2006.HK WACC - Weighted Average Cost of Capital

The WACC of Shanghai Jin Jiang Capital Co Ltd (2006.HK) is 9.9%.

The Cost of Equity of Shanghai Jin Jiang Capital Co Ltd (2006.HK) is 12.45%.

The Cost of Debt of Shanghai Jin Jiang Capital Co Ltd (2006.HK) is 12.25%.

	Range	Selected
Cost of equity	10.30% - 14.60%	12.45%
Tax rate	24.30% - 31.80%	28.05%
Cost of debt	4.00% - 20.50%	12.25%
WACC	5.7% - 14.2%	9.9%

WACC

2006.HK WACC calculation

Category	Low	High

Long-term bond rate	3.0%	3.5%
Equity market risk premium	5.3%	6.3%
Adjusted beta	1.36	1.67

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.30%	14.60%

Tax rate	24.30%	31.80%
Debt/Equity ratio	1.78	1.78
Cost of debt	4.00%	20.50%

After-tax WACC	5.7%	14.2%


Selected WACC	9.9%

2006.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 2006.HK:

cost_of_equity (12.45%) = risk_free_rate (3.25%) + equity_risk_premium (5.80%) * adjusted_beta (1.36) + 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.