1839.HK WACC - Weighted Average Cost of Capital

The WACC of CIMC Vehicles Group Co Ltd (1839.HK) is 8.2%.

The Cost of Equity of CIMC Vehicles Group Co Ltd (1839.HK) is 8.70%.

The Cost of Debt of CIMC Vehicles Group Co Ltd (1839.HK) is 4.80%.

	Range	Selected
Cost of equity	7.10% - 10.30%	8.70%
Tax rate	18.80% - 20.50%	19.65%
Cost of debt	4.00% - 5.60%	4.80%
WACC	6.7% - 9.6%	8.2%

WACC

1839.HK WACC calculation

Category	Low	High

Long-term bond rate	1.7%	2.2%
Equity market risk premium	5.8%	6.8%
Adjusted beta	0.92	1.1

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.10%	10.30%

Tax rate	18.80%	20.50%
Debt/Equity ratio	0.12	0.12
Cost of debt	4.00%	5.60%

After-tax WACC	6.7%	9.6%


Selected WACC	8.2%

1839.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 1839.HK:

cost_of_equity (8.70%) = risk_free_rate (1.95%) + equity_risk_premium (6.30%) * adjusted_beta (0.92) + 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.