1958.HK WACC - Weighted Average Cost of Capital

The WACC of BAIC Motor Corp Ltd (1958.HK) is 7.6%.

The Cost of Equity of BAIC Motor Corp Ltd (1958.HK) is 12.20%.

The Cost of Debt of BAIC Motor Corp Ltd (1958.HK) is 4.25%.

	Range	Selected
Cost of equity	10.30% - 14.10%	12.20%
Tax rate	34.60% - 35.70%	35.15%
Cost of debt	4.00% - 4.50%	4.25%
WACC	6.6% - 8.7%	7.6%

WACC

1958.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.25	1.46

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.30%	14.10%

Tax rate	34.60%	35.70%
Debt/Equity ratio	0.94	0.94
Cost of debt	4.00%	4.50%

After-tax WACC	6.6%	8.7%


Selected WACC	7.6%

1958.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 1958.HK:

cost_of_equity (12.20%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.25) + 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.