1958.HK WACC - Weighted Average Cost of Capital

The WACC of BAIC Motor Corp Ltd (1958.HK) is 8.2%.

The Cost of Equity of BAIC Motor Corp Ltd (1958.HK) is 11.60%.

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

	Range	Selected
Cost of equity	9.60% - 13.60%	11.60%
Tax rate	34.60% - 35.70%	35.15%
Cost of debt	4.00% - 4.50%	4.25%
WACC	7.0% - 9.5%	8.2%

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	1.13	1.39

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.60%	13.60%

Tax rate	34.60%	35.70%
Debt/Equity ratio	0.61	0.61
Cost of debt	4.00%	4.50%

After-tax WACC	7.0%	9.5%


Selected WACC	8.2%

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 (11.60%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.13) + 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.