2096.HK WACC - Weighted Average Cost of Capital

The WACC of Simcere Pharmaceutical Group Ltd (2096.HK) is 10.0%.

The Cost of Equity of Simcere Pharmaceutical Group Ltd (2096.HK) is 10.35%.

The Cost of Debt of Simcere Pharmaceutical Group Ltd (2096.HK) is 4.25%.

	Range	Selected
Cost of equity	9.10% - 11.60%	10.35%
Tax rate	6.00% - 8.40%	7.20%
Cost of debt	4.00% - 4.50%	4.25%
WACC	8.8% - 11.2%	10.0%

WACC

2096.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.04	1.11

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.10%	11.60%

Tax rate	6.00%	8.40%
Debt/Equity ratio	0.06	0.06
Cost of debt	4.00%	4.50%

After-tax WACC	8.8%	11.2%


Selected WACC	10.0%

2096.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 2096.HK:

cost_of_equity (10.35%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.04) + 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.