9.60% - 12.60%	11.10%
Tax rate	11.70% - 17.30%	14.50%
Cost of debt	4.00% - 4.50%	4.25%
WACC	4.6% - 5.3%	4.9%

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	1.12	1.25

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.60%	12.60%

Tax rate	11.70%	17.30%
Debt/Equity ratio	4.75	4.75
Cost of debt	4.00%	4.50%

After-tax WACC	4.6%	5.3%


Selected WACC	4.9%

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 (11.10%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.12) + 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.